If the pandemic has taught us one thing, it is that the hospitality industry is shaped by an incredibly resilient and innovative group of people and entrepreneurs. Over these past two years, we have seen operators, owners and staff work together, quickly adapting services to better attend to customer demands and safety.
From increased take-out service options to the expansion of off-sales for wine and spirits, business owners have made significant changes to their services so that they can not only operate but continue to grow against all odds.
Despite the lessening of pandemic restrictions, consumers continue to expect the same level of (if not more) remote service options. To better meet the growing demand, there has been a trend of virtual restaurants, also known as ghost kitchens, popping up across North America.
These delivery-only food concepts operate out of existing restaurants or commercial kitchens to provide a unique and diverse dining experience. These pop-up establishments are in many cases, owned by large corporations such as Wendy’s, and reach a new audience of unsuspecting customers.
By operating through third-party apps including UberEats, DoorDash, and Skip the Dishes, virtual kitchens offer the ability to expand existing businesses without expanding required dining space or having to be an extension of a previously existing space.
With growth supercharged by the Covid-19 pandemic, experts in the field estimate that by 2030, virtual restaurants will make up 50% of takeaway service and more than $250 billion in global annual sales. As the number of virtual dining options increases, many people are asking the same question – are ghost kitchens a trend or are they here to stay?
Weighing the Benefits
As with any booming new trend, it’s always best to weigh the pros and cons before taking part. For many business owners, virtual kitchens offer the ability to add new incremental revenue streams, which can be especially valuable in the challenges we’ve faced over the past few years.
This incremental revenue comes from the ability to create and build an entire menu and brand overnight, reaching an entirely new audience without the additional overhead, staff, or seating space required.
Of course with that benefit, we must also recognize that to implement these changes, we’re assuming the kitchen has the capacity and budget to install these new products. While a ghost kitchen setup can bring in additional revenue, it also costs a significant fee to implement.
This reason is why we’re seeing so many large corporations jump on this trend rather than small businesses and independent kitchens. One adaptive measure we’ve seen some smaller businesses taking advantage of is the strategic partnership between a ghost kitchen chain and their kitchen operations.
Preparing for the Worst (Again)
After the industry shut down in March 2020, many brands are looking for safety nets that will better protect their staff and operations in other closure events. Ghost kitchens are one of the possible solutions, along with direct delivery and online ordering of current products.
With rumours of recession running rampant, we can all agree that many business owners are feeling nervous. Having access to these solutions while also keeping costs low and affordable will be key. This presents a major challenge but also opens the door to new opportunities such as strategic partnerships and communal kitchen spaces.
2023 Customer Predictions
Despite restaurants being back to full and former capacity, many customers have learned that they prefer to dine at home. According to a study by DoorDash, 86% of consumers in 2022 say they are ordering pickup as much or more often now than last year.
Remaining accessible for these customers and continuing to provide new, interesting products is in the best interest of every restaurant owner. These figures indicate that not only are online restaurant models a beneficial tool for increasing revenue streams but also an essential part of the industry.
Whatever 2023 might hold, there is one thing we can count on and that is change! Whether it’s the introduction of an eCommerce platform for direct deliveries or a strategic new partnership, business owners will be making changes to their restaurant operations to stay relevant and accessible in the coming year.
Ryan Moreno is the CEO and Co-Founder of Joseph Richard Group, a BC-based collection of unique hospitality ventures featuring more than 25 establishments. Ryan has taken his business one step further by bringing his hospitality group virtual, establishing a series of virtual ghost kitchens.
Photo by lasse bergqvist on Unsplash
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