Ghost kitchens and virtual restaurant brands are rising in popularity and look to stay. Curious what all the fuss is about? We’ll answer your questions about the state of ghost kitchens or virtual brands, plus other virtual and ghost kitchen restaurant technology trends to watch.
The terms “ghost kitchen” and “virtual restaurant brands” get tossed around plenty without clear definitions. To add to the confusion, sometimes these terms get used interchangeably to refer to any and all variations on the concept. At other times the two terms refer to different approaches.
To clear up any confusion, here are some working definitions.
A ghost kitchen is a branded restaurant or food prep operation that has no physical outlet where customers can come, order food in person, or sit down and eat it. They exist to make food exclusively sold and delivered through food delivery apps and often carry independent branding.
Customers find them listed in apps like Grubhub and DoorDash, and it usually isn’t obvious to the customer that anything is different about these restaurants.
Ghost kitchens often operate out of commercial kitchen spaces far from restaurant patrons, like in-office parks near the edge of town. They’ve often shared spaces, cranking out cuisine for multiple brands.
A virtual kitchen or virtual restaurant brand is a restaurant with no physical location in the traditional sense. The difference here is that virtual brands operate out of the kitchen of an existing restaurant, offering cuisine that’s at least slightly different from what the “real” restaurant offers.
Mr. Beast Burgers is an example of a virtual restaurant brand. If you see a Mr. Beast Burgers in your local delivery app, you won’t find a physical location by that name. What you will find — if you do enough digging or have the right tools — is a local, independent midrange to an upper-tier burger shop that also quietly makes Mr. Beast-branded items and combos, in addition to their “real” or regular menu.
Interestingly, Mr. Beast Burgers is fairly consistent from one municipality to the next — and they don’t always look like the burgers the “real” restaurant sells.
Any number of the seemingly nonexistent wings restaurants populating delivery apps are also virtual restaurant brands. Most of these operate out of existing national pizza or neighbourhood grill-style restaurants.
Ghost and virtual restaurant brands are riding the delivery wave, which is as strong as it has ever been. Food delivery revenue is projected to hit $33 billion in the U.S. in 2022 and reach $42 billion in 2025, according to the Research and Markets division of IMARC Group. The pandemic accelerated trends toward delivery, but it remains a growth market even as the pandemic subsides.
As long as restaurant delivery remains strong, ghost and virtual restaurants are likely to stay strong as well.
And while this new approach relies heavily on delivery marketplaces, it provides more strategic advantages than simply increasing a restaurant’s presence on food delivery apps.
Many restaurants have turned to virtual brands to add additional revenue streams. BBQ Holdings, which owns Famous Dave’s and Granite City Brewery, leveraged virtual kitchens aggressively during the long stretch of the pandemic. The higher-end Granite City Brewery locations lost their in-person crowds during the first nine months of the pandemic and struggled to capture off-premises customers, given the nature of the food.
But Famous Dave’s was already a 30% off-premises operation before the pandemic and easily transitioned more business to that market. So the company opened virtual Famous Dave’s locations inside some Granite City Brewery kitchens, increasing revenue without increasing rent or staffing.
Other restaurants have used ghost or virtual brands to launch new cuisine concepts without the cost and overhead of additional retail restaurant space, décor, physical branding, and so on.
Where early ghost kitchens tended to rely on large third-party platforms like DoorDash, there’s no fundamental reason why this has to be the case. As the ghost and virtual restaurant brands industry matures, look for brands to break free of those platforms.
In other words, it wouldn’t be surprising if, in the next five years, consumers start using the Mr. Beast Burgers app (or whatever other ghost brand they like) in the same way they use the Chipotle or Wendy’s app today.
Another likely trend we predict in the restaurant industry is a backlash or growing concern about environmentally unfriendly packaging. The world collectively looked the other way at aspects of waste during the pandemic, including those plastic-based disposable surgical masks and a drastic increase in disposable, non-recyclable to-go containers.
But as to-go and off-premises remain popular, expect a renewed focus on sustainability.
Last and most importantly, ghost kitchens are beginning to better leverage data to inform their operations in a wide range of ways. What started as a speculative, see-what-sticks sub-industry is refining itself into something far more data-driven.
Using data in restaurant decision-making isn’t brand-new, but many restaurants still aren’t capitalizing on the data they have — or availing themselves of additional data they could access. But as the ghost and virtual kitchen markets mature, properly leveraging data will be an essential part of successful growth.
Today’s customers want convenience — that’s a big part of the rise in off-premises. But they still want personalized, highly customized dining experiences that are just as personalized as they are convenient. Ghost kitchens are uniquely positioned to meet this need because no one will find it odd or inauthentic that a “pizza joint” sells waffles, fried chicken, or falafel.
Data on what a market has been ordering or what isn’t widely available can help a ghost kitchen operator decide what to offer, join a popular trend or seize opportunities to supply something missing in a market.
Data can also drive decisions about expansion into markets or which brand concepts are market fits. It can even predict what customers are likely to order based on past orders and feedback or surface predictions or recommendations for future orders.
Brizo can get restaurants and restaurant providers data like this, with massive sample sets and impressive granularity.
Brizo FoodMetrics understands the power of food delivery data. With our database of over 1.2 million foodservice establishments, we have the granular data restaurants and restaurant vendors need to navigate the coming data-driven future of the industry. We help you analyze the competition, identify new markets, innovate on ingredients and packaging, and more. Ready to see for yourself? Get started for free today.