Are Ghost Kitchens The Future of Restaurant Business?

This year, every restaurant franchise is grappling with decisions about delivery. But the fact is, delivery was a priority even before the pandemic, with 78 percent of respondents in last year’s National Restaurant Association survey looking to focus on their off-premise strategy.

This year, 33 percent of customers report that they are ordering more take-out, creating a significant new revenue stream for restaurants willing to double-down on delivery.

Ghost kitchens — professional cooking facilities created for the preparation of delivery-only meals — enable restaurants to rapidly start delivering food to their customers. These kitchens exploded in popularity this year, but the question remains, are ghost kitchens here to stay, or will they go the way of the food hall and crumble like a house of cards?

What’s in it for the restaurant?

From a value perspective, it’s easy to understand the appeal of a ghost kitchen. By cutting out the expense of front-of-house operations and dining rooms, restaurant operators can significantly reduce rent and labor costs. Delivery is also difficult for most brands to do well on their own, and facilities like DoorDash Kitchens in California already have the infrastructure and agreements in place to enable third-party delivery for their tenants.

What’s in it for the ghost kitchen?

The most successful ghost kitchens, typically operated by a separate parent company, use their own staff of delivery drivers and offer a variety of cuisine from a single location. These companies operate several of their own proprietary food brands out of their ghost kitchens (i.e., a generic Mexican, Chinese or burger concept).

Customers typically aren’t familiar with the generic ghost kitchen brands, and consumer behavior trends confirm that younger customers prefer brands with a soul and a strong reputation. A significant 90 percent of millennials say authenticity is important when choosing which brands to support. To solve their credibility problem and keep their generic brands afloat, ghost kitchen companies are choosing to lease some of their space to well-known brands with existing, loyal customer bases.

The bottom line

On the surface, ghost kitchens are a win-win. Fast-growing, popular restaurant concepts can quickly ramp up delivery, and ghost kitchens can boost their credibility and, by extension, visibility and sales for their generic brands. However, a closer look reveals that the benefits are one-sided.

As soon as a ghost kitchen brings a franchise brand on board, they are looking for an exit strategy. Ghost kitchens will only pay fees and royalties to a brand long enough to get market share. As soon as they do, they bring everything back in-house to sell their own proprietary brands.

Ghost kitchens need the street cred of an established brand but fail to offer enough upside. Third-party delivery fees add up quickly, limiting a brand’s ROI and stifling its growth. A recent New York Times report found that the base fees large delivery services charge small restaurants can add up to 20-30 percent of each order. For concepts already operating with razor-thin margins, the juice isn’t worth the squeeze.

What’s next?

Ghost kitchens will likely follow the 80/20 rule. Eighty percent will fail, and 20 percent will succeed — but only those that enlist a brand with a soul to join their facility. There will be too many ghost kitchens — and too many without a reputation backing them — to make it.

For franchisors, leasing space in a ghost kitchen is a short-term solution to a long-term problem. Delivery will still be a priority in a post-Covid world, so restaurants should avoid third-party ghost kitchens and instead consider investing in their own off-premise operations.

Tech-forward brand Wow Bao is leading the pack with their delivery strategy. They adopted an off-premise platform allowing other restaurants to sell their product through third-party delivery — essentially transforming any kitchen into a ghost kitchen. Wow Bao’s new model offers a significant opportunity for restaurants to create a new revenue stream and easily diversify their offerings.

By investing in their own ghost kitchen or off-premise platform, franchisors can get the best of all worlds — a strong delivery operation, the opportunity to strengthen their brand reputation and the best possible ROI.

7 restaurant technology trends to watch in 2021

The restaurant industry has traditionally been slow to adopt technology and innovative digital solutions. But in 2020, the COVID-19 pandemic changed that and forced food and beverage outlets to look beyond the traditional. Many restaurants have recently turned to tech, even if reluctantly, to adapt to a new reality. One which includes less dine-in guests, more off-premise and al fresco dining, or plexiglass screens and table dividers, masks and gloves, and lots of sanitizing.

Technology and innovation are what have helped, even saved, restaurants as they transform how they operate to not just survive, but thrive, in this new connected and contactless era. From online ordering, self-checkouts and touchless payments to delivery and pick-up, the F&B industry can no longer afford to ignore the trends that are helping businesses reinvent themselves to remain relevant and competitive.

As it’s predicted that growth in the restaurant industry will be entirely driven by off-premise consumption, using technology is not just about improving operations and service delivery, but also reimagining restaurants.

So, what digital trends and tools should be top of mind in 2021 to stay up-to-date, and even ahead of the competition?

1. Online ordering systems and delivery apps
As restaurants remain vulnerable to imposed restrictions, strict sanitary regulations and even closure, online food orders and contactless home-deliveries have come to the rescue. And this service is here to stay as diners grow accustomed to getting the food they want when, where and how they want it.

Third-party food delivery apps like UberEats, Foodpanda, or Door Dash will continue to be an important solution for those not able to offer in-house ordering and delivery services. But as many diners report a preference for ordering directly from restaurants, we can expect to see restaurants following the lead of larger fast-food chains and investing in developing their own integrated online platforms and apps. Despite the ‘distance’, this digital proximity enables the restaurant industry to stay closely connected with their customers.


2. Contactless payment
Contactless technology is going mainstream, and it’s not just about placing an order online, but also about paying with a smartphone, smartwatch or smartcard via an app or touchless device. New payment technologies have been slowly gaining momentum within the global restaurant industry, but this trend has accelerated with the pandemic. It’s estimated that contactless payments will triple from $2 trillion to $6 trillion worldwide by 2024, and having such options are reportedly extremely important for 34% of customers. With no cash hand, no human contact is required – more hygienic and safer – and it’s quick, instant and convenient. From a cash flow point of view, it’s also more efficient. If restaurants don’t want to be left behind in the coming year, those who haven’t yet done so better invest and plan for mobile and digital payment strategy.


3. Online table reservation system
Booking a table via a phone call is becoming a thing of the past as online table reservation technology takes on new importance. Providers like Eat App, Tablein or OpenTable give customers the freedom to see available slots and make their own booking on-the-go. In turn, by using technology-enabled reservation systems, restaurants can manage seating, waitlists, customer loyalty and dining preferences as well as collect vital client data be it for contact tracing or market insights.

The concept has even been taken a step further. Via its initiative Experiences, OpenTable is offering restaurants the opportunity to propose unique culinary events and dining experiences, beyond standard reservations. Whether it’s Ramen Nights in celebrity chef Hugh Acheson’s dining room, a ‘side-dish’ of line dancing lessons or a fixed-price tasting menu, guests can book their next special dining experience easily, directly and according to what tickles their taste buds. Time to get creative!

4. Digital kitchen ‘boards’
No need to grab paper and pen, worry about smudged printed tickets or run back-and-forth between the kitchen and front-of-house anymore. Kitchen Display Systems (KDS) are a digital menu board for kitchen staff helping restaurants streamline back-of-house operations. Directly linked to the restaurant’s point-of-sale (POS) system, the screen displays orders automatically according to priority and flagging any special dietary requests. Tracking meal delivery times and monitoring inventory to signal when a product is out of stock, this technological solution ultimately ensures better communication, accuracy, clearer workflows and – being 100% digital – promises a more sustainable kitchen operation.

5. Automated inventory management software
Automating your inventory management means tracking food and beverage stocks, anticipating quantities and even scheduling reorders no longer need to be time-consuming tedious tasks. Very importantly, the implementation of such software in your working process can also reduce food wastage, which is reportedly costing the hospitality industry $100 billion annually. Through cutting-edge artificial intelligence (AI) technology, companies like Winnow are helping restaurant owners and managers cut food waste and costs and run their businesses more efficiently and sustainably. Partnerships with innovative platforms like Too Good to Go also save restaurants from wasting their food surplus, instead of making it available to users looking for a meal-deal. Saving time and money all while helping the planet – sounds like a no-brainer with sustainability being at the forefront of the global agenda.


6. QR codes
Already a staple in mobile-first societies like China, QR codes are going global and popping up at restaurants around the world. In this ‘no-touch’ era, auto-scanning barcodes with smartphone cameras on posters, tables, coasters, doors or websites allow customers to access online menus, order and pay – without contact – keeping diners and employees safe. This technology, which doesn’t require downloading an app, has also played an essential role in helping restaurants with contact tracing now mandatory in many parts of the world for their reopening during this pandemic. Offering a number of convenient benefits at relatively low costs for restaurants, QR code technology is going to be a ‘must’ in 2021.


7. Air purification technology
As diners return to restaurants, it’s going to be critical to make them feel safe and comfortable. Upgrading sanitization systems through various air purification technologies to promote ‘clean air’ is a growing focal point for the restaurant industry.

Harmless-to-human technology like bipolar ionization, which purifies the air and surfaces in indoor spaces by neutralizing contaminants, is already showing promising results and finding a market for itself. As are systems which make use of ultraviolet light known as effective methods of both air and surface sanitization. While these concepts and products may not yet be mainstream yet, they are fast-becoming the most important restaurant technology of all in in a virus-wary world.

The Importance of Restaurant Marketing in the Competitive Restaurant Industry

Restaurants are among the best business ideas and can generate a good income if managed well. However, without a proper plan and a clear implementation strategy, it will not be possible to make it in the restaurant business.

In this post, we explore some of the important restaurant marketing strategies.

Find Out What Food Trends There Are in Modern Restaurant Business

The first step you should take is researching the market. You should have a clear understanding of all the popular restaurant food markets and what is trending in the industry.

The restaurant business moves with trends. Some of the modern trends include molecular kitchen, healthy food, vegan food, gluten-free food, and an open kitchen. The open kitchen has become very popular in upscale areas where people love enjoying the show as the cook prepares the meal.

You should also try offering different types of meals that are trendy and attractive to modern society. For instance, most people today want to eat gluten-free meals, sugar-free meals, and vegan meals. Capitalize on such meals to attract the right customers.

Organize Some Events in Your Establishment

Evening parties and weekend events are a great way to popularize your restaurant. Create events and market them extensively to get people interested in your restaurant.

You can invite local celebrities to grace your events too. You should have at least one day of the week that is themed with parties. It can be live-music evenings too.

Invite Famous People and Bloggers to Your Place

Famous people appearing at your events will attract more people to your restaurant. Even if your restaurant does not serve foods that are the preference of some people, they may just pop in to have some fun time with celebrities. Capitalize on such moment to serve your best dishes.

You can also invite local press and bloggers to review your services and write about your brand in the papers and on high-rated blogs.

Work on the Reputation of Your Place

It is not possible to succeed in the restaurant business without establishing your brand’s reputation. Work on your image through digital marketing including social media interactions.

You should also design an attractive website where potential customers can find out more about your brand. There must be such information as a price, menu info, location, contacts, and social media links.

Make Accounts on Social Networks

Social media is your gateway to the thoughts of your customers. If you want success in your restaurant marketing campaign, you must be willing to invest in social media marketing.

Post visual content such as food recipes, special meals, special offers, announcements and virtually anything that will keep your online followers interested. High-quality photos of your meals will attract more clients than you can imagine. Social networks are the best branding platforms. Respond to your customers’ questions and provide help where necessary.

How to Make Videos for your Restaurant?

Video marketing is popular among marketers for one major reason—it works. Want to boost the number of people visiting your site to make reservations? One study found that including your video on a landing page can improve conversion rates by nearly 80%, with 70% of marketers noting that video has higher conversion rates than other […]