Our Co-founder and CEO, Zhong Xu, recently gave a keynote at the 2nd Annual Ghost Kitchen & Virtual Restaurant Conference in Dallas, USA, where he talked about critical insights into this growing industry.
This two-part blog series breaks down the types of ghost kitchens, the future of ghost kitchens, and the importance of optimizing and marketing your virtual brand to boost your bottom line.
About Ghost Kitchens
It’s no secret that the on-demand food industry is booming and has significantly capitalized on the shift in consumer behaviors driven by the global pandemic and mobile technology expansion. Customer demand for outstanding food delivered directly to their door is rising. According to a report by BusinessWire, the delivery industry is now projected to be a potential market that will cross the $154.34B mark by 2023.
And that’s big news for Ghost Kitchens (also known as dark kitchens), a new business model that’s also booming and has six different models, each with pros and cons. Let’s have a quick look:
Traditional dark kitchen: When a single brand owns or rents a single dark kitchen location, typically specializing in a single type of cuisine. It relies on third-party delivery channels.
Multi-brand dark kitchen: Multiple brands share a single cloud kitchen under the umbrella of a parent company. While sharing the kitchen and equipment, brands offer different cuisines and dishes. This ecosystem enables them to maximize efficiency while minimizing operational costs.
Takeaway dark kitchen: Similar to the traditional ones, except they allow customers to wait and collect their orders.
Aggregator-owned dark kitchen: When delivery service providers (DoorDash, Uber Eats, and Deliveroo) offer a fully equipped kitchen for restaurants to rent. These ghost kitchens can concentrate on meal preparation while the owner handles everything else.
Aggregator-owned dark kitchen plus: This model provides an extended service similar to the prior. Aggregators provide more infrastructure and optimize the kitchen process. This may also include a storefront identical to that in the takeaway model.
Outsourced dark kitchen: This model outsource anything they can, so people working there only have to add the finishing touches to the meals. It is more customer-facing as it allows the team to focus on delivering a perfect order.
This diversity in such a new business model is at least fascinating and opens new opportunities, but it also raises a big question…
Is there a future for Ghost Kitchens/Dark Kitchens?
By 2026, Restaurant-to-home delivery will be a $500B market with an annual growth rate of 8.29%. So is there a future for Ghost Kitchens? Short answer: Absolutely! Here are some observations about providing food online:
Millennials are the driving force
Millennials spend most of their income on online food ordering because they like to taste different cuisines that offer quick and innovative solutions to save time. They also have high purchasing power and prefer third-party delivery sites (with over half (54 percent) ordering this way). As a digital-first generation, Millennials are critical of their experiences and enjoy sharing reviews and feedback online.
Your brand’s strong digital presence is essential, and providing excellent services is crucial. And that implies an evolving relationship with customers and their new habits, leading to more considerable revenue in an industry expected to be worth $1 trillion by 2030.
But to do so, you’ll need to be in the right place at the right time, which means adding channels and virtual brands.
How to go further
“Properly” is the keyword for all of this. Because even when the Ghost Kitchen market is booming and has a promising future, not all its players will take advantage of it.
So, how can you move further and capitalize on the wave? Expand your channels and look for efficiencies! Through optimation and more visibility, your sales will grow.
Let’s take a look at the case of a Japanese restaurant to illustrate this point:
This place has a menu with sushi, poke bowls, dim-sums, yakitoris, and ramen noodles.
They are doing around 35k USD in sales/per month and have just started with delivery. Within the first month,by adding 1 extra delivery channel, they generated 7k USD extra.
That means that sales potential increases 2x
And by adding 3 more channels, they increased their monthly online sales to 32k / month - an instant increase of 330%
With in-store sales of 35k, they are now doing a total of 72k USD in sales.
And what if you add virtual brands? Sales potential increases even more!
By adding new channels and working with virtual brands, the same space is optimized to operate efficiently. That means more reach, more market share, and more revenue.
And that is just one of many cases. On the other hand, recent research shows that restaurants lose 20% of their profit average by not having an online presence. So which one would you choose? The answer is obvious!
To help you with space optimization and profit potential, Deliverect has introduced a tool to find the right Virtual Brand for your business.
Deliverect Marketplace
Deliverect Marketplace is a first-of-its-kind online ecosystem of food industry partners. It connects you and your ghost kitchen with stock management, kiosk, POS, pay & order, and now virtual brands to help you streamline costs and efficiencies, boost sales, and much more.
How does it work?
Browse the virtual brand’s section of Deliverect Marketplace to communicate with
License the virtual brand of your choosing
Start working with the best virtual brand to make your business thrive.
Deliverect Marketplace provides a wide variety of the best brands and tools. It gives you the resources to expand your business, work with new virtual brands, and earn more profit—an intelligent way to stay ahead in the industry.
“We started by helping restaurants connect their delivery channels to their POS systems and are expanding to do so much more for the industry. For example, we listened to our Deliverect users, who said they want more resources and more creative ways to deliver their meals to customers. With Deliverect Marketplace – and the platform’s new virtual brand partners – we’re putting these restaurants in touch with the best businesses to help them do just that.”
Zhong Xu, Deliverect Co-founder and CEO
Now you have a clearer vision of why marketing your ghost kitchen properly is the other vital part of this process. And why it would be the main topic for our next blog entry. We’ll show you best practices, insightful examples, and how Deliverect Restaurants can help your ghost kitchen thrive.
Stay tuned for more relevant content.
Follow us on social media and LinkedIn, and request a free guided demo with one of our experts to learn more about how Deliverect Restaurants can boost your bottom line!
