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How to Start a Ghost Kitchen?
In recent years, ghost kitchens have become an emerging trend in the restaurant industry due to their highly flexible business model and low start-up costs. Chefmax gives a complete step-by-step guide on how to start a ghost kitchen, including the need to synthesize several aspects such as market analysis, menu design, equipment selection, and marketing promotions, to help you stand out in an industry full of competition and opportunity.
Table of Contents
What does ghost kitchen mean?
Ghost kitchen, also known as cloud kitchen, shadow kitchen, or dark kitchen. It refers to kitchens that do not have a physical dining space and focus on takeout and delivery services. It mainly accepts orders through third-party takeout platforms or its online platform and then delivers the food to customers. Due to the rise of the delivery service industry and the impact of COVID-19, ghost kitchen is gaining momentum.
It is differentiated from the concept of a virtual restaurant. The virtual restaurant relies on the extension of the brick-and-mortar restaurant, which is an attempt to bring the brick-and-mortar restaurant closer to digitalization and online operations. The menu of the virtual restaurant is sometimes different from what it offers in the physical restaurant, as a trial run for some decisions.
What are the pros and cons of ghost kitchens?
According to the market analysis report 2023, the Global Ghost Kitchen Market size is estimated to be USD 70.37 billion in 2023 and is expected to reach USD 156.6 billion by 2030, at a CAGR of around 12%. The top three market share holders are North America, Asia Pacific, and Europe in that order, making it a vast and promising market.
Even though ghost kitchens have surged in popularity over the past few years, you need to understand the positives and negatives before thinking about how to start a ghost kitchens. The pros will help you see the future while understanding the possible cons will allow you to anticipate the problems you will face next and think about ways to deal with them.
Benefits of Ghost Kitchen
● Cost-effectiveness. Ghost kitchens do not require a dining area, resulting in lower initial investment and operating costs.
● Flexibility and versatility. The ability to operate multiple brands or cuisines in a single kitchen provides great flexibility.
● Data-driven decision-making. Using data analytics, Ghost Kitchen can better understand customer preferences and make accurate market positioning and decisions.
● Saving space. Since there is no need to provide dining space, kitchens can choose smaller venues and save on rental costs.
● Adapt to market demands. Ghost Kitchen can quickly adapt its menu, brand, or partners to market changes and trends.
Limitations of Ghost Kitchens
● Lack of face-to-face experience. By not offering a dining space, these kitchens cannot offer the face-to-face customer experience of a traditional restaurant and may lack brand affinity.
● Reliance on third-party platforms. Most ghost kitchens rely on third-party takeout platforms, which can lead to high processing fees and dependency.
● Intense competition. Due to the low market entry barrier of ghost kitchens, competition may be intense, requiring smart market positioning and marketing strategies.
How to start a ghost kitchen?
Starting a ghost kitchen intersects with ways to start a regular restaurant business and is generally similar. However, ghost kitchens have their characteristics and aspects to be aware of. Chefmax summarizes 8 steps on how to start a ghost kitchen. From the initial site selection to the final rollout, a complete analysis of the challenges faced at each aspect.
1. Determine the type of business
What food is the most popular? Fried food, Chinese fast food, simple meals—You may already have a choice in mind. It may be what you know best, or it may be what you think is the most promising after doing some research. Ghost Kitchen's business type has several limitations compared to a brick-and-mortar restaurant.
Suitable for take-out dishes
Dishes take at least 30-60 minutes to reach the customer after being prepared, so extra attention needs to be paid to the temperature and texture after a long period of transportation. Foods such as sushi, fried rice, tacos, and sandwiches are prime choices for ghost kitchens. Fried foods can get soft, steaks can cool easily, and ice cream can melt.
For example, the famous ghost kitchen "WOW BOO" offers fast-casual Asian street food such as bao, pan-seared potstickers, steamed dumplings, rice & noodle bowls. These foods are so well adapted to takeaway that you don't need to take many packaging measures.
Run multiple businesses at the same time
To accommodate fast-paced takeaways, a ghost kitchen's menu should ideally consist of foods that are easy to prepare and make. For example, simple food such as chow mein, fried rice, and salads can be cooked in a few minutes. Fast meal preparation will optimize the entire delivery process, which is part of customer service and helps increase customer satisfaction.
Fast cooking
Restaurant chains usually have centralized supply chain management to ensure that different outlets receive the same ingredients and raw materials, which helps ensure that the taste of the dishes remains consistent while maintaining food prices at the same level.
2. Choosing the right address
Unlike traditional restaurants, ghost kitchens do not need to solicit customers to come in and spend money. So when considering how to start a ghost kitchen, you'll find that it doesn't need to be set up in a high-traffic area, which can go a long way in reducing expenses.
Accessibility and delivery range
Since it relies on delivery service, Ghost Kitchen is more concerned about how well-developed the delivery service is and the coverage of the delivery area. Even in areas far away from pedestrian streets and office buildings, as long as the delivery range can be covered, it will not be greater for ghost kitchens. Choosing a location with convenient transportation is conducive to the efficient operation of takeaway delivery services.
In addition, a certain degree of market research is quite important, how well restaurants operate in this area and what types of food are highly competitive. It is important to avoid areas that are too competitive or choose another type of business that lacks competition.
The starting costs of a kitchen
Building your kitchen is an option that allows for full control. Although the initial investment is higher, it allows for greater flexibility and brand autonomy. However, it also requires more time and effort to get up and running. Renting spare time slots in a centralized or other commercial kitchen is a lower-cost, more rapid start-up option. It has the disadvantage of being more difficult and usually requires more negotiated costs.
3.Ghost kitchen equipment
Owners of ghost kitchens usually want a kitchen that offers more functionality and flexibility. These kitchens have less space and require more specialized layout design and equipment selection.
Multi-functional equipment
Ghost Kitchen equipment needs to provide more cooking options while saving space and supporting flexible changes in decision-making. For example, the most classic combi oven combines three types of cooking(steaming, roasting, and steaming-roasting）, which plays an important role in the diversity of the ghost kitchen menu. When you only have a few steamed snacks on your menu, having a combi oven eliminates the need to acquire a special steamer.
Intelligent data monitoring
In addition to this, automation and smart equipment are essential to make your ghost kitchen model easy to replicate. Modern equipment in ghost kitchens is usually equipped with technologies like menu recording, digital controls, intelligent sensing, etc. that can increase productivity, reduce manual errors, and provide better data monitoring. These help in the supervision and replication of multiple kitchens.
4. Regulations and licenses
When thinking about how to start a ghost kitchen, be sure to follow local regulations for kitchen construction and operation. This usually includes the following minimum permits and requirements:
● Food Safety License
Usually issued by the local food regulatory agency, this license ensures that food preparation and storage processes meet health and safety standards. This license is a basic prerequisite for operating a ghost kitchen.
● Business License
Required from your local business authority or municipality to legally conduct business.
● Sanitary permit
A special sanitary permit ensures that the internal sanitary conditions of the Phantom Kitchen comply with the relevant standards.
● Site Permit
If the rented space is not dedicated to a commercial kitchen, a site permit may be required to ensure that the use of the site for a catering business is compliant.
● Ventilation and fire protection systems
Safety is a top priority for kitchens and there are strict regulations regarding fire safety, so please refer to local requirements and recommendations for building fire protection systems.
5. Hire Staff
Due to the nature of ghost kitchens, your kitchen will generally require very few employees and cooks. Make sure your staff has the necessary training to ensure smooth operations and consistent products. Training and managing employees can take online courses to save money. When it comes to the compensation system, restaurant owners want to keep employee salary costs at 20-30% of total earnings. Establishing a reward system helps to motivate employees.
In response to the problem of labor difficulties, the application of automation equipment can greatly reduce the expenses of hiring employees. Automated systems such as order processing software not only improve efficiency but also reduce the pressure of labor costs.
6. Supply chain management
Establishing a stable supply chain is one of the keys to how to start a ghost kitchen. Establishing relationships with reliable suppliers and bulk purchasing can reduce the cost of raw materials and ensure the standardization of the quality of raw materials. However, finding suitable and stable suppliers is more difficult and requires more communication and negotiation costs.
For lesser demand, one may consider purchasing raw materials from food markets or grocery stores. However, this approach may face the risk of fluctuating raw material quality and requires careful screening and management of suppliers to ensure product quality.
7. Technology and online platforms
In the discussion of how to start a ghost kitchen, different platform options have their advantages and disadvantages. These options mainly include enrolling in a third-party delivery site and building your website.
Third-party websites
The advantages of being on a third-party delivery website are that it's relatively low cost, there's no need to develop and maintain the platform independently, and you can leverage the traffic from the third-party platform to quickly attract a large number of potential customers. However, the disadvantage of this approach is that the platform will charge a certain commission, as well as the restaurant will lose some control over the brand image.
Build your website or app
Building your website or app is a more independent and branded option. By developing their platforms, restaurants can take full control of their customer data, order management, and brand image, and implement more flexible promotional strategies. However, the challenge with this approach is the large initial investment. Meanwhile, traffic and user acquisition can be tougher compared to third-party platforms, requiring additional marketing and branding efforts.
8. Promote your concept
Promotion is the final step in getting started with Ghost Kitchen. The most common method is to use Google AdWords to refer your Ghost Kitchen to potential customers through targeted advertising and search engine optimization. This requires a significant ad spend.
Starting a promotion on social media platforms is also an effective means. Post real-life store visits on Instagram, Facebook, and other platforms to pique users' curiosity. By partnering with food bloggers or influencers on social media, you can expand your reach more quickly and entice more customers to try your cuisine. Regularly updating social media content and interacting with users to increase user stickiness is also an important part of long-term promotion.
Summary
In how to start a ghost kitchen journey, Chefmax has shared and explored the complete steps to get started, each of which has a direct impact on your business operations. Hopefully, these tips and guidelines will provide you with strong support to make your ghost kitchen stand out in the competitive market and become a favorite food choice for diners.