The last decade has seen remarkable growth for food delivery services. With gross revenue valuations upwards of $80 billion in 2018, delivery apps like Grubhub and UberEats are poised to change the restaurant industry as we know it. Their concept is simple: By offering delivery options to their customers, brick and mortar restaurants can reach more customers and increase sales.
But what if a food delivery service could forego the brick and mortar restaurant altogether? Across the United States, that’s already happening at establishments called ghost kitchens. Ghost kitchens are rented kitchen spaces that solely offer delivery options for customers – there’s no dine in or takeout. In a world where delivery options are increasingly valued by customers, the idea makes a lot of sense. So how has it worked out?
In February of this year, Roaming Chef interviewed celebrity chef Eric Greenspan to discuss the success of his ventures in his ghost kitchen experiment. In the interview, Greenspan highlighted the approach that worked for him: “cross-utilizing” supplies. This means using the same basic ingredients in as many ways as possible to maximize the possibilities for using what is often very limited, rented kitchen space.
Greenspan’s own food brands are a perfect example of this in practice. He owns four brands that operate out of ghost kitchens, each focused on minimizing the number of supplies required for operation by maximizing cross-utilization of ingredients. He owns an Asian-Latin fusion brand called Chino, a bold attempt to offer two different styles of cuisine from one common set of ingredients. He also has a brand called Bubu’s that offers burgers and fried chicken, a New York Deli concept called 2 On a Roll, and an all-day breakfast brand called Brekkie Breakfast Burritos. All these brands are designed with scarcity of space and ingredients in mind. Many of the items on the menu, while different from one another, can be created by utilizing one limited set of ingredients that can be used in nearly any rented kitchen space and easily moved to another on short notice.
The goal of Greenspan’s approach, according to him, is for each brand to top their market and sell competitively against brick and mortar restaurants that offer similar menu items. His strategy sets itself apart from other ghost kitchens that have focused nearly exclusively on dominating a single food category, like a pizza brand. A ghost kitchen that only sells pizza uses the same concept as Greenspan’s brands – their food only requires a few ingredients. That’s why the approach has worked. However, it can be difficult for single-food-item ghost kitchens to compete with the pre-existing brands associated with that food item.
Putting together a complex menu and branding it effectively is what allows Greenspan to compete against brick and mortar restaurants and receive traffic on delivery apps. When customers are scrolling through their options on Grubhub, they have no sense of whether they are ordering from a brick and mortar restaurant or a ghost kitchen. Many do not even know that ghost kitchens exist. What customers do consider is the appeal of certain restaurants – how appetizing its menu items seem, whether there is something that grabs them – and the price.
Ghost kitchens like Greenspan’s manage to create the feel of an existing, well-known brand and combine that with a low-budget food operation that only needs the very limited overhead of a rented kitchen space and a few ingredients. This approach has worked in Los Angeles and is a good model for other ghost kitchens to follow.
With the right approach to branding and creative approaches like cross-utilizing ingredients, the prospects for ghost kitchens seem very good right now. The restaurant industry is an extremely competitive business, and before ghost kitchens, competing required significant investment in a concept due to the overhead required to launch it off the ground and become operational. Ghost kitchens are a great way to cut through that, and they offer a simple and inexpensive product to customers in the ever-expanding food-delivery market.