The ghost kitchen concept is growing hugely because of its lower overhead costs and amid the popularity of delivery apps and tech solutions. According to a report, by 2025, ghost kitchens can account for 21% of the $66 billion United States restaurant industry. How to get started with the thriving and beneficial food business model? Read through this ultimate guide on how to start a ghost kitchen.
What is a ghost kitchen?
The ghost kitchen business model (also called a dark kitchen, cloud kitchen, shadow kitchen, or virtual restaurant) is a restaurant that serves food for off-premises consumption. As a delivery only concept, it uses first-party or third party delivery platforms for sales and is either a stand-alone business for market testing with no need for an existing customer base or the extension of an existing restaurant. For instance, It’s Just Wings virtual restaurant is owned by Chili’s parent company.
Another form of ghost kitchen business is what we call "food hall ghost kitchens", where restaurant operators share commercial kitchen space with a connected dining hall. Leveraging a shared dining area, ghost kitchens in food halls gain additional foot traffic without the overhead costs of a traditional brick and mortar restaurant.
How to open a ghost kitchen
Ghost kitchen definition aside, the guide covers what it takes to start a ghost kitchen successfully.
1. Choose the right concept
The concept of virtual restaurants implies the name and menu items. Unlike brick and mortar locations with in person dining, it is necessary to optimize the ghost kitchen menu and name, enabling its good performance in online searches. The name should be catchy and has three words at most, say, Wing King for the chicken wing food concept. Other factors to consider include delivery friendliness, high volume cooking, and reasonable yet profitable menu prices.
2. Brand your business
Your ghost restaurant needs an attractive logo that comes out well on packages and bags and is effortless to read in search results. Also, to elevate your brand, you can provide your diners with fun or appealing packaging share-worthy on social media sites (and made of eco-friendly materials that keep cold foods cold and hot foods hot). One trend we have noticed lately is using a custom designed stamp on paper-based packaging as an easy, environmentally friendly packaging option for delivery apps.
3. Develop a business plan
Crafting a business plan before you start a ghost kitchen is an essential step to understanding the costs and profit potential. It is similar to brick and mortar restaurants but resolves around delivery only concepts. The elements in your plan are ghost kitchen software, food costs, packaging, food delivery partners, staffing, etc.
4. Adhere to regulations and licenses that affect your ghost kitchens
While a virtual restaurant does not require as many permits as a traditional restaurant, you still need some licenses before you start a ghost kitchen, including a business license, state tax ID, employer identification number, and sales tax license. Regarding food safety, ServSafe food handler certification and food manager's certification are necessary. Please contact your local health department for the exact details. Moreover, should you lease space in a commercial kitchen, ascertain its applicable permits to legally sell food. You will need a business bank account as well.
5. Choose a location wisely
If the ghost kitchen operation is a brand extension, you can leverage a physical space in your existing restaurant’s kitchen to fulfill online orders, saving on costs of finding a new location. Or, rent commercial space in cheaper, licensed commercial kitchens with reasonable delivery distances and suited to your ghost kitchen menu (i.e., your eats are simple to make using existing equipment there).
There are plenty of options when it comes to commercial kitchen space — many cities have
6. Plan your delivery only restaurant layout
Because you are not setting up a brick and mortar restaurant, your virtual restaurant layout will be somewhat different from what you might be familiar with. For instance, instead of the serving stations and dining room, you should focus more on where delivery drivers from food delivery companies receive delivery orders.
7. Get the right technology
It is crucial to optimize the delivery operations of your ghost kitchens. As third party delivery apps charge commission fees for delivery services, you should factor them into menu prices when becoming the delivery partner with these food delivery companies. Further, you can invest in POS software that allows you to sync your ghost kitchen menu items to main third party platforms. Else, an all-in-one online ordering and delivery strategy preferred by restaurant operators is using ghost kitchen software (also called kitchen display system) that brings a wealth of powerful features to the table. These include simplified menu management, QR code menus, multi-location support, online ordering and fulfillment, best delivery platform prioritization, language translation, website integration, continuous updates, and SEO improvement.
8. Find staff strategically
Virtual brands do not need front of house staff, positively affecting your labor costs. Often, the ghost kitchens hire food preparation and cooking professionals, a separate chef, packaging employee, and customer service.
9. Source food suppliers
Restaurants that already have a reliable supplier can use that supplier for their new delivery only concept. For new restaurants, looking for a supplier who provides the best value is advised. If you do not spacious food storage areas, find ones that deliver ingredients to your location a couple of times weekly.
10. Market your virtual restaurant
Some marketing ideas, particularly for your ghost kitchens, include:
- Create a website and use the ghost kitchen software One2 to boost SEO, search, and discoverability.
- Establish a strong social media presence. Incentivize local food influencers to share your meals on their feeds or stories.
- Promote the ghost kitchen on the delivery app and trusted sites like Nextdoor and Yelp to help get new customers.
1. What are the pros and cons of running ghost kitchens?
- Minimal overhead costs
- Easier and faster launch
- Meeting higher demand for online ordering
- Wider audience access geography and volume-wise
- Higher pressure on marketing for customer acquisition and retention
- High commission from third party delivery service(s)
2. How much does it cost to start a ghost kitchen (compared to a brick and mortar restaurant)?
While you do not need a fortune to start a ghost kitchen, the costs can reach $30,000.
3. Is virtual franchise a scam?
No. Creating a ghost kitchen is a legitimate primary business and potentially a great secondary revenue stream for your existing kitchen space.
You will be good to go following this guide on how to start a ghost kitchen. With the ghost kitchen market projected to be a $1 trillion industry by 2030, now is the perfect time to make a free One2 Ordering account and create a ghost kitchen business yourself. If you have questions, feel free to contact to our experts for support in building a solid foundation for this trend.