After restaurants started working together with food delivery platforms like Uber Eats, Deliveroo and Foodora, a new phenomenon in the restaurant industry arose, namely ghost restaurants. Ghost restaurants, also called ghost kitchens or virtual kitchens, are restaurants without a dining room. These restaurants are designed for delivery service only and do not offer the traditional dining experience. Can these delivery-only restaurants become successful? And will these restaurants still make use of the existing food delivery platforms? (Jacob, 2018)
The biggest advantage of ghost restaurants over traditional restaurants is that they can save costs by not having a dining room, which needs furniture and waiters. Furthermore, the online food delivery market is growing, as more and more people like the convenience of ordering food online and let it deliver at home. This growing market creates big potential for the ghost restaurants. To offer their service I do expect ghost restaurants to still make use of the existing food delivery platforms, like Uber Eats. Although, ghost restaurants are designed for delivery-only and could develop their own delivery platform, the existing food platforms have such a big customer base that it will be hard for the restaurants to peer with this. People also like to have an app where multiple restaurants are assembled and they can choose between different types of dishes. The ghost restaurant will have to work together if they want to create the same format, which is difficult in terms of coordination. (Schwab, 2018) (Hirschberg et al., 2016)
I do not expect that traditional restaurants will totally disappear in the streets, because sometimes people want to have the traditional dining experience in a restaurant. When people have something to celebrate or want to have a special night out, they probably do not want to sit on the couch at home with a take-out box, but want to be served by waiters in a nice atmosphere. However, I think that it will become hard for the existing restaurants to all survive this disruption. The ghost restaurants can offer a way better price, whereby price sensitive customers will probably choose a ghost restaurant above a traditional restaurant for most occasions. That’s why I absolutely believe that ghost restaurants are going to be a success. Do you think that ghost restaurant are going to overtake the traditional restaurants?
References:
Hirschberg et al., (2016).The changing market for food delivery. Retrieved 06-10-2018 from https://www.mckinsey.com/industries/high-tech/our-insights/the-changing-market-for-food-delivery
Jacob, A. (2018). No dining room, no storefront, no problem: ‘Ghost kitchens’ making their way to Winnipeg. Retrieved 06-10-2018 from https://www.cbc.ca/news/canada/manitoba/winnipeg-ghost-kitchens-1.4774471
Schwab, P. (2018). Ghost kitchens : the next disruption in the restaurant industry? Retrieved 06-10-2018 from https://www.intotheminds.com/blog/en/ghost-kitchens-the-next-disruption-in-the-restaurant-industry/
Interesting topic! Due to the technological developments a lot is changing in the food retail, and it is interesting to see what can happen when it comes to traditional restaurants. As you already mentioned, I don’t believe that the physical traditional restaurants will totally disappear. Especially nowadays, with all the workload and stress people experience, it is an ongoing ‘trend’ to have lunch or dinner in physical)restaurants.
What I think the most interesting part is; if – and how – the traditional restaurants will have to change their business strategies. As you have said, it is going to be hard for the restaurants to survive this disruption and the already known disruption of the food delivery platforms like Uber Eats and Deliveroo.
It is interesting that a similar case happened with the hospitality sector: hotels are nowadays dependent of Booking.com while similar a lot of the restaurants depend on Uber Eats and Deliveroo. I believe that the traditional restaurants need to step up their business to eventually compete with the ghost restaurants. They already have started this by making use of the delivery platforms, like I have said before. But, as stated in the article you referred to, this can be risky: “if enough restaurants make a significant percentage of their revenues through those platforms, they will become dependent on them.” The restaurants have to take this into account when revising their strategies to survive the disruption. Maybe by extending their business with a ghost restaurant in addition?
Thank you for bringing such a cool idea. To be honest, I know some people are doing this in the Netherlands, but I am also sure that it is not legal at the moment, I mean not Pizza stores.
I agree with your idea that this business concept will increase as the expansion of digital platforms and network effects and. And yes, because of the cuts in fixed cost, those ghost cooks can set a lower price to attract more customer. However, the lower fixed cost is the only strength I can come up with at the moment, in another word, it is still a food delivery service, compared to the regular restaurants, it still has no extra revenue. I think it is just a part of a regular service, not disruptive enough.
I regard this solution as a start-up, or from bottom to top strategy for a young cook who has excellent cooking skills, if she or he gets rich, the cook will still go for a real store for more money. Or, expand the kitchen service through the help of a robust platform.
Dear Laura,
Thank you for your interesting article. I agree with you that ghost restaurants will not make normal restaurants completely dissapear, but I think they will change the home delivery market. Especially ghost restaurants with a business model like the Green Summit in New york. This ghost restaurant offers different types of food, for example burgers, pizza, sandwich, pokebowl, so you can order al your food a one place. This is a big advantage if you are with multiple people that like to eat different dishes. It also has as an advantage that they can easily change the menu, as they have most ingredients already in their storage. So when a dish is not popular and another dish is they can easily switch. I think this kind of ghost restaurants can overtake the whole home delivery industry, as you do not need other restaurants as they offer all dishes. However, a condition for this succes would be constant good quality.
Hi Laura,
I really like your post about ghost restaurants! I was not aware that this actually exists and that this also becoming much more of a trend. My family used to own a traditional restaurant for almost three decades but since it is a physical demanding and competitive industry we decided long ago not to continue it. But ghost restaurant could be a potential business model for people who really want to focus on delivering a food experience with the dishes they create. By saving big time on operational and staffing cost this could be a quicker option to enter the food/restaurant business with minimum capital. Like a food start-up, resources are dedicated on the menu development and can work on “dishes on demand” which allows for a much better planning then in a traditional restaurant.
Personally speaking I see a lot of potential in their but it also depends on the food delivery market if it is big enough. Certain countries are further ahead than others in adopting a food delivery mentality. However, this is definitely a trend to look out for and something that I am interested in for myself.
Thank you for your contribution!
Best regards,
Stefan