Ghost Kitchens: A Solution for Those Who Don't Cook

Are ghost kitchens the answer to closed venues? How do virtual restaurants work?

What are ghost kitchens?

A new phenomenon in gastronomy that was supposed to be the culinary trend of the decade has suddenly become a rescue model for the entire industry. Restaurants lost the ability to accept customers overnight and are surviving thanks to food sold for takeaway. And that is exactly what ghost kitchens are - places where food is ordered only online, and kitchens that prepare dishes exclusively for home delivery. Experts at merce.com explain why this model is here to stay.

Although due to the coronavirus pandemic the phrase "online shopping" is being searched on Polish Google more than a dozen times more often than a month ago, it does not look like online grocery stores can grow equally fast and meet demand. The main barrier to the development of the e-grocery market is logistics.
Meanwhile, the on-demand online food ordering segment has shown that you can bake a pizza in half an hour and deliver it to the person ordering it

Already last year 1/4 of Polish restaurants' turnover came from takeaway deliveries, and phone orders are slowly being replaced by those placed online. However, traditional food-service businesses have recently begun to be threatened by a new player. These are ghost kitchens, known in the absence of a Polish name as phantom kitchens, virtual restaurants - food outlets selling exclusively for takeaway and only via the internet. Specialization means their meals can be cheaper and their offer better suited to culinary trends - notes Bartosz Górecki of merce.com

Online sales are the recipe (not only) for the virus

Merce.com provides online sales tools for companies operating in various sectors of Polish commerce. Its experience shows that already in recent months the greatest ferment in e-commerce was taking place in companies connected with the FMCG and food-service industries, which wanted to develop their online distribution channels. Now, when due to the coronavirus pandemic and the social campaign #StayAtHome, and later government decisions, restaurants' revenues have fallen drastically, the rapid building of online distribution channels is a matter of life or death for the entire food-service industry.

Online sales as a recipe for crisis

What are ghost kitchens and why are they the culinary trend of the decade?

Experts point out that in gastronomy moving distribution online makes it easier to cope with scaling a business. Traditional companies, even when they increase sales through online orders, at some point reach the limit of their capacity, which is simply determined by the number of burners on the stove in a restaurant kitchen. The only way to increase their own production becomes opening a new venue, which naturally involves considerable costs. However, companies that by principle do not have venues, in such a situation only launch an additional kitchen - not necessarily even in the same building. It is also easier for them to expand their offer. They are not sensitive to rapidly rising rents in large cities and do not need as much skilled staff.

Will platforms take over the industry?

Restaurants without a sign and without a venue

A restaurant that does not have a venue also does not have a sign - it must reach customers exclusively via the internet and have an efficient online food ordering system. This is more complicated than a typical e-store, which is why the strongest players readily bypass this stage by starting operations through cooperation with online food ordering platforms that have appeared in recent years, e.g. Uber Eats, Pizzaportal or Pyszne.pl. They must therefore share with them a commission on every transaction, which in this highly competitive industry can consume most of the profits. That is why, as experts at merce.com predict, in time medium and larger food-service businesses will build their own sales channels and use marketplaces as sources of promotion, similarly to how today e-stores list some of their products on online auctions.

In an advanced ghost kitchen model, a kitchen may prepare dishes for several brands - whether restaurant or catering, its own or external. Thanks to specialization, the market may split into entities dealing with only one aspect - the kitchen cooks, the brand owner advertises online, and the courier company delivers the order. The effect of popularizing and refining the model will ultimately be increased competition on the market and therefore lower prices, which will be another argument, alongside convenience, for customers - assesses Bartosz Górecki of merce.com

Across the ocean, the term ghost kitchens has already permanently entered the dictionary. In the American market, this sector is growing four times faster than traditional restaurants and has already been dominated by food-service marketplace platforms. However, the Polish e-commerce industry has more than once shown that it follows its own paths. Whether our eating habits will be changed by diet catering, a takeaway meal aggregator or a flood of local e-businesses remains an open question, but the revolution has already begun - much faster than anyone expected.

Summary

Ghost kitchens, i.e. kitchens preparing dishes exclusively for delivery, became a lifeline for gastronomy during the pandemic. Experts at merce.com point out that this model allows scaling a business without costly venues, and specialization makes it possible to serve several brands from one kitchen. In the American market, the sector is growing four times faster than traditional restaurants, and in Poland its future depends on the development of online ordering platforms and proprietary sales channels, which may increase competition and lower prices.