It’s increasingly apparent that ghost kitchens—which saw explosive growth during the pandemic—are here to stay. In fact, it’s shocking just how profitable a well-equipped, managed, and marketed ghost kitchen can be for an operator. How profitable? In 2019, ghost kitchens nationwide raked in more than $43 billion, and that’s expected to surpass $71 billion by 2027. And, by 2030, it’s estimated the global market for ghost kitchens could surpass $1 trillion.
These eye-popping figures may explain why I’m frequently asked “How can I increase the profitability of my ghost kitchen?” It’s a great question. And, the answer is similar to why an item on a restaurant’s menu is so popular with patrons. It’s the recipe. That recipe in business is its strategy. But, before we delve into the details of that strategy and how to boost your ghost kitchen’s profits, let’s first define the ever-evolving term “ghost kitchen.”
The traditional definition is any commercial kitchen without a store front or indoor seating run by an owner who fulfills on-line customer orders through third-party delivery services. Today, however that definition has expanded dramatically to include several hybrid ghost kitchen models, including the multi-brand and operator-managed business models currently being adopted by many international and national restaurants. Their heightened interest and buy-in support the profitability potential associated with ghost kitchens. Case in point: Wendy’s, which announced earlier this year that it plans to open 700 ghost kitchens across North America and the United Kingdom by 2025.
But, no matter if you’re an established restaurant chain, a small mom and pop startup, or something in between, the right recipe (strategies) will help ensure the success and profitability of your ghost kitchen. Here are five tips to get you started:
1. Right size your kitchen
Just like Wendy’s saw an opportunity to reach into urban areas that it called “dramatically underpenetrated,” you need to do know your target customers, ascertain where opportunities lie, and ensure your ghost kitchen has the necessary space and right equipment to meet projected demand. Click here to see our top equipment picks for ghost kitchens.
If you’re offering a niche menu for example, featuring a handful of select offerings, the average ghost kitchen size of between 200 to 300 square feet might suit your needs. On the other hand, if you’re a multi-brand ghost kitchen operator, offering menu items from multiple brands, you will require a much larger footprint.
2. Menu, please…
How simple or robust your menu is will dictate your equipment needs. My advice, especially to startups, is not “go big or go home.” It’s start off small and slow, create the perfect menu, and do what you’re good at. It’s also beneficial to do some market research and competitive analysis to gauge consumer interest and growth potential. If you’re a startup, spending tens of thousands of dollars on market research is most likely out of the question, but some multi-brand kitchens, also known as commissary kitchens, offer digital dashboards to companies who lease space in their facilities. These dashboards provide data on customers’ online orders, so restaurants can better plan their supply chain and labor needs based on demand. And, they’ll also get valuable insights into which menu items are a hit with customers, and which are not.
At Henny Penny, we offer complimentary customized needs analyses to our customers, as well as our prospective customers. Any one of our 90+ distributors worldwide would welcome hearing from you and learning more about your food service dreams. Just click here to locate the distributor in your area.
3. Cooking Equipment – quality in, quality out
No matter what you’re cooking up in your kitchen, for the long-term success of your business, you’re going to need the right commercial equipment. Because equipping your ghost kitchen will be your greatest investment, you should plan for the future and leave room to grow. That can be challenging, especially when you’ve only got a few hundred square feet to work with, but it’s not impossible. Space-saving, multi-purpose products will provide you with the freedom and flexibility to test new ideas, new menu items, and even run multiple concepts out of your small kitchen.
Two of the most versatile must-haves for ghost kitchens include:
Space$aver Team Combi Oven – This innovative combi oven delivers a one, two, three punch by offering three cooking solutions in one unit. It functions as a grill, convection oven and steamer. What’s more, the Space$aver is less than 22 inches wide and features an integrated hood that reserves dedicated ventilation space for frying and other cooking equipment. It comes with two Chef’sTouch™ Control System screens that feature several apps you can select from for cooking, serving convenience, cleaning, troubleshooting and even the ability to upload your own recipes or access any of the 350 preprogramed recipes. Click here to learn more.
PFE 500/PFG 600 Pressure Fryers – when it comes to frying, deciding on pressure vs. open frying can be a challenge. But who says you have to choose? Why not get both in one fryer? That’s what our electric and gas pressure fryers deliver. This 4-head fryer has more than enough power for any ghost kitchen.
What’s more, it comes with some unique features:
- Although it’s a pressure fryer, it’s engineered for versatility. That means you can open fry using the same unit. All you have to do to open fry is leave the lid open and hit a different program. This also gives you great flexibility with limited staff who can par cook chicken in the pressure fryer, hold it in a warming cabinet, and then, just before the food’s to be delivered, flash finish it, ensuring that the chicken is both juicy inside and crispy outside.
- Unlike most pressure fryers, which require enough product to build up that pressure, our 4-head pressure fryer comes with built-in Pressure Assist. So, if you just put one piece of chicken in the fryer, it will still pressure cook it because it has automatic Pressure Assist.
- Another HUGE benefit associated with our fryers, including the 4-head, is they come equipped with an oil filtration system, which filters out impurities and maintains high quality frying oil longer. When compared to other commercial fryers on the market that don’t offer automatic filtration systems, we’ve found that an operator can extend the life of vat of oil by sometimes 4-5 days, which translates into a ton of savings, especially when you consider that cooking oil has doubled and in some cases tripled over the past year.
4. Staffing – Work smarter, not harder
As a whole, the restaurant industry, including ghost kitchens, has been hit hard by staffing shortages due to the pandemic. But, thanks to technology, you truly can do more with less and work smarter, not harder. What do I mean? Well, to begin with, most ghost kitchens are relatively small, which means you’re already working with fewer staff, but what you can accomplish with a small team using the right, versatile equipment can translate into big returns. How? Instead of cooking to order, if you anticipate your throughput, you can prep many orders in advance. For example, you can par cook chicken using one of our pressure fryers, keep it in one of our warming cabinets, and then, flash fry it just before delivery. Click here for more on how new technology offers relief to labor- and time-strapped restaurants.
5. Marketing – the personal touches do matter
With ghost kitchens, which don’t have storefronts (except those hybrid models that may have a drive-thru), there is no walk-in traffic. Because of that, it’s important to connect with customers via strong digital advertising tactics, including social media. For a ghost kitchen startup, social media advertising can be a relatively inexpensive way to get the word out about your restaurant and your food.
First things first
Start with making sure that all the food delivery apps you work with have great photos of your restaurant’s food with taste-tempting menu descriptions that create that all important craveability for your food. Be sure to know your target audience and ensure your menu descriptions match up with their tastes, literally.
Then, utilize effective to-go packaging with the necessary venting, padding and sealing to ensure your food arrives hot, fresh and safely.
Make a personal connection
From my perspective, as an executive chef who’s worked for some of the nation’s leading restaurants, the most important factor to increasing your profitability lies in being able to make that all important personal connection with your customer.
And, that’s not easy, considering as a ghost kitchen operator, you may never meet your customers. But, that doesn’t mean you can’t connect with them.
Handwrite a number of thank you notes beforehand, and then, before delivery, customize each note with the customer’s first name and sign it with yours. I guarantee you when that customer gets their order, they’ll be delighted. What’s more, if you include a bounce back coupon or info on an upcoming limited time offer, you’re giving them a reason, apart from how great your food is, to order again.
I think of it as having a conversation. Your challenge is continuing to find ways to keep that conversation going and in doing so, you’ll continue to build brand loyalty.
While these five tips certainly aren’t exhaustive, hopefully, they’ll give you an idea of things you can do to boost your ghost kitchens profits.
If you’d like someone to bounce ideas off of, please contact your local Henny Penny distributor, conveniently located across North America and the globe. Maybe you need assistance with menus, putting processes place, or testing new products. We can help. While we do sell commercial kitchen equipment that’s engineered to last, we’re about much more. We’re here to support and help you realize your business dreams as a restaurant owner. We look forward to meeting you.
Until then, and on a personal note, I’d encourage you to keep testing new ideas and concepts because finding out what you’re great at is part of the journey and the fun!