The so-called “ghost restaurants” (or Dark Kitchens), are those who only produce delivery orders – they’re on the rise and are here to change the restaurant industry as we know it. At Mero Mole we believe that Ghost Restaurants can be a success when they are supported by the right business model.
1. The benefits of not relying on the Front Of House
Let’s think about the following case. After years of savings, you decide to open your first small restaurant in La Condesa, CDMX. You invest a good amount of money in comfortable furniture, the perfect lighting and a well-trained staff, but as the weeks go by, you realize that most of your orders are being requested for delivery.
Certainly, the money used on perfecting your FOH could have been better spent on marketing and brand presence in order to grow inside consumers’ consciousness.
So a virtual restaurant could be an excellent idea for small entrepreneurs wanting a slice of the restaurant business, because they can use it to get people trying out the dishes and start building a brand with the possibility of eventually opening a traditional store with better knowledge of the market.
These type of restaurants are not entirely unknown to Mexico. It Burgers recently opened its premises in the La Roma, after months of being a Ghost Restaurant with sporadic pop-ups in the city.
A well-known case in the United States is that of Gerizim Cafe & Ice Cream. This little place had hamburgers on their menu, but on average they sold one a day turning it into their less profitable dish. Machiavellically, Uber Eats contacted them one day after reviewing their long list of data collected and noting that there was a high demand for delivery burgers in the area.
Afterwards, the success was such that now they sell more than 70 hamburgers for delivery (according to Bloomberg), leaving them a profit 28 times higher than the total of coffee. They even decided to change the name of this famous online service to The Brooklyn Burger Factory, to differentiate it from the menu of their physical restaurant.
2. Variations in this new business model
Ghost Kitchen, Cloud Kitchen, Ghost Restaurant … these terms are starting to be used right and left in the online food and beverages world, but there are variations in the definitions. A Ghost Restaurant refers to a brand that strictly only cooks orders at home.
These virtual brands have a Ghost Kitchen, but any brand of restaurants with FOH established can open a Ghost Kitchen to fill their orders online and thus not affect the quality or service of their traditional restaurant. A Cloud Kitchen refers to a ghost kitchen that is operated by more than one brand, regardless of where they come from.
These new business models for the food industry could represent a lower initial investment, but not a drop in creativity. In Mero Mole we believe that experience must be king and this should not change just because they’re only offering delivery.
Today, more than ever the competition is rough. According to El Heraldo de México, in 2017 the growth of food delivery in our country was 14.3% per year, while in 2018 it rose to 18.6%.
37% of those interviewed claimed to have purchased online in the Home & Food Delivery sector. 45% do it at least once a week.Capital México
3. A game changer
With so many rivals, flavour is obviously paramount, but making sure the packaging is perfect can make a difference when choosing through apps like Uber Eats or Rappi – while searching for the perfect content to go with it on your favourite streaming service.
Originality is always rewarded with recommendations, which could eventually boost a virtual restaurant and make it real. For example, having an environmental conscience and taking into account the new anti-plastic laws; it’s up to these ghost restaurants to put the gold standard in biodegradable materials without neglecting the integrity of the transported food.
The Ghost Restaurants, as any trend, have come to change the game in the industry and offer an alternative for new demands. Is the end of going out for food here? Don’t think so, this trend is replacing lazy cooking in the comfort of home, not so much the experience of eating out.
This is something similar to what happened with Netflix and cinema, many believed that with the arrival of streaming services, movie theatres would go bankrupt, but fortunately we saw that it wasn’t so.