The Ghost Kitchen business is a lucrative option within the food and beverages industry. But you must learn how to open a ghost kitchen business to make it profitable.
Quick Summary: Do you want to open a ghost kitchen business? Do you want to become part of this emerging trillion-dollar cloud kitchen industry? You have plenty of things to explore, though learning how to open a ghost kitchen is the first step forward. In this guide, we shall talk about starting a ghost kitchen business and more. Let’s explore;
Did you know Ghost Kitchen is projected to hold a 50 percent share of the drive-thru and takeaway food service markets worldwide?
From the world’s top celebrity chefs and investors to chains, everyone is rushing to open ghost kitchens. The ghost kitchen, cloud kitchen or virtual kitchen trend blossomed during the pandemic and is now the new normal, becoming a mainstream business option today. According to Statista, the Ghost Kitchen market worldwide will reach 112.53 billion U.S. dollars by 2027 from an estimated 56.71 billion U.S. dollars in 2021.
With a ghost kitchen business, you create your brand and actualize your business vision. In this article, we have covered how to open a ghost kitchen business primarily, along with all relevant points that you should know. The points we shall discuss in this article, include;
Ghost kitchen aka cloud kitchen or virtual restaurant is a restaurant that provides delivery-only services , has no physical space for customers, and does not provide dine-in or pick-up/takeout services. Some of the ghost kitchens also support takeaway orders.
The order-taking process is entirely online, and for deliveries, the ghost kitchen depends on a third-party platform or brand for sales.
The ghost kitchen has more than one chef to fulfill more orders on time. For example, a popular restaurant can set up its ghost or virtual kitchen under a different or same name for faster deliveries. They need a place, kitchen equipment, chefs, and other staff. Since the ghost kitchens do not support dine-ins, they do not need expensive furniture or decor to attract people.
Why Opening a Ghost Kitchen is a Good Idea?
Starting a ghost kitchen is a good idea because you make a lot without investing your fortune. You can make up to $10,000/ per month with as little investment as $20,000.
Isn’t it a good idea?
With consumers shifting their dining behavior towards online delivery, the concept of ghost kitchens is gaining immense significance. So, there’s no reason why you should ignore the fast-growing appetite for this profitable yet low-cost restaurant business model.
Let’s take a look at some of the more valid reasons why starting a cloud kitchen is a good idea;
Low startup costs: Let’s face it – setting up a restaurant involves a huge investment. And when you already own one, incurring additional costs to open another restaurant might cripple your finances.
Splitting your kitchen operations & resources and embracing the “ghost kitchen” model can help expand your business but with lower investments.
Reduced overhead costs: The ghost kitchen or cloud kitchen concept does not involve dine-in customers. In many cases, it does not require having a restaurant storefront at all – just a kitchen will do. As such, your overhead costs are relatively lower.
Better targeting: The key USP of ghost kitchen is it helps you target an untapped market and expand your restaurant business. It gives you access to a wide audience base. All you require is a streamlined ordering & delivery system that allows you to grow your business in a short span.
Keep pace with changing consumer behavior: Consumer preferences towards food and dining at restaurants are changing rapidly. A large number of people today prefer ordering food online due to the high levels of expediency it offers. By adopting the ghost kitchen model, your restaurant business can keep up with the changing delivery demands.
Ghost Kitchen Business Models
Ghost Kitchen, as we have explained earlier, does not have any physical space nor does it offer dining or take-out services, it completely relies on digital space, an online food delivery system, and mobile applications. The ghost kitchen business model is cost-effective as you can start the business just by creating a restaurant website or just by partnering with aggregator sites. More than that, under one banner, you can create a brand —that is the beauty of cloud kitchen.
How to Start A Ghost Kitchen?
Launching a ghost kitchen takes a lot of planning. The Plan includes asking questions like:
Does your location have a high-density customer base?
What are your competitors doing, and can you do it better?
Planning
The success of ghost kitchens relies entirely on their food quality and adequate deliveries. Before starting a ghost kitchen, the first thing to decide is to plan the menu.
What food items will form the menu of your ghost kitchen? You can choose the menu items keeping in mind the hygiene and feasibility of those food items for delivery.
Many food items aren’t suitable for delivery and packaging. So, it’s better to avoid them from the menu—fried foods, nachos, steak, eggs, salad, and pasta.
Secondly, you should focus on what the customers like to order the most. For this, you can study your competitors and what they deliver the most and can create a better dish than that.
Planning and competitive analysis are the keys to starting or running any business. If you are planning to start a food delivery business, you must jot down a detailed plan after a deep study of the market and your competitors. This will help you start stronger and stay longer.
Name your ghost kitchen: Pick a catchy name for your ghost kitchen that people get attracted to and can easily remember too.
Write Your Plan
The next step to starting your ghost kitchen is to decide on and write your business plan. A pre-decided and written business plan helps manage your food business operations efficiently.
Whether you want to start a ghost kitchen as an extension under your existing restaurant brand or a sole ghost kitchen business, you need one thing in common- the Plan. The business plan includes staffing, finances, budget, equipment, and other operations.
Choose a Location
One of the most critical steps to starting your ghost kitchen is finding a location. However, a cloud kitchen does not serve dine-ins, so you need not worry about picking a prime location. People can also create a ghost kitchen from home.
They need enough space to set up their cloud kitchen equipment where two or more chefs can operate efficiently. However, if a restaurant starts a Setup Cloud Kitchen to make faster deliveries, they must consider choosing a location closer to the areas from where they get the most orders.
Permits and licenses
Opening a ghost kitchen also requires many permits and licenses from local authorities. You will need the support and permit for the location you operate. If you add the ghost kitchen to your existing restaurant, your current license will do. You will not need a separate license for the ghost kitchen.
In addition, you will also need the following restaurant permits and licenses to operate legally:
Food service license.
Business License
Employee health permit.
Seller’s permit.
Kitchen Equipment
The next step to starting your ghost kitchen is to purchase and set up kitchen equipment. You will need the following Kitchen Equipment:
Gas stoves, ovens, fridges and freezers, dishwashers, etc.
Pans, pots, cutting boards, gas & electric grill, knives, pasta cookers, filters, spoons, etc.
Marketing and promotion must inform people about your newly established ghost kitchen. You can use these marketing ideas:
You can create a website to let people discover your cloud kitchen, check the detailed menu, and place orders. Ensure your website is optimized for SEO to be easily discoverable on Google.
Use social media to promote by posting high-quality pictures of the food dishes you serve. You can post regularly and let people order directly from the social handles. Besides, you can discount promotions, loyalty programs, referral programs, etc., to boost sales.
Food Photos
The best way to promote your ghost kitchen is to post images of the delicious food and meals. Since this is the only promotion, you cannot post about the incredible interiors as you do not support dine-ins.
Instagram and Facebook are the top-notch platforms to promote your restaurants and ghost kitchen. Food lovers look for new places to visit or order food on Instagram and Facebook. They also trust the reviews and feedback on these platforms written by genuine customers. And this is one of the major benefits of online food ordering system that helps owners easily reach out to more customers.
You can post your high-definition food images on these handles, link your website, or allow direct ordering.
You can hire a professional photographer and get the shoot done. It will cost a few dollars initially but will bring hundreds and thousands of dollars back.
However if you don’t want to spend your money on a professional photographer, the next option is to click the pictures on your own. Then, you can edit or enhance those pictures using photo editing software or tools like Snapseed, Canva, etc.
Tip: Though your images should be of high quality, do not post any food images you don’t or can’t serve. If people do not get what they see, it will create a negative impression of your ghost kitchen.
Gather Staff
Once you have the location or the place to operate, the next step is gathering the staff for your ghost kitchen. You will need the following team:
Chef: A ghost kitchen generally serves many orders or orders of two or more restaurants; you must require more than one chef. You can hire three or four chefs to create various cuisines and maintain each cuisine’s unique taste.
Kitchen Staff: You will also be required to hire the kitchen staff to help the chef prepare the food.
Delivery Staff: If you own your delivery services, you must hire delivery drivers.
Source Suppliers
Since ghost kitchens have to deliver multiple food orders in less time, you must always be ready with extra stock of kitchen supplies. Connect with wholesale suppliers to keep your kitchen stocked with food ingredients sent by the wholesalers regularly. If you operate in a limited space for your ghost kitchen, discover suppliers that deliver twice or thrice a week.
Packaging
Packaging is vital as you want to deliver food fresh, hot, and quick. You require specialized packaging for different food dishes. You will need to take care to pack your french fries in a way that they stay crisp for longer. You will not want a spilled or excellent soup to reach your customers.
Launch your Ghost Kitchen
You are ready to start your ghost kitchen and earn massive profits. You have discovered a location, done with permits and licenses, gathered skilled staff, and prepared for promotions. So, it’s time to serve your customer’s lip-smacking food and get repetitive orders.
If you are a startup entrepreneur, it is important to be well aware of the complete process of the online food ordering and delivery system. You should be well aware of how the online food ordering system works for ghost kitchens.
How Does Ghost Kitchen Typically Work?
A cloud kitchen, otherwise known as a dark kitchen, ghost kitchen, or virtual restaurant provides delivery-only services. It does not offer dine-in or takeaways. Ghost kitchen owners need to create a food delivery app. It’s the only restaurant that earns you maximum profits on minimum investment. It does not need physical dining space and does not need to have a storefront, a simple mobile delivery app can help run ghost kitchens. Here’s how a ghost kitchen works.
Rent a space and create a menu that you want to provide.
Implement an online food ordering system.
Ensure you have your person to deliver food you have partnered with third-party food delivery services.
Market your ghost kitchen kitchen among your target audience and region.
Now, receive orders through the food delivery app and website.
Prepare the order and deliver. That’s it.
To better understand the ghost kitchen business, you can explore DoorDash, Uber Eats, or Deliveroo. They are the best example of the Ghost Kitchen business model and make huge profits.
How to Set Up a Ghost Kitchen?
Think ghost kitchens are a profitable way to grow your restaurant model and increase your revenues?
Here are a few tips on how to start a ghost kitchen.
Set up an inventory of the kitchen equipment and resources you have to better evaluate where you can start with your ghost kitchen business
Create a brand and identify USPs of your food menu which you can better market through this business model
Define the target audience
Find a delivery partner
Set up your own tech capabilities to manage online ordering or get the entire thing outsourced to a third-party
Starting a Ghost Kitchen – How much does it cost to open a Ghost Kitchen?
While exploring a relatively new concept like a ghost kitchen, you might be wondering how much it costs to start a ghost kitchen.
The cost will vary depending on your target market and overhead costs, such as kitchen equipment & premise cost, inventory cost, staffing, insurance, utility, and marketing costs.
Factors that affect to cost of starting a ghost kitchen
Location Cost: Owners can either purchase the premises or take on rent. The deposit, rent, and documentation expenses will decide the overall costs.
Kitchen Equipment Cost: The cost of kitchen and cooking equipment, freezers, etc.
Staffing Cost: The cost of hiring the kitchen staff and chefs. Their monthly salaries and incentives.
Insurance Cost: Though a ghost kitchen involves fewer risks than restaurants, you still need insurance coverage. You can take insurance for the location, kitchen equipment, and employer insurance.
Marketing Cost: Marketing and promotions on social media or other platforms will also require investment.
License & Permit Cost: The expenses on licenses and permissions will also affect the cost of starting a ghost kitchen.
Approximately the amount you will need to start a ghost kitchen will be between $5000-$10,000.
So, is a ghost kitchen suitable for your restaurant business?
Yes! Ghost kitchens are the future of the hotel & restaurant industry. As more people are expected to shift to online food ordering, you should keep pace with the changing consumer trends.
Most importantly, the ongoing pandemic has made the restaurant industry more uncertain than ever. So, refrain from putting all your eggs in one basket.
FAQ
How to start a ghost kitchen from home?
If you want to start a ghost kitchen from home, you need to choose your ghost kitchen business model carefully. Start with creating a good ghost kitchen business plan, create and implement an online food delivery system, market your virtual kitchen, and start delivering the food. You can explore this article for a detailed understanding of opening a cloud kitchen.
How much does it cost to start a ghost kitchen?
It depends on where you want to start a ghost kitchen and what business model for your virtual restaurant you choose. For example, if you are starting a cloud kitchen in the USA, it will cost you around $20,000 to $60,000 depending on the location, space, and services. If you get a good location, it can even cost you up to $200,000.
However, if you want to start a ghost kitchen in India, it will cost you around INR 100,000 to 500,000. Again, the location, space, and services will impact the starting costs for Cloud Kitchen.
How much can I earn from starting a Ghost Kitchen?
Initially, you can earn up to 15% to 20% of total revenue. However, the profits in Ghost Kitchen depend on location and business model. However, it’s way higher than traditional restaurants that is 3% to 5% initially.
Are ghost kitchens profitable?
Yes, a ghost kitchen business is lucrative and profitable. However, the profits of the cloud kitchen will depend on various factors, like region, location, space, business models, and services. If you have selected a good location and opted for a relevant ghost kitchen business model, you will make good profits.
What is the average size of a ghost kitchen?
It’s typically 200–300 square feet. The size of a ghost kitchen is always smaller than a traditional restaurant. It does not need any storefront or space for customers, counters, or receptions. You can start a dark kitchen even from the basements.
What are Ghost Kitchen’s requirements?
You need to rent a space, it can even be a basement.
Kitchen equipment with all necessary food preparation products.
An online food delivery app and website.
Delivery partner or delivery personnel.
A marketing team.
These are the basic requirements of running a dark kitchen or ghost kitchen.
Are ghost kitchens legal?
Yes, it’s legal everywhere. The micro cloud kitchen is legal in all aspects. In other words, if you have followed regulatory compliance according to the region, the ghost kitchen is legal.
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Quick Summary: Do you want to open a ghost kitchen business? Do you want to become part of this emerging trillion-dollar cloud kitchen industry? You have plenty of things to explore, though learning how to open a ghost kitchen is the first step forward. In this guide, we shall talk about starting a ghost kitchen business and more. Let’s explore;
