Ghost in the Machine
Ghost kitchens—or restaurants that prepare food exclusively for delivery and have no physical footprint outside of a commercial kitchen—are the hottest start-ups in the restaurant world. They live almost exclusively in the virtual landscape of third-party delivery apps and their numbers are growing by the day. Chowly, a POS integration company, estimated there were 100,000 virtual restaurants on third-party apps back in August, a number that likely looks archaic by the time you’re reading this.
Many think of these ghost kitchens as new, faceless entities haunting warehouse districts (which they can be, especially in bigger cities) or as the soulless culmination of our obsession with convenience and delivery. But ghost kitchens aren’t new, they’re here to stay, and, depending on who you ask, they could actually be good for independent restaurants—both aspiring and existing. “I think independent restaurants can effectively set up a ghost kitchen and do well,” says longtime Colorado restaurant consultant John Imbergamo. “Especially since the delivery apps have become a regular part of our daily lives, they are a strong option.”
ChefReady, a Platt Park kitchen space for 10 ghost concepts, opened in November. Its tenants get year-round access to 200 to 250 square feet of cooking space, a brand awareness boost via ChefReady’s marketing channels, and the ability to deliver via any service they choose. Heck, they can even switch concepts nightly or operate as multiple restaurants simultaneously. With lower rent, build-out, and back of house costs—not to mention no dine-in area to staff and design—it’s a lot cheaper and easier to start up a restaurant this way than the Herculean task of financing a conventional brick and mortar. “Ghost kitchens are good for independents in that they allow them to do what they do best,” says Nili Malach Poynter, ChefReady’s co-founder. “We viewed this as the chance to give a lot of chefs and entrepreneurs the chance to succeed. The model gives them the chance to not just work for the landlord, but to work for themselves. Chefs are artists, and this really gives them the ability to not worry about all the other bullshit, to just be in the kitchen creating.”
“Navigating the technology related to delivery and logistics is just as important as the food in the current restaurant landscape.“
Lower overhead is why Ashton Kyng runs Kyng’s Scrumptious Salads out of other Colorado Springs kitchens instead of opening a storefront of his own. Kyng considers his delivery- and pick-up-only business to be a ghost restaurant, and he’s not sure he could have survived COVID if he operated otherwise. Instead, the business has thrived during the pandemic. “With COVID-19, you see a lot of businesses closing down or needing loans, but with me not actually having a storefront, I’m not getting that hard hit. I’m not having to worry about, ‘Can I make rent this month?’ I’m a ghost front, I go wherever,” Kyng says.
When Alan Berger, Jesus Olaya, and Nicole Zajac started Bodega Cuban Kitchen out of a leased food truck in Denver in October, they were very intentional about making it a ghost restaurant, with delivery available via all the usual third-party apps. Berger and Olaya met while working at Edgewater Public Market, and during the pandemic-induced shutdown, they thought about how the industry was changing.
“We weren’t even thinking about this a year ago,” Berger says. “Then COVID hits and we’re starting to see the effects. Restaurants as we know them, they’re going to change.” They saw ghost kitchens blowing up in bigger cities and recognized that the demand for food delivery was only going to increase. So they used Olaya’s photography skills and social media platforms to build their brand, and they hope that Bodega is only the first of many ghost concepts that could go into an eventual virtual food hall. In fact, the trio is already planning on launching two more ghost restaurants out of the truck by the end of 2020.
“We’re hoping to eventually have a space with 10 to 15 different brands operating inside,” Berger says. “We know a lot of young talent in this town who don’t have the means to start their own business but could help us build new concepts.”
Really, these virtual kitchens have existed for years. Think of pop-ups and kitchen takeovers, and the home delivery operation that takes off and requires additional space in a commercial kitchen to meet demand. Using the kitchen of another brand is nothing new. During the pandemic we’ve even seen existing restaurants create new takeout and delivery-friendly concepts out of their own kitchens, like Jabroni and Sons out of Bar Dough, Blue Tide Tacosat Blue Island Oyster Bar, Flavor Dojo out of Rioja (all in Denver), and Brasserie Boulder and Lil Bub’s Family Meal out of Café Aion in Boulder. “To me, that’s the top use of ghost kitchens for independent restaurants—the ability to use some of their excess capacity and sell something that doesn’t necessarily fit the [original] concept,” Imbergamo says.
Or independents can use ghost kitchens the way chains are using them—as separate kitchens to support an existing concept. If a huge chunk of business is delivery, why spend money and space on dine-in when a kitchen is all the restaurant needs? If dine-in is still going well, it can also make sense to use a separate, off-premise space to fulfill delivery orders, shifting the burden to off-site kitchen cooks and allowing the restaurant to focus on the dine-in experience.
Thus far, the big ghost kitchen companies like CloudKitchens (which is owned by Uber co-founder Travis Kalanick) and Kitchen United have stayed out of Denver. But that’s about to change, as CloudKitchens will soon move in. And with its leg up in funding and technological infrastructure, it will undoubtedly be difficult for independents to compete when CloudKitchens comes to town.
Boulder’s Scratch Kitchen has a good chance, though, as owner Michael Joseph has extensive experience in the food-tech realm. Before starting Scratch, a virtual food hall made up of six to-go and delivery concepts, Joseph founded Green Chef and Mile High Organics and co-founded Door to Door Organics. While he doesn’t describe Scratch as a ghost kitchen—people can, in fact, come in and order takeout—he’s certainly using the space to innovate the on-demand food model.
Navigating the technology related to delivery and logistics is just as important as the food in the current restaurant landscape.
“We saw big holes in the market,” Joseph says. “When we set out to do this, it was about reinventing the restaurant for just delivery and takeout.” What Scratch does differently is focus on healthy takeout meals using organic ingredients, but Joseph stresses that it’s not just about the food. Navigating the technology related to delivery and logistics is just as important in the current restaurant landscape. “You really need to have a great understanding of these new tools and how to leverage them so you can compete,” he says. “I don’t think we would have gone down this path if I hadn’t created digital food brands in the past. I’ve sold millions of meals digitally before starting this. There’s a lot to learn along the way.”
Of course, traditional dine-in service will always be a big part of restaurants—especially post-COVID when people will be beyond ready to gather again—but delivery isn’t going anywhere, either, and it’s been a lifeline for restaurants in desperate need of revenue. Ghost kitchens can make getting in on that delivery income accessible to both new and existing restaurants. It just takes some rethinking about what a restaurant is and can be.
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