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Complete Guide to Virtual Kitchens
Have you ever looked through an online ordering app like DoorDash or UberEats and noticed restaurants in your area that you didn’t even know existed? When you Google the restaurant, you notice there is no physical address or storefront. They exist only online, and you can only have their delicious-looking food delivered.
This is the newest restaurant trend, and it’s called virtual kitchens. These restaurants, also known as ghost kitchens or cloud kitchens, are changing the market and ushering in a new era to the restaurant industry.
In just the last few years, food delivery has skyrocketed in every area of the restaurant industry. From 2019 to 2020, food delivery jumped over 150%, and it is expected to rise another 10x in the next ten years.
Virtual kitchens are what current and new restaurant owners are turning to for increased profits and new business models.
So, what are virtual kitchens?
Virtual kitchens are commercial kitchens with an online brand solely selling food items via delivery or carry-out. They offer no storefront ordering or dine-in options.
This may sound a bit limiting to cut off an entire aspect of your business, like the dine-in experience. You have to keep in mind, this is an opportunity to expand sales and not limit them. Stick with us and we’ll show you how this can work for a variety of businesses.
Different ways to utilize a cloud kitchen
There are a few different ways that virtual kitchens are being used in the ever-changing restaurant industry.
The first way is for a brick-and-mortar restaurant to create a second, new digital brand and sell existing items through the new brand. This second brand would be delivery only and sold through 3rd party delivery apps such as DoorDash and UberEats.
For example, you may be a premier pizza restaurant in your neighborhood known for delicious New York-style pizza. But you also offer great wings. Because you are a pizza-first restaurant, when people search for wings on Doordash, your restaurant doesn’t show in the top results, resulting in missed sales.
To fulfill the purpose of the virtual kitchen, you would create a new brand specifically for wings. You would still make wings in your kitchen, with your staff, but under the new brand. All of sales and delivery is managed via 3rd party delivery apps. By adding this second brand, you can increase your customer base without any additional expenses. You could create multiple brands for different styles, such as a sandwich, wings, salads, etc. This allows you to market your existing menu.
The second way to utilize a virtual kitchen is to start a new business with the sole intention of working and operating without a brick-and-mortar location for customers to dine in. You only need a commercial kitchen to make and store your food, and you only sell food for delivery.
The savings presented by only utilizing a kitchen space is massive when you think about it.
Rent will be MUCH cheaper when you don’t need any dining space. The square footage you are paying for will all be utilized, and wasted space will be minimal.
Staffing can be limited to only kitchen employees—no need to hire any front-of-house staff.
No need to spend any money on decor or ambiance. No customers enter your new space, so there’s nothing needed to impress anyone.
If you are looking to open a restaurant in an expensive area of your city, cutting down the size required to just kitchen space can save an incredible amount of money. The reality is that with the increase in meal deliveries on the rise, you aren’t even cutting down on your sales potential by going digital only, but you can save a lot.
Benefits of virtual kitchens
There are many benefits to starting a new restaurant with the ghost kitchen model or adding a new brand to your existing restaurant.
Creating a new brand in your existing restaurant is inexpensive and doesn’t change your current operations. It just allows you to market your food more specifically.
Start-up costs: The initial investment of time and money to open a new brick-and-mortar restaurant can be extremely daunting. In reality, many new restaurants will fail, and you can lose a great deal. However, the initial cost to open a virtual restaurant is pennies on the dollar in comparison. The revenue needed to sustain a virtual restaurant is much less, making the overall risk of failure much less.
Shared Kitchen Space
To reduce the costs of a virtual kitchen even further, many new ghost kitchen businesses rent space in a shared kitchen. There are many catering companies that need commercial kitchen space for prepping food, as well as other businesses that have started delivery-only restaurants. Renting space from one of these kitchens can be super affordable, increasing your profit margins even greater.
There are likely shared kitchen spaces available for rent already in the areas of the city that you’d love to be working out of.
In today’s era of entrepreneurship, many established businesses are already offering pre-built virtual kitchen brands that you can sell out of your current restaurant’s kitchen. Sort of like a franchise except affordable, convenient, and proven.
A great example of this comes from the famous YouTuber Mr.Beast. This YouTube star has over 60 million followers, making him one of the most watched channels on the internet. He started a virtual kitchen brand called Mr.Beast Burgers and overnight was able to launch 300 of these “restaurants.” These virtual restaurants sold over a million burgers in the first two months alone. The cool thing about this model is that much of the profit from these sales went to the existing restaurants that were preparing Mr.Beast Burgers out of their kitchens.
This business model is essentially a turn-key business opportunity for restaurants to increase their sales and profits. Mr.Beast takes a percentage of the sales, so there isn’t even an initial buy-in like a traditional franchise would require.
These restaurants get access to established supply chains, hands-on training, and the name credibility that comes with a celebrity like Mr.Beast.
Virtual kitchens are likely here to stay
Adding multiple restaurant brands out of your current kitchen allows you to own numerous restaurants at the cost of running just one. Food deliveries will only increase, and you can control a larger piece of the market pie by marketing multiple brands for different menu items. You could sell pies under a new brand name, and UberEats them right from your pizzeria.
The possibilities are endless.