Delivery-only 'Ghost' Kitchens Flourish During Pandemic

You can't eat there or collect your meal. But so-called ghost kitchens, which only prepare food for delivery, are booming in the United States during the pandemic.

Don't look for a Firebelly Wings or a Monster Mac restaurant anywhere in America because you won't find their signs on any street.

Instead, their chicken wings or macaroni and cheese are found via smartphones. The new brands, like dozens of others, were invented solely for delivery.

Their dishes are prepared in "ghost" kitchens, hidden commercial spaces closed to the public.

The trend, sometimes called "dark" kitchens, has been around for a couple of years but is enjoying a huge boost due to coronavirus shutdowns.

"Consumer behavior has been altered by Covid-19," said a spokesperson for Nextbite, an operator of ghost kitchens.

"Consumers who had never ordered from delivery platforms have adopted the convenience."

Restaurants closed for months, others open with reduced capacity, customers preferring to eat at home for fear of infection: everything has been pointing towards increased demand for delivery.

DoorDash, the leading food delivery platform in the US with 47 percent market share, handled 543 million orders between January and September, a three-fold increase on last year.

"It's capitalizing a lot on the restaurants that have closed. But at the same time there's new demand created too," said R.J. Hottovy, director of financial analytics at global restaurant consultancy firm Aaron Allen & Associates.

Zuul, C3, Kitchen United and CloudKitchens, headed by Uber co-founder Travis Kalanick, offer restaurateurs kitchens -- sometimes fully equipped -- along with technical support to manage orders and advice on developing their brands.

Nextbite focuses on the latter, helping restaurants develop new menus in their existing kitchens.

Traditional caterers are getting in on the act, opening ghost kitchens under their own names and inventing new culinary offerings.

"Everyone is trying to address the downward pressure on your margins," said Kristen Barnett, COO at Zuul who manages a facility in New York that houses nine different ghost kitchens.

Michael Roper, CEO of healthy fast-food chain Muscle Maker Grill, says a dark kitchen can be opened with a $75,000 investment. A classic brick and mortar restaurant would cost "between $350,000 and $500,000," he said.

With a rental kitchen, "I can switch to a salad concept, to a burger concept. I can make those changes pretty rapidly and all the cost to me at that stage is some artwork and maybe secure the name," he said.

Zuul also offers its own ordering platform to help restaurants further improve margins. It is intended to replace deliverers like DoorDash or Uber Eats that can take up to 30 percent of the cost of the order.

Ghost kitchens operate without the waiters and managers needed to run traditional restaurants.

Hottovy, the analyst, notes that the restaurant sector has been moving towards a "much more productive model" in recent years.

"It probably means less jobs down the road," he said.

The Restaurant Opportunities Centers United, a non-profit representing restaurant employees, recently warned of increased job insecurity at ghost kitchens compared to more traditional outlets.

For some in the restaurant industry, the model made it possible for them to survive the Covid-19 crisis.

When the virus is under control and restaurants are free to serve as they did before, Roper, the fast-food executive, doesn't think customers will stop ordering in or slow down.

"Once they learn how easy it is, the food comes on time, it's hot, it's good, just the convenience, they're going to keep doing it.

"The whole industry has kind of changed," he said.