Is Ghost Restaurant or cloud Kitchen model good for start-ups?

Cloud kitchen or ghost restaurant model

We all know a famous quote that necessities are the mother of invention. Any business model or any product has its flaws and humans develop the upgraded one by solving defects.

That upgraded model will also have some flaws in some aspects, and the development is an ongoing process. We, in general, go to restaurants only to celebrate certain occasions like birthdays or family lunch, etc.

The owner of any restaurant has to bear the costs of rent in the restaurant area, food supplies, salaries, electricity bills, and many more. In return, he/she has to cover all those bills and get profits when we go to restaurants.

Most of the people these days prefer ordering online and eating at their homes. Business is happening for restaurants as they are the ones to make food, but there is a certain impact on the customer count towards those restaurants.

Ghost Restaurant Model

The traditional restaurant model consists of people going and ordering food in restaurants. If they like the food, they will become loyal customers and visit again whenever possible. Ghost Restaurant Model consists of the only kitchen wherein chefs make food when orders come and delivery people take that food to their destination.

Ghost Restaurants will not have a sitting area and serve staff like traditional restaurants. This benefits the owners because the costs for salaries for serving staff and electricity have been cut off, mostly. This model is slowly becoming popular and most of the newcomers, along with owners of existing owners, want to try Ghost Restaurants.

How does Ghost Restaurant work?

As said above, Ghost Restaurants will not have a fancy sitting area, staff for serving and basically, you cannot go and eat in the ghost restaurants. They are only made to make the food based on the orders. They tie up with food delivery companies as Uber eats. Whenever people order food from the apps, they get notified and will make that order.

Food delivery guys will take that order from these ghost restaurants and deliver them to the destination. Due to more work every day, most people are willing to order food online. The only things they wish for is the fast delivery and good taste of the dish they order. So users prefer the restaurants near to them and make the orders.

This is beneficial as almost all the restaurants will get the orders as people are interested to order in nearby ones. The reason for these restaurants to tie up with food delivery companies is that people do not know about your restaurant.

Even if you release an app, people would not go and download an app specifically for your restaurant. It is because they have these food apps with which they can order from any restaurant of their wish.

Third-party delivery companies take their part in an order which is about 20 to 30% of the total cost of the order. That’s why you can observe the rates are more when you order online compared to eating in restaurants. The difference is not much and is worth it as they have their costs like salaries of employees, servers, etc.

Benefits of Ghost Restaurant

There are lots of benefits to ghost restaurants. The renting space for restaurants, salaries for employees, and electricity bills can be saved to a maximum extent. This saved money can be invested in buying more advanced cooking equipment and marketing.

When the taste of the food is great, people will become loyal to your restaurant. Word of mouth publicity happens like the people who tasted the food will share the news with their friends and colleagues when they are ordering the food. As the taste is good, new customers will also become loyal and thus the business can be improved.

The investment in equipment is also one time and this will reduce the cooking time and increase efficiency. Overall, ghost restaurants are profitable if done the wrong way, and a trend has already started wherein ghost or virtual restaurants are becoming widely popular.

Ghost Restaurant’s impact on business

Ghost restaurants will have a huge impact on business. Due to the advancements in technology, people started preferring ordering food online through mobile apps instead of visiting restaurants. A few years ago, starting up a restaurant business is a big deal. It was not easy and needed lots of money.

Ghost restaurants are relatively less costly to set up compared to restaurants. They do not need large spaces, good design rooms, and serving staff. Cooking equipment with chefs is the only investment to make and you can start off this business.

Tying up with food delivery services is also easy these days. If this trend continues, we may see a lot more ghost restaurants starting to pop up in major cities. As they are new, they will try to give their best tastes in food possible. Offers may be provided in order to attract new as well as existing customers. Food business can also become like a smartphone business because people love tasty and quality food.

As ghost restaurants require less money to invest compared to regular restaurants, food items can be given at fewer rates. Healthy competition may occur between these restaurants and the food business will boom in the market in upcoming years.

Bottom Line

Ghost restaurants are the future. We would anyhow need restaurants because the ambiance of a restaurant can be only felt at the place. But both of these businesses will go side by side as people who want to visit restaurants will visit them and people who want to eat food at home will order online. Owners of existing restaurants should observe this change and open ghost restaurants soon so as to not back off in the market.

We cannot say that ghost restaurants will completely take over the traditional model restaurants. It is because people want to celebrate some occasions like birthdays, family lunch or dinner and such kind of events by spending time eating together in restaurants. The demand may go down a bit because of ghost restaurants, but traditional restaurants are still a good business to do.

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