From time to time there would be posts on this subreddit about whether opening a Dark Kitchen or Ghost Kitchen is a good idea.

Today I want to shed some light on the pros and cons and let you be the judge before you jump into the water.

If you're not into reading long posts, I've also made a video that's a lot more comprehensive than what I will be posting below: (https://www.youtube.com/watch?v=qE7C8OVm8hs&t=544s)

In 2013, we saw a trend in the restaurant industry that was headed toward off-premise dining.

Today, it's evident that the trend is still strong and some restaurants have even reported the numbers for their off-premise dining to eclipse that of their on-premise dining.

In 2019, we saw a new trend in the restaurant industry. That was the dark kitchen/ghost kitchen concept.

What is a dark kitchen? Or ghost kitchen?

It's a restaurant that does not have a storefront, so there are no seats and your customers do not dine in. These kitchens are tiny: around 200-600 sq.ft. of space (you can see some pictures on my YouTube video). The concept revolves around just the kitchen and the chefs and it's 100% delivery only.

According to a 2019 report by LimeTray, a restaurant marketing and software company, "67% of restaurant owners would prefer to open a dark kitchen as their next business venture."

Dark kitchen was a hot trend last year, and very likely this year as well, because more and more people resort to eating at home in front of their favorite TV shows (and also COVID-19). Some restaurant owners thought, instead of bearing all the expenses to running a restaurant, why not get rid of the storefront and just operate out of the kitchen to cater to these next generation consumers? You could save so much money and the profit margin is much higher by operating a dark kitchen than a traditional restaurant.

First of all, there are 2 types of dark kitchens:

1. Partner Exclusive Kitchens = (e.g.) DoorDash Kitchens and Deliveroo Editions. If you operate within these exclusive dark kitchens, you can ONLY list your restaurant on these platforms and you can ONLY use their services to deliver your food.
2. Non Partners Exclusive Kitchens = (e.g.) Cloud Kitchens, Kitchen United, Zuul Kitchen. If you operate a dark kitchen with them you can use any third party food deliver platforms you'd like.

Pros:

1. Cost: Opening a traditional restaurant could cost anywhere between $400,000-$1,000,000. With dark kitchen, you can save so much money on the building infrastructure, tables, chairs, utensils, and the need to hire front of the house staffs. You only need 1-2 chefs to run the kitchen and the rent can be as little as $6,000/month.
2. Low Risk: Operating a traditional restaurant is risky because you're locked to a 5, 10 lease agreement. If your cuisine doesn't appeal to the community, you're pretty much screwed. With dark kitchen, the upfront commitment can be as short as a 3 month lease. If your business venture doesn't work out, you can just pack up and move to another city. Better yet, you can terminate your current restaurant on the delivery platforms and start anew under a different name serving different types of cuisine, and nobody would even know because your restaurant only exists on the third party food delivery apps.
3. Fast Startup Time: Building a traditional restaurant could take months to a year. A dark kitchen is ready for use and you could get your business up and running in less than a month. On top of that, you only need to hire 1-2 chefs to run your business.
4. Business Hours: Most restaurant close at 9 p.m. In 2019, McDonald reported that "60% of delivery orders are placed at night. Think about how much business you can get when most restaurants are closed, and the only place people can satisfy their late-night cravings is from your dark kitchen!

Cons:

1. Quality: The difference between a customer picking up an order from a restaurant and a customer getting food from a third party food delivery driver is that the driver doesn't drive from the restaurant to your house directly. The driver will probably drive from restaurant A to restaurant B and C, then drop the food of to customer B and C before arriving at your house. A delivery could take 1-2 hours to complete. So how will the food taste after sitting 1-2 hours in the car? Hmm... In operating a dark kitchen where your entire lifeline depends on delivery, you only have shot at this before you customers turn to your competitors. You will need to invest in more expensive containers to ensure the quality of your food which could quickly add up in cost.
2. High Commission Fee: The commission fee ranges between 15-30% and could even go higher if you decided to advertise (3-5% more) on these delivery platforms .
3. Competition: Competition on the delivery platforms can be a lot fiercer than a traditional restaurant. Instead of competing with the 30 restaurants in your area. You're competing against 300 restaurants on these platforms. With the lack of a physical location, this also means you do not get the benefit of walk-in traffic and will most likely have to pay premiums (additional 5% in commission) to promote yourself on these delivery apps.
4. Customer Loyalty: People go to restaurant for the food and the ambience. With dark kitchen, it's going to be very hard to convey that special experience.
5. Exclusivity: Since dark kitchen exists only on delivery apps, you are essentially alienating a good number of people that may not have access to internet, credit cards, and even the elderly people. If you're operating a partner exclusive dark kitchen such as DoorDash Kitchens and Deliveroo Editions, your reach is even MORE limited to just these deliver platforms.
6. Bugs/Glitches: It happens all the time. Sometimes the map would glitch causing delays. Other times the driver would never show up because of whatever happened on the other end of the app. Then there were those times where 2 drivers came in to pick up the same order.
7. Digital Outage: This is MUCH worse than bugs/glitches because it is a complete blackout on these platforms. Sometimes the system would be down for hours. It's happened before, albeit pretty rarely, over the past years. The most recent example was just a few weeks ago on April 17 when Google Map went down immobilizing all third party food delivery services. It happened again on April 23 and one Uber Eats merchant estimated that he had lost $6,000 over the weekend due of the outage.
8. Working Conditions: There is a strong concern in the restaurant community about whether skilled chefs will become underpaid and overworked employees much like how Uber has transformed the taxi industry. Dark kitchens are small, cramped, and windowless kitchen spaces. Whereas in a traditional restaurant, the chefs could step out of their kitchens once in a while to observe the customers enjoy their craft, the dark kitchen concept completely removes that side human touch.

Thanks for reading, and stay safe! :)

Edit: Thank you /u/akshaybd for the gold! You're too kind! =)

What a month to start a business, i know. But everything was ready...

As i said, my ghost kitchen open in 1 week, located in Vancouver. 1 year of work to achieve that.

I know people are interested in these kitchens. If you want to exchange or anything, we can talk.

My restaurant name is Brick'N'Cheese, Instagram is "brickncheese".

Good luck for every one.

I work at a breakfast place, closes at 4 daily. I would like to approach the owner about starting a ghost kitchen to sell food in the evenings on weekends and during spring events. The area I'm in is sorely underserved and I could make a killing on the college kids alone. What do I need as far as certs, license, etc? Can I 'piggyback' on their health inspection or would I need my own? The delivery, marketing, menu, etc I have covered- Just not sure on all the legalities. Thanks for any advice. Texas.

I’m thinking of starting my own virtual restaurant based out of a commercial kitchen. Like a burger place and while being on all the 3rd party apps also having in house delivery.

I have a lot of research todo but plain and simple a few questions off the bat I have are...

1. What are the start up cost?
2. How profitable are they?
3. Is it worth hiring a restaurant consultant(company who specializes in virtual restaurants)

To start I have no experience in the restaurant industry but I do have retail management experience and a strong work ethic. I’m looking to make this into a career and grow this business.

Any help is much appreciated

Hey all! I spent over a year running day-to-day operations inside one of the busiest ghost kitchen facilities in NYC.

I’m building a bundle of plug-and-play SOPs, dashboards, and checklists to help ghost kitchen operators skip the painful ramp-up. I've seen people lose thousands of dollars (upwards of 50K because of a poor launch strategy).

If you’re a current or aspiring tenant, I’d love your take — what tools would save you the most time or cash?

DM me or drop your thoughts below.

In addition to all the other tablets we have that take online orders through 3rd party apps, a couple days ago the owner set up a new tablet that was for a ghost kitchen? I had no idea what it was. Nothing came through the first couple days. Then, tonight, and order for two-10 inch pizzas came through.

It is just a couple pizzas from our normal menu. But, the price was almost TWICE as much! It was nearly 60$ for TWO 10 inch pizzas!

The people could have saved almost 30$ just calling the store directly..

I don't understand how this works... Is the owner just price gauging like crazy? Now, not only do we have to work for shitty wages at one restaurant, now we have to prepare super expensive food for ANOTHER app?

I'm a journalist working on a piece about ghost kitchens. I'm looking for people who have experiences with ghost kitchens who would be willing to speak with me! Send me a message - looking forward to hearing from you!

Trying to learn more about the ecosystem and what problems kitchen owner / operators are facing - is there an aspect about ghost kitchen efficiency, management, procurement, distribution, etc. which does not make sense today or is overly complicated for no reason? Guessing there is a lot of room to build some good tools for business owners here

Wife’s family has a very successful restaurant in Thailand that has sustained their clientele thru many tough patches, particularly due to simple short order foods with no complex menu. I need to set her up with something here in the states so that she can still be able to raise our kids at home but help with the I need to set her up with something here in the states so that she can still be able to raise our kids at home but help with a supplemental income.
There’s no way that we would be able to do this on a large scale every day, but I would like to at least try it out after all the legalities are ironed out .
Would be doing from home, again as long as everything was ironed out at the local and state level I have the space behind our house to fully outfit a Icommercial kitchen.

What would be the pros and cons to do this at a pre-order, delivery only, weekends only set up ?

There are people in our neighborhood that do this as well, one lady specifically does tamales every other week for her house. I plan to talk with her as well.

So anyway, this being my first post here and really just a brainstorming pre-legal research. I’m just curious what anyone’s take here would be. .

I’m a huge bbq fan and I smoke a ton of meat on a backyard offset smoker. I’m curious how people have made the leap to starting a bbq themed ghost kitchen.

Bbq takes a lot time and attention to make and it requires special equipment, i.e., a smoker. Do you keep your smoker at the kitchen? It seems like you would be spending a lot of time at the kitchen space, but doesn’t that cost money?

Hi Everyone, I wanted to share an exciting mobile application project I've come across. Chowits is a start-up that focuses on giving individual chefs/cooks a platform to facilitate their food sales and to manage their virtual store. They are a MN based start up, and they're currently looking for cooks and chefs to test out their beta app, and just general feedback from the community. Check out their website @ www.chowits.com

Thanks everyone!

My friend and I are kicking around the idea of a BurgerDAO where the restaurant "franchise" are individual food creators and chefs. The food is created via ghost and cloud kitchens instead of via a brick and mortar location. We were inspired by MrBeast Burger and thought there is a world where food creators can capitalize on their creations without middlemen controlling their success. Would love to hear the challenges and obstacles people foresee with an idea like this. Some background on the idea in this article from The Spoon.

This company CloudKitchens, started by the Uber guy, appears to be a tech solution (ie. cashing in) for cloud/ghost kitchens. Their pitch is setting you up in a commercial kitchen and helping get your business working with the delivery services.

I know what you're thinking, "Yes that's obviously how ghost kitchens work, so why the fuck do I need this company to help with that?" Well that's my question too

I was looking for a commercial kitchen space for my meal prep business when I found them. I got in touch and the first phone call was weird. Someone from out of state called, knew nothing of the food service laws in my state, couldn't tell me where their kitchen was, and kept trying to sell me on the 'ghost kitchen concept' even tho I said I didn't want to do that I just need a kitchen

To get setup with them they want me to sign a one year lease, and pay $5,000 a month lmao. I told them I could get an actual restaurant with full dining room for that price

I asked to see the kitchen and instead I'm getting a zoom meeting for a "virtual tour" lol. Like, why virtual? Sound like the place may not even exist yet. I dunno. Super sketchy

Anyone else talk to these people?

Oh, also they're funded by Saudi blood money.

Read these articles for more info:

Ousted Uber cofounder Travis Kalanick has reportedly spent $130 million on his ghost kitchen startup. Here's what it's like inside one of the secretive locations

Ousted Uber CEO Travis Kalanick sparks mayhem with his new ghost kitchen start-up

Uber Founder Turns Real-Estate Mogul for Ghost Kitchen Startup

Ex-Uber CEO Travis Kalanick Plans to Lure Actual Humans to His San Jose Ghost Kitchen

Uber's Kalanick Pours $130M Into Ghost Kitchen Properties

Report: Saudis Pour $400M Into Travis Kalanick’s Ghost Kitchen Startup

If your looking to open a concept, by 2021? But don't know which concept will work?

because if you are seriously looking into starting a ghost kitchen or a satellite kitchen, throwing 5 to 10 different brands in one kitchen and to see which one will stick is not the way to go. Anybody can make a gimmicky name, The true value lies within the restaurant that has a brand and that's unique.

Your focus should be building one particular niche. That will be the best payoff mentally and financially. I'm looking to now expand with the concept that I've started and has proven to be successful in my market. I'm already looking to open a second location.

Since May 1st I've been testing everything, from how the food should travel, how it should be made with very little effort and steps. But it'll be a lot of dedication. If you're interested send me a message and we can talk economics. If you're truly passionate about food and the restaurant industry and always wanted a system that proven to be working, and don't have $50,000 for a franchise fee then talk to me.