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Sunday, December 29, 2019

3 Predictions for the Ghost Kitchen in 2020 - The Spoon

In 2019, the idea of a restaurant kitchen with no dining room that would exist solely for the purpose of fulfilling off-premises orders was an intriguing but little-known concept. Fast forward 12 months, and ghost kitchens are now a major talking point in the discussion around how to meet customer demand for delivery and takeout orders. And it’s not just restaurants getting involved. Third-party delivery services like DoorDash have opened their own ghost kitchen facilities, companies like Kitchen United, who provide kitchen infrastructure to other brands, are expanding across the globe, and even non-restaurant food brands are capitalizing on the craze.

It’s still early days for the ghost kitchen concept, and as I noted with The Spoon’s most recent market map, this is a part of the restaurant industry that will change rapidly over the next year as it becomes more commonplace among both restaurants and consumers.

Here are a few things we expect to see happen in 2020.

Ghost kitchens will become the norm for large restaurant chains. 
Last year around this time, I wrote that “where the [ghost kitchen] concept could really shine in 2019 is by taking on delivery orders for existing businesses, so the brick-and-mortar locations of those restaurants don’t have to shoulder the entire burden.”

Without a shadow of a doubt, that began to happen in 2019. In 2020, it will become the norm. Many early adopters of the ghost kitchen concept in 2019 were national or international chain restaurants with the kind of reach and influence that will compel other establishments to take similar steps. Chick-fil-A already rents space from DoorDash’s ghost kitchen facility. Starbucks has teamed up with Alibaba’s Heme supermarkets in China to run ghost kitchens out of the latter’s stores. The coffee giant is also building out its own express stores that will function largely as ghost kitchens for delivery orders. Fat Brands is using its own kitchens to double as ghost kitchens for sister brands.

All of which is to say, many brands will create many iterations of the ghost kitchen concept in 2020. As we move though the next 12 months, which types of ghost kitchens (commissary, in-house, etc.) make the most sense for which brands will become clearer. 

Restaurant brands will compete with their kitchen providers.
Both large chains and virtual restaurant concepts will quite possibly find a new competitor in 2020: the folks renting out the kitchen space they use.

Much like grocery stores display their own brand of pasta on the shelves along side CPG brands (or, for a more web-friendly parallel, Amazon has its own Amazon Basics brand), ghost kitchen providers will start to use their facilities to house their own virtual restaurant concepts that compete with those of their tenants. 

This is already happening. Travis Kalanick’s CloudKitchens startup, which operates a network of ghost kitchen facilities, provides space for brands like Sweetgreen to fulfill off-premises orders. It also houses its own virtual brands like Excuse My French Toast and B*tch Don’t Grill My Cheese. 

Not all kitchen providers will take this route. For example, Kitchen United said recently it did not want to be a restaurant itself.

But for many kitchen providers, offering their own virtual restaurants allows them to own yet-another piece of the restaurant stack and therefore more revenue and the all-important customer data. And as more and more non-restaurant food brands, from diets to celebrity chefs, try out virtual concepts, launching a virtual restaurant will (in theory, at least) get simpler for these kitchen providers to do without incurring much additional overhead. No, B*tch Don’t Grill My Cheese won’t stand a chance against a big brand like Chick-fil-A if a customer is really craving those waffle fries, but in the future, the two entities won’t be working out of the same ghost kitchen facility anyway.

Which leads us to our next point.

Third-party delivery services will open more kitchens. Big brands will follow.
Remember above when I said we’ll see an explosion of big-name restaurant brands adopting the ghost kitchen model? At some point in the future, most of them will be doing it out of kitchens run by third-party delivery services like DoorDash and Uber Eats. That’s not because providers like Kitchen United don’t offer delivery options (they do), but because the delivery companies themselves are approaching the restaurant chains.

DoorDash is a case in point. When the third-party delivery service opened the doors on its own ghost kitchen facility in Redwood City, CA this year, it had four existing restaurant chains onboard — all of whom it approached because the company had user data that said people were looking for that type of food in the California Peninsula area. Chick-fil-A soon signed a lease for exactly the same reason.

This is almost a no-brainer. Restaurants already working with delivery companies use these services for things like marketing, technical fulfillment, and last-mile logistics. Adding kitchen space to the stack seems almost a foregone conclusion.

The other thing ghost kitchens are likely to encounter at some point in 2020 is a reality check. At the moment, optimism is flowing into the sector alongside the millions in capital companies are raising. Soon enough, though, the questions will start pouring in. Who gets to own the customer data? Can ghost kitchens become sustainable or will they just pile more trash into the ocean via takeout boxes? Is the model actually profitable, and for whom? Expect these and many other questions to surface in the next year as the ghost kitchen goes mainstream. 

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December 29, 2019 at 09:00PM
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3 Predictions for the Ghost Kitchen in 2020 - The Spoon
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