Dive Brief:

• McDonald's has opened its first ghost kitchen, located in London’s Hanworth district, to meet growing demand for delivery. 
• A McDonald’s spokesperson told Property Week that the delivery-only restaurant is part of a broader test of different restaurant formats. 
• Order receipts from the kitchen will indicate that the food was prepared in the ghost kitchen versus a traditional McDonald's restaurant. This distinction will also be made clear on the Uber Eats app. 

Dive Insight:

The U.K. market has become a hotbed of virtual kitchens. Deliveroo operates 16 ghost restaurants across the market, according to Property Week. Uber Eats has 5,000 ghost kitchens globally, and a big chunk of that unit count is in the U.K. Considering Uber Eats is McDonald’s delivery partner, its experience in the ghost kitchen space could enable the quick-service giant to expand here as well.

The opening of McDonald’s first ghost kitchen comes on the heels of its Q3 earnings call, in which the company announced that delivery accounts for more than 10% of its U.K. business. In the market, 950 of McDonald’s 1,250 locations currently offer delivery and on Sept. 18, the company received more than 124,000 delivery orders. Globally, McDonald's delivery business is expected to generate $4 billion, or about 4% of sales this year. 

Although ghost kitchens provide benefits such as lower real estate costs and the ability to more efficiently experiment with menu items, McDonald’s is likely jumping into the space to provide fulfillment help with the added volume delivery creates. A spokesperson for the chain told iNews that the company wants to ensure people are still getting the service they expect while growing its delivery channel.

McDonald’s is hardly the only restaurant brand exploring virtual kitchens to alleviate back-of-the-house pressures. Other chains trying their hand at the format include Chick-fil-A, Red Robin, Outback Steakhouse and FAT Brands.

Sixty-percent of restaurant meals are now consumed off-premises, and these off-premise channels are expected to make up around 80% of the industry’s growth by 2025, according to research from the National Restaurant Association. To keep pace with this convenience-driven trend, chains are turning their attention to not only delivery solutions like ghost kitchens, but also to-go-only models.

McDonald’s, for example, recently introduced a new to-go-only format in London, with touchscreen ordering, smaller staff and smaller menus. According to Eater London, it marked the first time McDonald’s has launched a new format in the U.K. since the drive-thru was added in the 1980s.