Dive Brief:

• Foodservice distributor US Foods introduced its ghost kitchens program on Wednesday, which aims to guide restaurant operators in opening facilities that produce food solely for delivery, with no dine-in areas.
• US Foods Ghost Kitchens will provide resources to operators on menu technology, marketing and revenue generation. Its program will advise on minimizing start-up costs for restaurants looking to set up kitchens within their existing facilities.
• In late July, gig economy management program ShiftPixy announced ShiftPixy Labs, a similar service suite that offers end-to-end support for QSRs, including technology to assist the establishment and operation of a ghost kitchen.

Dive Insight:

New programs by US Foods and ShiftPixy to support operators as they transition to off-premise models follow a years-long rise in popularity in the industry of ghost kitchens, as well as a timely response to the off-premise needs of operators amid the novel coronavirus pandemic. Foodservice delivery sales more than doubled between 2014 and 2019, and market research firm Euromonitor predicts that ghost kitchens could be a $1 trillion global market by 2030. 

ShiftPixy CEO Scott Absher cited the “combined forces of gig economics and COVID” as driving the trend toward off-premise. Significant cost-savings on rent and labor expenses come with the ghost kitchen model, and could pave the way for greater automation in service and food production. 

Kitchen United, as well as competitors such as CloudKitchens and Reef Technology, have led the expansion of ghost kitchens, but major QSRs including Bloomin’ Brands, McDonald’s, and Red Robin have recently piloted their own in-house models. Services such as those offered by US Foods and ShiftPixy could offer opportunities for smaller brands to develop their off-premise operations. Because ShiftPixy aids restaurants’ native mobile apps rather than being consumer-facing, operators can track consumers’ data, and avoid commissions charged by third-party apps such as Uber Eats, according to The Spoon. 

With the lack of a storefront or physical presence that a ghost kitchen entails, marketing primed for digital-native consumers is even more essential. Jim Collins, CEO of Kitchen United, a self-contained ghost kitchen service, remarked to Forbes that the pandemic has created a perfect storm for this trend, but that for a restaurant to thrive in this new virtual environment, it must sustain “active, digital connections with their consumers.” 

While the model offers operators greater flexibility than a traditional brick-and-mortar restaurant tied to a long-term lease, ghost kitchens come with risks as well, and not just in the expenses associated with moving to off-premise and partnering with potentially several delivery services. The business model relies on continued consumer adoption of e-commerce and promotions from food delivery apps, as well as on a lack of demand for local, community-oriented establishments. 

As cities across the U.S. pause their reopening phases and Americans remain reluctant to return to indoor dining amid the coronavirus crisis, many restaurants moved de facto to ghost kitchen operations. Resources like these offered by US Foods and ShiftPixy, however, may ease these transitions and open up new revenue streams to help restaurants stay afloat.