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Does the Future Belong to Ghost Kitchens and Virtual Restaurants?

With the limits imposed by the COVID-19 virus in terms of table service, restaurants of all sizes seek above all to develop sales outside the restaurant itself, which encourages them to be more interested in the possibilities than offer takeout and delivery service.

While the interest of the entire restaurant sector in delivery or take-out is currently the subject of particular attention, this trend is not new. A 2019 report from the National Restaurant Association indicated that 80% of restaurateurs consider takeaway delivery or sale to be an area of ​​vital interest.

Delivery and take-out are clearly on the rise, but high service costs and the fear of increased operational complexity are still a concern for many restaurateurs interested in this market.

These concerns have given birth to an entirely new method: ghost kitchens.

These ghost kitchens, also known as cloud kitchens or dark kitchens, are designed to help restaurants develop and optimize their delivery services and reach more customers at (seemingly) reduced costs. But what exactly is ghost cooking?

Let’s explore ghost cuisines, their pros and cons, and see why it’s likely that restaurants that serve table service are increasingly interested in this way of expanding their brand footprint. and increase their sales.

What is ghost cooking?

“A ghost kitchen is a place where virtual brands are produced without a physical restaurant. These are equipment only intended for the production of virtual brands” explains the famous chef Eric Greenspan.

United Kitchen and Cloud Kitchens, founded by Travis Kalanick, the founder of Uber, are two major companies in the ghost kitchen sector. A ghost kitchen is a rented space for cooking, in which restaurateurs can launch a virtual restaurant brand without requiring a physical restaurant.

What is a virtual restaurant?

We often tend to confuse the terms “ghost cooking” and “virtual restaurant”, when they do not mean the same things.

Unlike ghost kitchens, virtual restaurants do not rent kitchen space through a third party. They have physical premises, use their kitchens to fulfill online orders and generally offer a menu reserved for deliveries.

Alma, an award-winning restaurant in Montreal, is a good example of a virtual restaurant. Faced with a drop-in activity due to the COVID-19 virus, they launched Tinc Set, a concept allowing customers to place their orders online and pick them up at a given time in the charming little street behind the restaurant.

For restaurants that have a physical establishment and are looking to offer take-out or delivery orders, virtual restaurant concepts like this are of undeniable interest. They provide flexibility to support take-out or delivery sales and customer pre-orders and create another source of revenue to cover the costs of a physical establishment.

Where does the rise in popularity of virtual restaurants come from?

In summary, this increase in popularity is due to the fact that many predict that the future of catering will lie in sales outside the restaurant, i.e. deliveries and take-out and orders placed in advance. by customers to avoid waiting on site.

Sales through third-party delivery services can be costly, with fees for sales through certain services reaching almost 20%. However, operators of virtual restaurants remain free to choose their sales methods.

The use of platforms like UEAT allows restaurants to take orders directly from their website, instead of selling through a third party. If they want to partner with third parties to develop their delivery services or to outsource them to deliverers (or both), they can very well do so, but at least they are not obliged to sell exclusively through ‘a platform that erodes their already reduced margins.

Ghost kitchen or virtual restaurant: what is the best solution?

The answer to this question depends largely on the context. Ghost kitchens can be useful for starting a new business with less capital. Virtual restaurants, for their part, are very attractive for existing restaurants who wish to engage in deliveries or take-out sales.

With virtual restaurants, you can still sell through renowned and popular delivery services, but you can use your own kitchen and equipment to prepare orders, instead of renting ghost cooking space.

The pros and cons of ghost cooking

Benefits

Reduction of overheads: without a storefront, ghost kitchens make it possible to avoid all the overheads associated with the purchase or rental of a restaurant commercial space. To change the menu, there’s no need to reprint anything: just update it online.

Take advantage of the increased demand for online orders: ghost restaurants can sell through as many third-party delivery services as they like, as well as through their website.

Challenges

The costs of third-party delivery services: it’s no secret that third-party delivery services charge transaction and/or service fees for each sale made on their platform. If these costs are not controlled, they can undoubtedly reduce the restaurant’s bottom line.

Reputation management: in the absence of a service in direct contact with the customer, the reputation of a ghost restaurant depends to a great extent on word of mouth and the reviews and comments published online. It is therefore necessary for ghost restaurants to actively promote positive reviews and respond to negative reviews.

Increased pressure on marketing: building and developing a brand in an online-only space, without a physical restaurant to get to know consumers, requires very effective digital marketing to ensure customer acquisition.

Limited customer base: since most delivery services limit your delivery area to a relatively small radius around your ghost kitchen, the area in which you can find potential customers is limited.

The pros and cons of a virtual restaurant

Benefits

Take advantage of the online ordering request: the virtual restaurant is the best way for an existing restaurant (which has a physical establishment) to discover the possibilities of food deliveries, take-out sales and orders to be placed in advance by customers. No need to rent a ghost kitchen, you already have everything you need to prepare orders in the kitchen of your restaurant.

Potential to avoid third-party service charges: With an ordering system like UEAT, restaurants can take orders without depending on third-party delivery services or exposing themselves to their transaction and service charges. And of course, if they wish, they can also sell through third parties.

Customer experience control: as customers can order directly from your website and, if you follow the Tinc Set model, can pick up their orders at your establishment, you keep more control of your customer experience, from packaging up to the quality of the dishes.

Challenges

A virtual restaurant requires commercial catering space. For restaurateurs who are starting out, the virtual restaurant presents a major obstacle: a place of physical restoration is necessary. Therefore, the virtual restaurant is generally not the first experience of an entrepreneur who embarks on catering. It is more aimed at restaurants wishing to offer both table service and delivery options, take-out or orders to be placed in advance by customers.

Managing multiple menus: If your table service, takeout and deliveries menus are different, you must manage them all. Without the right tools, managing several different menus can be relatively complex. Lightspeed Delivery allows restaurateurs to manage all their menus of deliveries, take-out meals and meals served at the table from a single place: from items in the lists to their prices and photos. You will be able to send the menu changes to your website and to the menus presented on each third-party delivery platform.

Potential heaviness in order execution: imagine having to dedicate a tablet to each order method. If you offer table service, takeout and delivery through your website, for example, and you also sell through UberEats, that means you need four tablets, each receiving orders independently of others.

Before integrations of two-way deliveries such as Lightspeed Delivery, restaurants had to assign an employee to take incoming orders from each shelf and enter them manually in the restaurant cashier system.

Order fulfillment previously posed problems in offering food for delivery and takeout: this is no longer the case today, if you have the right tools.

Virtual restaurants won’t stop

There’s a lot of talk about virtual restaurants right now, but the concept of marketing through online sales channels, whether it’s a third-party service or your own website, is not new. The COVID-19 virus has only accelerated the adoption of an already emerging trend.

By necessity, restaurants are now exploring the concept of virtual restaurants as a way to diversify their sales and customer service methods. By deploying the right technology to support the management of all operations, restaurants can manage table service and online orders simultaneously without the slightest difficulty.

If you want to find out how to ensure the success of your restaurant online and how to get started in take-out and deliveries and orders to place in advance,  contact our team of catering experts today  to ask them free advice!

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