“Location, location, location”… unless you’re a ghost kitchen.
Before we go further…let’s make sure we’re on the same page.
Our friend, Ian Christopher of Galley gave a great definition (you can also check out Give an Ovation podcast with him here): “A ghost kitchen, simply put, is a delivery-only restaurant. There’s no physical space for customers. Orders are made in one location, picked up by a delivery driver, and enjoyed off-premise.” (you can read the whole article here, “What Is a Ghost Kitchen? Here’s Everything You Need To Know.”)
Pros and Cons of Ghost Kitchens.
- An additional incremental revenue stream.
- Lower overhead due to no wait staff, furniture, or decor being necessary as well as additional space for dining in customers.
- The customer is communicating directly with the kitchen and not a server.
- There’s also a lot of technology designed for ghost kitchens like Bbot for online ordering and Ovation for guest feedback that make it easier to run.
- Tend to be low volume and no foot traffic.
- Without a strong database, they rely heavily on 3rd-party delivery companies that eat into the margins.
- Can muddy the operations of a fine oiled restaurant kitchen machine.
Your Ghost Kitchen Discovered
But how do people find your ghost kitchen and decide if it’s worth a shot?
Online reviews. Over 90% of diners will check online before ordering.
So your online reviews will be a huge factor for first timers, but feedback is also essential for repeat customers. With 42% of online orders having some sort of issue, it is critical to catch those unhappy customers before they get to Yelp.
Those negative reviews aren’t only annoying, but they hurt your business. 1 negative review loses you on average 30 potential customers! Ouch.
Hence the key is going to be to intercept those negative reviews, flood your listing with 5-star reviews, and make sure you offer the same hospitality to your ghost kitchen customers as you would to guests in your dining room.
As Zack Oates, the CEO of Ovation says, “It’s not about how people order, it’s about how they feel.”
Make sure you have bag stuffers, automated follow up messaging, or just use tools like Ovation to see how everything turned out, make it right, and invite them back.
Now onto those ‘can’t live with ‘em can’t live without ‘em’ 3rd-party folks. They are leading the market…like big time. “Doordash owns 50% market share. And Doordash’s number of orders for the first 9 months of 2020 tripled compared to the previous year.” (Find out more about this by listening to the full podcast here).
And while they are eating upwards of 25% of your margin, they don’t have to be the enemy. Use 3rd-party to your advantage. Use tools to convert them to 1st-party orders.
The Upsides and the Downside
It is more difficult for these kitchens to establish brand value, however. Most of that true brand loyalty is developed through inhouse experiences with customers.
While ghost kitchen concepts don’t have that opportunity, they do have the opportunity to create digital experiences with their customers. Creating a strong brand that stands out among all the other 100s of restaurants on Doordash or Grubhub or Ubereats is the key in their success. Things like a SIMPLE menu/concept, edgy or clever name, popping logo, bold colors, and resolute font, and a brand voice are key.
So if you have a restaurant and want to bring in some extra revenue, look to a ghost kitchen. You can either establish your own concept or test out a ghost kitchen franchise with companies like Nextbite.io. Regardless, have realistic expectations and don’t be afraid to open up a few concepts! Imagine someone ordering your wings on Wednesday, your pizza on Friday, and your lunch on Saturday from three different ghost kitchens – now that’s scary.
If you’ve read all the way through this article and still have questions, chat with us here.