2022 Predictions: Ghost kitchens and virtual brands will give the restaurant industry a much needed boost
Around the new year, I like to take a moment to reflect on what has transpired in the previous months and make some predictions about what is to come. So far, I have written about trends I see in the hospitality industry, non-COVID related challenges to the global economy’s recovery, the rise of plant-based seafood, and the staying power of NFTs. For my final prediction, let’s examine a new trend in the restaurant industry.
As the restaurant industry emerges from the post-pandemic rubble, ghost kitchens and virtual brands have the potential to give eateries a much needed lifeline.
For those who are unfamiliar, let’s go over some quick definitions:
Ghost Kitchen: a kitchen (either in a restaurant or third-party space) where one or more brands can prepare meals for only delivery and takeout
Virtual Brand: a brand that operates for delivery and takeout only and can be housed in existing restaurants, ghost kitchens, or elsewhere
Here’s an example of how this could work: Restaurant X closed its dining room at the height of the pandemic and switched to a take-out only model for lunch and dinner. To make extra revenue, Restaurant X began renting out its kitchen space to Bakery Y (a virtual brand) during breakfast. Bakery Y sells its pastries via delivery apps like DoorDash and Caviar.
These concepts did more than just help existing restaurants tread water. By eliminating common barriers, like real estate, labor, and overhead costs, ghost kitchens and virtual brands make it easier for restaurants to open, expand, and/or enter into new markets.
Take, for example, James Beard award winner and Iron Chef alum Jose Garces. In 2017, Garces was running an upscale restaurant in a luxury hotel in DC. He was on the brink of opening two more concepts (including an outpost of his Philadelphia bar) when his restaurant group declared bankruptcy–forcing him to give up his presence in Washington.
Just a few years later, Garces is back in the DC area with Buena Onda–a taco-only ghost kitchen, and an offshoot of his brick-and-mortar Philly shop. Building on this success, Garces is now said to be scouting locations for a full-service restaurant in the District. He is also planning additional ghost kitchens in Florida, New York, and Massachusetts.
Not only are these models helping to bring the restaurant industry back, they are giving entrepreneurs and smaller, independent eateries a way to compete with established brands and larger chains. This could serve up greater choice and innovation for both the industry and consumers.
Danilo Diazgranados is an independent investor in the global food and wine, financial services, real estate, and the hospitality sectors.