Ghost kitchens are a concept of the past as it’s been reported that these delivery-only kitchens are failing. The “ghost kitchen” concept attracted big investors, celebrity chefs, and food chains during the Covid-19 pandemic as a way to fulfill online orders from delivery apps like Grubhub and Uber Eats. The idea was for “ghost kitchens” to represent more than 20% of the restaurant sector by 2025.
However, it turns out that the “ghost kitchen” concept baffled many customers who couldn’t find the restaurants on a map, stop by in person to see where their food was being prepared, or report problems with their orders. Some customers felt cheated when they found out they had ordered from what they thought was a small restaurant but which, in reality, turned out to be a large chain using “ghost kitchen” techniques.
The “ghost kitchen” phenomenon was fueled by hope and necessity during the height of the pandemic. It was touted as a possible salvation for the restaurant industry as more than 70,000 restaurants closed due to the pandemic. However, as people began returning to restaurants, “the mysterious food world of virtual restaurants was no longer as necessary,” said Stephen Zagor, a restaurant industry consultant and adjunct professor at Columbia Business School.
Transparency and quality issues have also been a major issue for “ghost kitchens.” Consumers prefer to order from traditional restaurants, and 70% of diners say it is important that their food comes from a physical location accessible to the public.
In addition, the business aspect of running a “ghost kitchen” has been challenging. These initiatives depend on external delivery companies to deliver orders, and third-party providers charge fees that can be as high as 30%. Local health departments have also had difficulty inspecting and regulating “ghost kitchens,” and the online delivery market is saturated.
As a result, many restaurants have closed their “ghost kitchens,” and funds for these types of projects have dried up. Wendy’s abandoned its “ghost kitchen” plans earlier this year, Applebee’s closed Cosmic Wings, and Kalanick’s CloudKitchens laid off its staff this fall. Butler Hospitality, which operated “ghost kitchens” for the hospitality industry, also closed.
The collapse of the “ghost kitchen” business further demonstrates how companies that thrived during the Covid-19 pandemic have collapsed as consumers return to their old habits.