GHOSTKITCHENS

EVERYTHING YOU NEED TO KNOWABOUT THE FUTURE OF DINING

It’s the hot new food trendthat restaurateurs arepicking up quickly.

With these unprecedented changes taking place, people are being forced both individually and as a community to adapt to the new societal norms. With many businesses forced to shut their doors or abide by tough restrictions as a result of COVID-19, trends will undoubtedly be changing in terms of the way people interact, collaborate, shop, exercise, and most important to the Australian lifestyle, eat. This new age of isolation will see people enjoying the same quality food in the privacy of their own homes. That’s where new delivery based and takeout business models come in. Ghost kitchens will be the perfect answer in responding to these changing trends, all whilst eliminating the overhead costs of dine-in experiences.

The rise of ghost kitchens will mean a shift in restaurant focus to the quality of the food and exceptional service to customers during delivery and takeout. It will also require technological savviness and heavy investment into online marketing. Whilst ghost kitchens provide numerous advantages, there are also a few hurdles to be overcome.

This whitepaper will firstly define and explain ghost kitchens. It will continue to discover and elaborate on the latest trends that resulted in the shift within the industry, explore and highlight the pros and cons of operations, and finally, explain the numerous business models you can keep in mind when venturing into running a ghost kitchen.

If there’s one thing to keep in mind; the key to success is to focus on your delivery channels and how you can get the most out of them.

The future of the restaurant landscapeis going to be altered forever.

Contents

1. Ghost Kitchens: What are they?An introduction to ghost, dark, virtual or smart kitchens to get you ready to grasp the business model.

2. The latest industry trends Discover what the current market trends are that have given rise to ghost kitchens.

3. The Pros and Cons Ghost kitchens have plenty of advantages, but they also pose challenges.

4. The Business Models An exploration of numerous operational models to match with your goals.

5. Conclusion Find the right space, and enhance your delivery channels in orderto maximise the success of operating your ghost kitchen.

Chapter One

Ghost Kitchens: What Are They?

1. Do you cook and create incredible food?

2. Are you interested in bringing your delicious business ideas to life?

3. Would you need a commercial kitchen space to bring these culinary

pieces of art to fruition?

4. Will you be prepared to work solely within the booming markets of

delivery and takeout?

First things first, ask yourself;

If you answered yes to these questions, then you’re ready to seize the great opportunities that come along with a ghost kitchen.

Boo!Ghost Kitchens are here to stay

Ghost kitchens, also known as dark, smart, or virtual kitchens, are kitchen spaces for

food and restaurant services without the storefront. These businesses sell meals

exclusively through delivery channels and strip down all the fancy design and decor

you’d normally get at a dine-in restaurant. As such, operational costs are much lower.

The purpose instead is to serve quality food for customers to enjoy in the comfort of

their own home.

Revenue in the Online Food Delivery Marketin Million AU$ (Australia)

Source: Statista (COVID-19 impact will be implemented Q2 2020), January 2020

The online food delivery sector was already set to dramatically grow, with Statista

reporting an annual growth rate (CAGR 2020-2024) of 7.1%, resulting in a market

volume of AU$3,233m by 2024. With the increased closures and restrictions being

enforced in an effort to cease the spread of COVID-19 throughout the nation, it’s

predicted this sector will be set to boom. Ghost kitchens will rely completely on

online platforms to garner sales. The growth of these delivery channels such as

Deliveroo, UberEats, Menulog and more make the operational side of ghost kitchens

manageable, as food businesses are able to solely focus on what they do best,

creating food, whilst the delivery channels handle communications, menus, design

and technology.

However, it goes without saying that crucial to the

success of running a ghost kitchen is capitalising on

latest technologies and online marketing efforts.

Therefore it is vital to reach, attract and engage

target audiences in order to retain and build a loyal

customer base.This undoubtedly requires a new way

of thinking during these times.

Chapter Two

The Latest Industry Trends

The Detrimental Impact of COVID-19

It was bound to pop up somewhere in this white paper. This pandemic has single-handedly changed the way society functions as a whole. As the effects of the virus stretch globally, it’s been the priority for all governments to focus on the safety and wellbeing of their people. As such, Australia has seen heavy restrictions placed on the hospitality industry in order to uphold social distancing rules.

With businesses only allowed to operate as take-away stores, it’s seen the closure of many loved restaurants and bars. Queue online delivery! This has unsurprisingly seen Australians order their favourite meals straight to their door with a click of a button. Moreover, the effects of this health crisis will see a new customer emerge - one that will be highly conscious of hygiene, price, and social connection.

Next on the menu:A digital domination. Why are ghost kitchens going to be emerging across the nation? What has contributed to their success? Why are they appealing to restaurants, cooking professionals, and property owners? What is driving consumer behaviour and preference to ordering online? Let’s delve right in.

Don’t Forget Top Customer Service and Delivery Quality

Although there is no longer face to face communication, it doesn’t mean proper customer service can be disregarded. In this day and age a good product will only take you so far. Customers desire more. That’s why we’ve seen the rise of experiential retail and dining. People yearn for unique experiences, and if they’re being greeted with the same old product, they’ll start looking elsewhere.

Therefore, pivotal to the success of ghost kitchens is the offering of a unique consumer journey. Whether it be a personalised, handwritten note on their order, an exclusive discount, freebies, engagement on your socials or effective email marketing, you’ll need to establish a long-lasting relationship.

Millennials Live Online

Consumers within the ages of 22 to 38 are a very important demographic with their unique tastes and preferences. Always on trend and up to date with the latest news, millennials have navigated most of their lives with the help of internet-based technology. Being online and active on social media underlies all their activity - work, shopping, exercising, learning, communicating and even dating.

These millennials are now also online ordering their favourite food. It’s absolutely essential for any business operating a ghost kitchen to have a strong online presence. Without it, you’ll be missing out on effectively communicating to this influential market.

Chapter Three

The Pros and Cons

With lower overhead costs and rent, it allows one the power to fully embrace technology and data to deliver exactly what the consumer desires. Seems basic enough, but you’ll need to think differentlyand harness technology correctly to communicate your unique offering online.

There’s a reason everyone is doing it. Ghost kitchens are ultimately cheaper and simpler to operate than the traditional dine-in restaurant.

The Benefits You’re in For

The primary advantage of running a ghost kitchen is the lower operating costs. It’s much easier and cost-effective as overhead costs can be eliminated completely. There is no need for furniture, decor, wait staff, or cleaning. This means more money in your pocket. Instead, you get the chance to invest into utilising cutting-edge technology and its power to build your offering and communication to the target audience.

Furthermore, rent prices will be slashed. With a ghost kitchen, there’s no need to be located in a central, popular CBD area, that will attract traffic. After all, the great perk of delivering food is that the geographical customer base is broadened immensely. Profitability is no longer linked with location, and this means significantly cutting costs when looking to rent a kitchen. Even opting to share the kitchen space will make the price tag smaller.

Start-up time will also be minimised. Ghost kitchens can bring ideas to life much more quickly than the traditional restaurant.

In addition to this, you’ll gain more data-driven insight as you’re operating and marketing online. It’ll make management and monitoring of the business simpler with easy access to data. With this crucial information, you’ll be able to forecast and anticipate trends, favourite meals, popular menus, and confidently begin to trial or experiment new products. You’ll have customer feedback and reviews at a touch of a button.

The Challenges You’ll be Facing

Ghost kitchens are still quite a new phenomenon. Their full effect on the industry is yet to be seen during these uncertain times. However, there are a few things to be considered before making the decision to run a ghost kitchen. Put frankly, it’s more difficult to operate a virtual business.

You’ll be granted access to valuable data and resources, but so will the rest of businesses. As ghost kitchens become more common, you’ll be faced with more competition. With marketing and brand awareness being solely online, it’s vital to build brand image and visibility to attract your customers.

It also gets more complicated in terms of customer relationships. You’ll be losing the touchpoint with your consumers and without this in-person interaction, more effort will be needed digitally. It’s important in this case that the personality of the business is fostered throughout your products. Showing elements of emotion and personal touches will benefit brand image greatly. Ultimately, it’s favoured to be a high- tech connoisseur for guaranteed success of your ghost kitchen.

Pros• Lower overhead costs

• Reduced rental costs

• Quick start-up

• Increased brand awareness online

• Access to data-driven insight

• Real time adaptability

Cons• Increasing competition

• Online Reputation

• Eliminates touchpoints between customer and restaurant

• Technological skill required

• Food quality and safetymust be ensured

Chapter Four

The Business Models

The type of ghost kitchen you’ll be running isgoing to be dependent on your business goals.

You’re not limited to having to rent a private commercial kitchen and partnering with a few aggregators. There’s numerous business models that exist depending on the location and collaborative opportunities available.

The Dedicated Ghost Kitchen

This setup will be regarded as the traditional ghost kitchen. The business model is simple in that there will be one restaurant which privately owns or rentsa kitchen space with no dine-in or takeaway options.

This generally means a single type of cuisine will be available and dependent on delivery channels to manage orders and distribute deliveries.

01.

The Shared Ghost Kitchen

In this case, there will be multiple restaurants operating within the same ghost kitchen. This business model offers lower rent costs and will help keep other operational costs down. Whether you yourself own multiple of these brands, or you’re working alongside other businesses, each restaurant will have it’s own identity.

Proper data analytics will be required and must be done for each individual restaurant alone. In this way, online presence and marketing communications can be effectively managed.

02.

The Takeaway Ghost Kitchen

This business model follows a setup almost parallel to the dedicated ghost kitchen. The difference is that this operational method is also open to face to face interaction with customers only in the form of pick-up.

Customers will be able to interact with staff and witness food being created, however, no dine-in options are offered. This model will require more interior design and decor to facilitate customers, however, it gives businesses a change to forge customer relationshipsin person.

03.

Delivery Channel-Owned Ghost Kitchen

Beginning to pop up now is ghost kitchens owned by delivery channels. They put forward empty kitchen space available for rent by businesses. The perk here is that the restaurants operating out of these ghost kitchens have the added bonus of a partnership with this delivery aggregator and their channels.

These delivery aggregators will handle the online orders, menus, and even marketing. This leaves your business to do what it does best, cook up some incredible meals. However, important to note here is that you may be operating alongside a varying number of other restaurants at any given time.

04.

Outsourced Ghost Kitchen

The last form of operating a ghost kitchen is to outsource the majority of the process. This is possible by working in collaboration with another business that is professional in food preparation, order processing and delivery.

As a final seller, there is minimal involvement with the creation of the product.

All efforts are instead invested into the finishing touches, focusing more on differentiating the final product andensuring top quality.

05.

Conclusion

Ride the new digital wave,the best way

We’re in a new age. An age where digital experiences are going to be in demand and booming during a time where safety, social media, and convenience are top of mind.

Online food delivery and takeaway will undoubtedly explode in these current, precarious circumstances. The opportunity to operate or rent out a ghost kitchen in this market will reap rewards every business desires.

How SpacenowCan Help You

At Spacenow, we’d like to take action. It’s time to get hospitality businesses adapting to the current marketplace.

Spacenow is an online marketplacehelping businesses in Australia connectwith one another.

It’s important now, more than ever, that we all come together and collaborate to achieve success in these difficult and unprecedented times.

Whether you’re a restaurant owner or chef looking for commercial kitchen space to start cooking up some tasty dishes, or you own valuable kitchen space that could be rented out, Spacenow can help you.

We know how much the hospitality industry has been affected, and we want to help support the community.

How Does it Work?

Register your Details

If you’re chef or own a kitchen we would like to help you make an extra income.

01.

List your Information

Fill in a quick form to give us some basic information about your kitchen.

02.

Application Accepted

We’ll work together to make sure each partnership is successful.

03.

Ready to start bringing your culinary ideas to life?Or perhaps you have space that

could be used as a ghost kitchen.

Either way, visit our websitespacenow.com for more information.