What are Ghost Kitchens? The definitive guide to Virtual Restaurants

A ghost kitchen is a food service operation that prepares meals solely for delivery, without a traditional dine-in space. These kitchens operate from commercial spaces, focusing on fulfilling online orders through apps and delivery platforms. Want to learn more about ghost kitchens and how to start your own? Read our full guide to get started!

We have the inside scoop on ghost kitchens location and its business advantages. We’re diving into how they work, the different types, whether they’re profitable, and how you can get started.

Our detailed guide will help you navigate this booming industry and determine which ghost kitchen model is the right fit for you and your restaurant business. 

This guide will help you answer:

1. What is a ghost kitchen?
2. How do ghost kitchens work?
3. What’s the difference between a ghost kitchen and delivery at a brick-and-mortar?
4. What are the different types of ghost kitchens?
5. How does a ghost kitchen help your restaurant grow?
6. Are ghost kitchens profitable?

Check it out!

What is a ghost kitchen?

Ghost kitchens, also known as dark kitchens, are commercial kitchens optimized for third-party food delivery service.

Each delivery kitchen is located in areas with a high concentration of delivery demand. The kitchens themselves don’t have a storefront and the staff prepares dishes off of their menus that are only available for delivery. 

Think of it as a virtual restaurant operating as a digital storefront, with a few back-of-house staff members working on fulfilling online orders. Instead of a physical location, your presence is digital, allowing you to reach more customers than you ever could with just a physical location. 

Ghost kitchens provide you with prime real estate at a fraction of the cost, compared to brick-and-mortar.

Plus, they come with fulfillment and logistics services, so you can focus on cooking. With ghost kitchens come endless possibilities in terms of what you can do to launch new brands or manage multiple virtual restaurants all in one place since your presence is online.

When you understand how valuable of a concept this is for the customer, you know how crucial it is to master delivery so you can better meet their needs.

Ghost kitchens allow you to tap into the online delivery business which is rapidly growing and projected to reach $1 trillion by 2030. Now more than ever in the restaurant industry, it is crucial to adapt to the online delivery market to capitalize on market demand.

To remain competitive, it is vital to build a delivery service using a ghost restaurant or ghost kitchen model that works based on current demand.

The lowdown on ghost kitchens

Ghost kitchens (a.k.a. virtual kitchens, dark kitchens or delivery-only kitchens) – you’ve probably been hearing about this new trend circling around the restaurant industry.

With the shift in demand during the pandemic, this trend is only moving faster as food delivery has become the lifeblood of many restaurants.

In fact, in the United States alone, 60% of consumers are ordering delivery or pickup at least once a week.

Now more than ever, the cost of running a traditional brick-and-mortar restaurant is overwhelmingly high, with skyrocketing overhead costs in an uncertain demand period.

Simply put, traditional restaurants just aren’t built for delivery.

Even further, demand for food delivery is at an all-time high, where customers can order food from their favorite restaurants in any given city.

Customers are browsing their favorite foods online and ordering their favorite dishes directly from their couches.

You value your restaurant and the experience it has to offer your customers and may be wondering how you can maintain that experience when shifting to delivery.

We’re here to provide you with everything there is to know about ghost kitchens, so you can make the next best decision for your business and feel confident about your success even during unpredictable situations.

How does a ghost kitchens work?

To get started in a ghost kitchen or virtual kitchen, you’ll begin by renting out space at a facility where you can prep delivery orders.

Once you’re set up with the commercial kitchen equipment you need to operate, you’ll launch your restaurant brand online across multiple delivery apps. Then you’ll watch incoming orders and prepare food in your delivery-only kitchen space. 

Each existing kitchen is fully equipped with basic amenities and customizable options to best meet you and your customers’ needs.

You have more flexibility than ever before, where you can get creative in the kitchen again, and try new menu ideas and concepts.

Here’s a quick video showing how CloudKitchens work.

With the recent rise in popularity of major food delivery app providers (Uber Eats, Doordash, Grubhub, Postmates, etc.), it’s more important now than ever to build a delivery model that works.

At Cloud Kitchens, we provide the infrastructure and technology you need to run a successful delivery kitchen business/virtual brand.

• First, you’ll get access to your own ghost kitchen, fit with basic commercial kitchen equipment so you can customize it to your needs. We’ll provide the technology to track your orders effectively and efficiently;
• Next, your customer places an order and no matter what delivery app they use, you’ll accept all deliveries through one single tablet. Then you’ll cook up the order from your delivery-only kitchen;
• You’ll mark the order as complete right from the tablet in your kitchen, and our team will take care of the rest to fulfill the order from your existing restaurant. Each of our delivery hubs has a processing center on site with a dedicated team ensuring that each order makes it into the hands of the right delivery driver in the shortest amount of time;
• Thanks to faster and more accurate deliveries, you’ll see the 5-star reviews start to roll in from your customers for your existing restaurant business. And in case you missed it, reviews will make or break you, so it’s crucial to drive positive sentiment online.

→ Curious how to get started marketing your ghost kitchen online? Check out our 8-step checklist. 

You can also download our free restaurant marketing checklist, to ensure you’re setting up your restaurant (or multiple restaurants) for delivery success. 

Now, let’s dive into how ghost kitchens compare to traditional restaurants.

What’s the difference between a ghost kitchen and delivery at a brick-and-mortar?

Factors	Ghost Kitchen	Delivery at Restaurant
Overhead Costs	Low	High
Delivery Flow	Set up optimized for seamless delivery	Crowding up and compromising the walk-in/dine-in customers experience
Menu	Optimized (simplified) for delivery, usage of data analytics to improve offering	The same menu but changed occasionally
Online customers	Able to target a bigger online audience within the delivery radius	Rely mainly on walk-in customers, less on online traffic

A ghost kitchen concept operates differently than a brick-and-mortar.

In a traditional brick-and-mortar that offers restaurant delivery services, there’s typically limited parking for delivery drivers and poor operational workflows that result in slower deliveries, more room for error, and an interrupted dine-in experience.

On top of this, you’re juggling incoming orders on multiple tablets, making it difficult to track each order and ensure order accuracy. 

In contrast, ghost restaurants or ghost kitchens simplify your delivery operations and increase your efficiency with every order.

At Cloud Kitchens, you get the benefit of logistics and fulfillment handled for you, so all you’ve got to do is keep making amazing food.

You cook up the order, place the food right outside your kitchen, and a runner will handle the rest. In other words, you fulfill more orders in less time.  

You may already be delivering out of your brick-and-mortar restaurant and are wondering how it’s any different from a ghost kitchen. We’re breaking down the key differences so you can better understand the value of each. 

Less overhead costs 

You’re always looking for ways to cut costs while maintaining quality, but it can be difficult in an expensive brick-and-mortar with more and more delivery orders coming in.

With profit margins being squeezed from both sides and multiple delivery tablets to juggle, it is tricky to focus on delivery and streamline efficiency. 

In a ghost kitchen, you’re cooking in a delivery-optimized kitchen that’s designed to cut unnecessary costs.

Rent is low and efficiency is high. You have your own private commercial kitchen space within a delivery hub to cook up orders. It can be difficult to expand your traditional restaurant with high overhead costs.

But with ghost kitchens acting as satellite kitchens from your main base of operation, you can easily expand from coast to coast with low capital. 

With lower labor costs and overhead, you’re able to shift gears and get back to the reason why you opened a restaurant in the first place: to bring tasty food to happy customers.

Optimized for delivery 

Ghost kitchens provide you with kitchen space that’s dedicated to fulfilling each online order. At CloudKitchens, each one comes equipped with the proprietary software needed to track orders and decrease delivery time, meaning more happy customers leave raving reviews.

All your delivery orders are streamlined onto one single tablet, regardless of which delivery app the customer is using. This means real-time, accurate data right at your fingertips. 

With a dedicated onsite fulfillment team ensuring each order gets into the hands of the right delivery driver, you’re able to cook up more orders and get them into the hands of your customers in less time.

The more accurate your ETA with delivery, the better online ratings you’ll receive. With your own ghost kitchen, growing your restaurant business and expanding into new neighborhoods has never been easier. 

Simplified menu items

When you’re running delivery out of your brick-and-mortar restaurant, you may be more likely to include any or all menu items available for delivery.

When it comes to ghost kitchens, you’re working for efficiency, and with that comes a simplified ghost kitchen menu with items that travel well and are packaged nicely for any online ordering.

With each online order, you’re able to leverage the data you receive to plan your supply chain and labor needs based on demand, even across multiple restaurants.

This means you can optimize your online menu based on demand, so you know which items to keep and which ones to 86. 

This means less wasted ingredients and fewer hours spent producing menu items that aren’t in high demand. Instead, you’re able to narrow down your virtual restaurant menu based on what’s trending in your delivery area. 

More online traffic

You know that with a traditional brick-and-mortar, location is key. But with ghost kitchens, foot traffic is taken out of the equation.

You’re no longer relying on your physical storefront to bring in new customers, hence the name virtual kitchen. Instead, you’re able to reach a higher volume of customers searching for food online.

In fact, as of 2021, about 6 in 10 adults claim that they’re more likely to order online delivery than dine-in.³

Easily set up your virtual brand on each food delivery app with great images of some of your best dishes, and that’s it.

There’s no need for printing new menus or maintaining a large front-of-house staff. All you have to do is get set up online and start taking orders. 

There are many different types of ghost kitchens, so we’ve created a breakdown of each so you can understand which one is best for your restaurant business.

Ready to see a ghost kitchen in action? Book a tour today!

Pros and Cons of The Virtual Kitchen Business Model 

Pros:

This business model is revolutionizing the restaurant industry by offering a low-cost, flexible, and scalable solution for food entrepreneurs.

With the rise of online ordering and food delivery services, they provide a unique opportunity to maximize profits while minimizing traditional restaurant expenses.

Let’s explore the key advantages that make ghost kitchens a smart choice for aspiring restaurateurs and established brands alike:

• With no need for a physical dining space, ghost kitchens eliminate expenses tied to real estate, decor, and front-of-house staff, reducing the initial investment significantly.
• You’ll save on utilities, insurance, and staffing costs, as you’re only focused on kitchen operations and delivery, which allows for a more streamlined business model.
• Once your virtual kitchen is established, scaling to new locations is easier compared to physical restaurants. You can replicate the model in new markets quickly with minimal investment.

Cons

While ghost kitchens offer plenty of benefits, they also come with a few challenges that entrepreneurs should consider. The good news is that these obstacles are often easier to address compared to the hurdles faced by traditional brick-and-mortar restaurants. 

Here, we’ll outline some of the common drawbacks and provide simple, effective solutions to help you navigate them successfully.

1. Limited Customer Interaction: Unlike traditional restaurants, these kitchens don’t allow face-to-face engagement with customers, which can limit brand loyalty. You can overcome this with strong digital branding and by providing excellent customer service through delivery platforms, social media, and personalized follow-ups with customers.
2. Dependence on Delivery Platforms: Relying on third-party apps means paying commission fees and dealing with potential service issues from the platforms. While fees are unavoidable, you can offset costs by negotiating better terms, building your own delivery infrastructure, or driving direct orders through your website with special promotions.
3. Logistics and Delivery Challenges: Ensuring food quality during delivery and dealing with inconsistent delivery times can be a concern. However, this can be managed by optimizing your menu for delivery (choosing items that travel well) and by partnering with reliable delivery services to ensure food arrives fresh and on time.
4. Limited Walk-In Revenue: Without a physical location, you miss out on foot traffic and impulse dining decisions. You can combat this by enhancing your online presence, running local digital ads, and offering promotions that encourage customers to order frequently from your ghost kitchen.
5. Highly Competitive Market: Ghost kitchens are becoming increasingly popular, which means more competition on delivery apps. Stand out by offering unique menu items, leveraging data analytics to optimize your operations, and using strong digital marketing tactics to capture attention on delivery platforms.

What are the different types of ghost kitchens?

Ghost kitchens come in all shapes and sizes, with some spaces being shared and others being used by just one restaurant brand.

We’ve broken down the different types of ghost kitchen so you can understand which is the best fit for you. 

1. Commissary kitchens

Let’s say you’re a food truck owner with multiple food trucks in the Los Angeles (LA) area. With limited food prep and storage space, it can be difficult to fulfill each order quickly.

With commissary kitchens, you have dedicated space to prep your food and distribute it to your different locations. 

You get a shared kitchen space that’s available to rent based on your schedule, which makes it super flexible.

Whenever you need more space to prepare orders or store ingredients, you can access your commissary kitchen without having to incur the costs of actually owning the facility. 

You’ll have the basic equipment you need to get started quickly and efficiently. A commissary kitchen provides a lower-cost alternative to opening up a new kitchen on your own.

Also, you’ll be able to rent the real estate without the financial setback or commitment.

2. Commercial kitchens

Do you typically receive larger online orders where you need plenty of kitchen space and support to fulfill them? Commercial kitchens are larger, industrial kitchens that are licensed to restaurant brands and catering companies to prepare food. 

With a commercial kitchen, you’re set up with your own private kitchen space to cook. 

There’s no need to rent out specific time slots or worry about sharing your space. With commercial kitchens, you have your own dedicated space to prep orders whenever you need it.  

3. Incubator kitchens

Incubator kitchens, also known as pop-up kitchens, are temporary kitchens that are attached to a brick-and-mortar restaurant, within a food truck, or even a kiosk. These pop-up kitchens are designated as space for preparing incoming delivery orders. 

This helps staff divide and conquer, allowing the workload for deliveries to shift to the incubator kitchen instead of tackling all orders in one kitchen which can lead to inefficiencies and incorrect deliveries.

These kitchens are designed to help streamline efficiency for each delivery order that comes into the brick-and-mortar restaurant.

It provides a dedicated space for order prep and a designated area to hand off to arriving delivery drivers. 

Within each incubator kitchen, you have shared space for delivery only so you can try new brands at a time that works best for you.

Similar to commissary kitchens, you have the flexibility you need to test multiple concepts out of one single kitchen space. 

4. Kitchen pods

Compared to other types of ghost kitchens, kitchen pods are easy to transport between locations such as parking lots and behind restaurants.

These usually come in the form of shipping containers used as flexible kitchen space. This provides restaurateurs with the ability to cook anywhere and reach customers on the ground. 

Although they’re easier to transport, they’re also much smaller. Plus, kitchen pods are usually dark without any windows, making it more difficult to quickly prepare orders and effectively meet delivery demand.

It can be difficult to efficiently prepare large orders with minimal ventilation and natural light. 

5. CloudKitchens

CloudKitchens (Ghost Kitchen) provides restaurateurs with their secret sauce for delivery expansion.

Whether you’re a food truck owner, franchisee, local restaurant owner, or part of a national chain, we’ve got the expertise you need to get your delivery down to a science.

CloudKitchens offers a variety of delivery solutions to best fit your specific needs. If you’re looking to grow your restaurant business or simply need some extra prep space we’ll be with you every step of the way. 

Our ghost kitchens are designed with delivery in mind.

CloudKitchens: How it works

Prime real estate

You have your own private commercial kitchen space within a delivery hub to cook up orders.

With your ghost kitchen comes 200 to 300 square feet of prime real estate at a fraction of the cost. Ghost kitchens provide you with real estate within a delivery hotspot.

This means you’re strategically located in an area where you will capture the most online orders from customers nearby.

With a traditional brick-and-mortar restaurant, you know that location means everything and that typically comes with a high price.

But shifting to delivery-first means you can eliminate unnecessary costs without having to worry about how much foot traffic your restaurant will have.

With delivery-optimized facilities that are easily accessible for delivery drivers, it’s never been easier to reach a high volume of customers in the heart of a city at such a low cost.

Some restaurateurs are just using our space as a commissary kitchen, too, since our locations are right where all the action is happening.

You may be asking yourself, “Is there a commissary near me?”. With CloudKitchens, you’ll have access to the restaurant kitchen space you need to keep growing your food business. 

Proprietary technology

Each ghost kitchen at CloudKitchens comes fully equipped with the proprietary software needed to give you better tracking and actionable data.

This technology within each kitchen aggregates all your delivery orders into one place, rather than having a tablet for each app. That means less room for error, more efficient operations, and better data.

With key insights into market demand right at your fingertips, your restaurant will be running as efficiently as possible.

You can even leverage the data to plan your supply chain and labor needs based on demand.

Logistics and fulfillment

Instead of managing delivery all by yourself, you have a dedicated on-site fulfillment team to ensure each delivery is accurate and efficient every time.

Having a restaurant in a prime location usually comes with the constant headache of managing multiple delivery drivers entering your restaurant and keeping track of every order that comes in.

CloudKitchens sets you up for success with a dedicated team to ensure each order gets into the hands of the right delivery driver.

As soon as you mark an order as complete, our fulfillment team will come to grab it, process the order, and hand it off for delivery as soon as the driver arrives.

This can cut down your delivery time by 30%, and you never even have to step foot outside your kitchen. And in case you missed it, faster deliveries make happier customers.

Facility management*

Cleaning, maintenance, processing center, and security are all taken care of for you so there’s no wasted time on extra tasks that keep you busy.

All you need to do is make great food, and we’ll provide the support you need to grow your restaurant business online.

*Level of service dependent on facility

How does a ghost kitchen help your restaurant grow?

To put the value of a ghost kitchen into perspective, let’s say you have a franchise restaurant and due to the pandemic, you had to shut down.

You could have potentially offered take-out before the pandemic, but that only goes so far when you’ve got rent to pay on a brick-and-mortar.

This is where CloudKitchens comes in. You can quickly set up your restaurant to focus on delivery, minimize your costs, maximize your revenue, and resume cooking your best dishes.

Put simply, a ghost kitchen allows you to build a successful restaurant concept and return to business as usual.

Factors	Traditional Restaurant	Ghost Kitchen
Real estate size	~2100 sq ft	~200 sq ft*
Investment	~ USD 1m	~USD 30k*
Time to launch	~52 weeks or more	~6 weeks*
# of staff needed	25 or more	around 4*
Breakeven	~5 years	~6 months*

Turn-key solution

You can launch a ghost kitchen in one month or less. With minimal upfront capital and immediate access to the software and kitchen space you need, you have all the tools needed to have a successful delivery-only restaurant.

With commercial kitchens and storage space designed to help you run your delivery business, you’ll be able to optimize your business and minimize costs.

Our kitchens come fit with basic equipment, like a commercial kitchen hood and three-compartment sink. That way, you can customize the rest of your equipment to fit your needs.

Focus on the food

You’re probably in the restaurant business because you’re passionate about cooking, but have you become overwhelmed with managing the operations side of your deliveries?

Our kitchens come with all the pieces of the operations puzzle, so you can focus on the food. CloudKitchens helps take the stress out of implementing a new business concept so you can get back to doing what you do best.

All you’ve got to do is cook – we handle the logistics and fulfillment to make sure your orders are delivered with more accuracy, in less time. That way, you can better serve your customers.

Build multiple concepts out of one kitchen

Don’t miss this: since your presence is digital, you can create more than one brand to target different segments online. Let’s say you run a Mexican food restaurant.

Split that into street tacos, a fajitas concept, and a breakfast burrito brand, and you’ve just tripled your exposure on delivery apps.

Our most successful restaurant operators are often running five or more brands, and it’s all being cooked out of one single kitchen.

Experiment with low-risk

Have you dreamt of running a successful restaurant business, but always felt overwhelmed by the significant amount of time, money, and risks that come with doing so?

Opening a traditional restaurant comes with significant upfront capital and a lengthy ramp-up period, making it a high-risk endeavor for you.

But with CloudKitchens, you can unleash your creativity in the kitchen without losing your shirt, thanks to low investment and high reward.

Consider this your secret ingredient for expansion. You can easily build your delivery-only restaurant and reach a high volume of customers without being bogged down by the financial burden of a traditional brick-and-mortar.

Plus, the ability to run multiple brands we just covered leaves more room for experimentation without a big risk.

You’ve got the flexibility to experiment with new food concepts and brands and figure out what works without spending months building out a brick-and-mortar location each time.

Opening a ghost or dark kitchen requires minimal investment and risk, with unlimited opportunity to grow your restaurant business in the online delivery world.

Minimize cost, maximize profit

We all know restaurants are a low-margin industry, but ghost kitchens help you maximize that profit by getting smarter about how you run your delivery business.

With ghost kitchens, you’re able to get started with little capital (we’re talking $30K instead of $1M), and you’ll cut down on operational costs like front-of-house labor, wasted food, and expensive real estate.

In a typical brick-and-mortar restaurant, you’re likely spending about 30% of your sales revenue on labor alone.¹

When you partner with us, you can run your restaurant business with as few as 3 to 5 back-of-house staff. Since there’s no front-of-house staff needed, you don’t need as many hands on deck. 

Curious to learn more about how labor costs in a ghost kitchen compare to a traditional restaurant? Download our side-by-side comparison report.

Are Ghost Kitchens Profitable in 2024?

Absolutely, ghost kitchens remain a highly profitable venture in 2024. The evolving dining landscape, with a strong emphasis on food delivery, has positioned ghost kitchens as a cost-effective and revenue-maximizing solution for restaurateurs. Here’s why:

• Virtual kitchens eliminate the need for expensive real estate and front-of-house staff. By focusing solely on delivery, you can significantly reduce labor and overhead expenses.
• With streamlined operations, there’s less food waste and better inventory control, boosting your profit margins.
• Ghost kitchens allow you to operate multiple brands out of the same kitchen, expanding your customer base and increasing your visibility on delivery platforms without added costs.
• As consumer habits continue to shift towards convenience and online ordering, ghost kitchens are perfectly aligned with the future of food delivery. In 2024, the ability to optimize your online presence across multiple platforms means more orders and higher revenue.

Ghost kitchens not only reduce costs but also give you the tools to maximize profits in a rapidly growing market.

→ Check out the average restaurant margin in this blog →

How do you start a ghost kitchen? Step by Step

Starting a ghost kitchen can be a streamlined process if approached correctly. Here’s a step-by-step guide:

1. Research and Market Analysis: Identify your target market and assess demand in your area for delivery-only food options. Research popular food trends and the competition to find a niche.
2. Choose a Location: Find a cost-effective location that supports your delivery radius, keeping in mind the proximity to high-demand areas. Consider partnering with a ghost kitchen provider for a ready-to-use space. Check all the locations we have for you. 
3. Create a Digital-First Menu: Design a menu optimized for delivery. Focus on items that travel well, require minimal preparation time, and can maintain quality during transportation.
4. Partner with Delivery Platforms: Set up accounts with major delivery apps like UberEats, DoorDash, and Grubhub. Negotiate favorable terms and ensure your menu is optimized for visibility on these platforms.
5. Set Up Your Kitchen: Equip your kitchen with the necessary appliances and hire a small team focused on efficiency. Opt for high-quality ingredients that can be prepared quickly to meet delivery times.
6. Branding and Marketing: Develop a strong online presence. Create a compelling brand and run targeted digital marketing campaigns to attract customers. Utilize social media, SEO, and online ads to maximize exposure.
7. Launch and Optimize: Once operational, continuously monitor performance. Use customer feedback and data analytics to refine your menu, improve service times, and enhance your overall business strategy.

Launch your next kitchen with us

At CloudKitchens, you can launch a ghost kitchen in one month with little capital, and our team of experts will partner alongside you to set you up for success with delivery.

Whether it’s Orlando or a ghost kitchen in Sacramento, we have you covered.

Times have been tough, but managing your restaurant shouldn’t be. We’re as passionate about food as you are, and that’s why we’ve created a model where restaurants can thrive with delivery, even amid a pandemic.

Looking for a ghost kitchen in Austin, Chicago, Minneapolis, or somewhere else in the US? We have a variety of options to best suit your needs. Connect with us to find the location nearest you!

DISCLAIMER: This information is provided for general informational purposes only and the content does not constitute an endorsement. CloudKitchens does not warrant the accuracy or completeness of any information, text, images/graphics, links, or other content contained within the blog content. We recommend that you consult with financial, legal, and business professionals for advice specific to your situation.

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Sources:

• Lightspeed. 22 Online Ordering Statistics Every Restaurateur Should Know in 2024. https://www.lightspeedhq.com/blog/online-ordering-statistics/
• Restaurant Dive. Ghost Kitchens Could Be a $1T Market by 2030 https://www.restaurantdive.com/news/ghost-kitchens-global-market-euromonitor/581374/
• QSR. Restaurants in 2021: Takeout and Delivery is Now Essential to Customers. https://www.qsrmagazine.com/consumer-trends/restaurants-2021-takeout-and-delivery-now-essential-customers