Ghost Kitchens Changing Industry and Fueling Last Mile/Block/Yard

by Susan Beardslee | 3Q 2020 | IN-5873
COVID-19 has altered the trajectory of ghost kitchens and consumers’ habits related to eating out. These ghost kitchens, also known as dark, virtual, cloud, or commissary kitchens, are virtual; orders are enabled through websites and apps. They may either develop meals for a specific restaurant brand, like Famous Dave’s or PF Chang’s, a more localized restaurant group, or numerous online-only branded “restaurants” that do not have a Brick-and-Mortar (B&M) presence. They create meals for third-party delivery, restaurant delivery, or pick-up. Shelter-in-place orders have fueled ghost kitchen growth in North America, followed by Europe and with the Asia-Pacific (APAC) region and the Middle East as fast-growing markets. These emerging business models address the still significant size of dining-out spending. The industry draw comes from reduced costs in a low-margin business, with a much faster on-ramp to revenue. Volumes are higher and marketing costs are lower, including those associated with staff and a lack of long-term leases. According to Technomic, ghost restaurants sales across 300 U.S. sites have an expected 25% Compound Annual Growth Rate (CAGR) through 2025.

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