Ghost Kitchens are popping up everywhere What are they and should you start one?

Posted by Damian Roberti on

What are cloud kitchens also called ghost kitchen, virtual kitchen delivery, only restaurants? Also, we're going to be talking about the pros, the cons, who's it for and how you can take advantage of this movement. So then that way you can be in the forefront of this movement and how the first-mover advantage. So what is the cloud kitchen? Cloud kitchen is a restaurant with no physical storefront. And what does that mean? That means that people are operating in a commercial centralized kitchen.

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And in turn, they partner up with third-party delivery, service apps, such as Uber eats GrubHub Postmates in order for them to distribute their food offering to the public. So how do you visit these cloud kitchens? You can, these are restaurants without storefronts, and the only way you can consume their product is by ordering through these different apps that I mentioned before.

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They're focused specifically are on mass production. They just want to produce a ton of items and service through all these delivery apps. Now you might be thinking, is this something you want to invest your time energy into a hundred percent? Yes. By 2022, this food delivery service app industry is going to be more than seven, zero billion dollars. $70 billion is what we're talking about. So yes, this is definitely just infancy. The very, very beginning of the trend, the movement that we're talking about, which is the reason why if you pay attention right now, you can actually take advantage and be in the forefront of this crazy movement that we're talking about.

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We're talking about the ex CEO of Uber has raised more than $400 million, just this last year into his own cloud kitchen. We're talking about tons of people jumping into this issue. So without further ado, we're going to dive into the pros and the cons of this business model for you. So the reason why this model is so, so popular right now and is super promising, is because of the pros, the pros of not needing a physical storefront, not needing to own your equipment, not needing to go through all the business license infrastructure and the months and months of getting locked down into space and renovating the space and talking to like licenses, talking to like, um, regulators to get your license just so you can operate. No, we don't skip all those. You don't need any of those because you can just go into a cloud kitchen facility, sign a lease contract for a year to two years and you are ready for business.

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It is that easy, which is the reason why so many people are jumping into this and this is why it is super, super beneficial. Um, and it's definitely something that a lot of people are enjoying right now because you're not being locked down physically to one location only. Okay. This is a huge benefit for people who are in the food and beverage game. Now, another benefit is that you don't mean your full front of the house, staff. You skip all those. You don't have to worry about whether it's going to be raining or sunny, or whether it's going to be Thai food. You don't need to worry about all those because you don't need to worry about walking traffic. You need to spend thousands of dollars on a premium location because you're relying specifically on food delivery apps on the country. When it's raining, when there's time food, your business will probably spike.


No alt text provided for this imageSo you're going to skip all the training. You don't need to worry about customer service because all these food delivery apps are going to worry about that for you. All you have to do is focus on your craft, focus on your delivery, focused on producing good quality food for your customers. And that's the benefit. The pros of running F delivery only restaurant. Oh, I totally forgot to tell you another major. Pro is the investment is substantially lower than opening a full-scale brick and motor store. Because once again, I touched upon the fact that you don't need your equipment. You don't need to go through all the licenses. You don't need to run in the capital. You don't need any of those. All you need is to be able to go into leasing this cloud-based kitchen. So then that way your investment becomes substantially lower.

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To begin with you. You have an, a recipe in mind and you can already go into business. It is not easy, which is the reason why this is such a beautiful model that I can't wait to share it with you. But nonetheless, it does come with its cons. Now, what is the cons of running a delivery? Only restaurant. It is because you have no visibility. You have no way of doing promotion or marketing with walking traffic. And now for some of you, you don't really care about that. You don't want to walk-in traffic. So, which is okay, but major, a major con is the fact that you're relying on your whole lifeline, the bloodline you're being held by the neck, by these food delivery apps. And what that means is that if they do decide to favor a certain restaurant, then most likely you're going to be out of business.


No alt text provided for this imageIf they do decide to charge you a premium, to charge you 5% more, you don't have any leverage or bargaining power with this food delivery, service apps, big, a big detriment to any business. If you rely solely on one point of distribution, which is the reason why I highly recommend any of the people that I talked to, that if they are in this business and they're that they're leveraging this model for only a short period of time, let's say a year to two years until they're able to build a substantial base until they're able to build own brand name until they can prove their own concept. And then they should move out and rent their own brick and mortar to invest in it in this model that has worked for them. And then that way you're not being putting all your eggs in one basket you're diversifying.

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So then even if the food delivery services decide to kick you out, or they do decide to raise the rates and you can now have much more bargaining power, you can tell them, Hey know what? I have a restaurant down the street. I don't really need you guys. You know what? See you later, you can still have the opportunity to do that. That's called leverage right now. Another cons of going through this delivery-only restaurant and using this cloud-based kitchen is the fact that you don't own your customers, that delivery apps own your customer. And why would you want to own your customer? It is because at the end of the day in a food-based business, it's all about the community. It's all about getting your loyal customers to come back again and again, to, to have an enjoy your offering. So many times we go to that special place with special restaurant to celebrate a milestone, mainly because we have that emotional connection with the owner there or with the feeling or the vibe there, which is the reason why we are lifelong customers to these restaurants and in the fair food and beverage industry, this is super important for you to be able to build your own custom profile.

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And this is exactly what is lacking in this business model. So once again, I highly recommend that you leverage off this model, build it for a year to two years and build your own. Only after you've proven that you have a successful recipe and a successful model. Now that you understand the pros and cons of cloud kitchens, we're going to be talking about the three different types of cloud kitchen available for you. And then now you can choose which one you want to pursue. The number one type of kitchen is the ones that are special, specialized, exclusive to delivery apps, such as Uber delivery. They have their own kitchen. They have their own cow kitchen that they created. And if you're operating inside these cloud kitchens, you can only service their delivery apps, such, such as Uber eats or deliver roof. Now, the advantage of doing something like that is that you get a premium premium spot because they want you to be successful.

These delivery apps want you to be successful. So then that way you can drive much more value. And in turn, their customers are happier because they have a better experience. Now, this advantage of going through these different kitchens that are super exclusive to their own delivery apps, as a fact that you're missing out on a big chunk of pie, you're only servicing the people that use delivered. You're only servicing people who use Uber eats. You're missing out on people who use grub hub. You're missing out on people who are using Postmates or like skip the dishes or any other food delivery apps out there. There are the pros, there are the cons. You get to choose which one you liked. The second type of cloud kitchen are the ones that are non-exclusive, one's not, we're talking about art, like a cloud kitchen or kitchen United.

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These places just operate as a huge commercial kitchen and you can operate within their own facility. And in turn, you can partner up with any food delivery apps out there, as you wish, like I said, but the cons of doing that now that have more flexibility and you're exposed to much more people and customers, it's not, you don't get that special feature. You don't get that special treatment from Uber eats. You don't get that special feature from these delivery apps because you're not exclusive to them. Once again, it's your choice identity. I'm really suspecting and speculating the fact that you can actually pay a premium to be listed as a higher, um, and to run ads in these different platforms. Once again, that would be able to counteract the nonexclusive, okay. The third type of cloud kitchen, we're talking about the mobile cloud kitchen.

We're talking about these giant food trucks that go around the neighborhood. These guys are basically food trucks, but then they rent out their kitchen in closer proximity to your neighborhood or whatsoever that itself is an added bonus because the convenience and also the delivery time, not the disadvantage of that is that not this type of model is not super popular because you're not servicing a huge wide range of people. And you're always operating within a food truck. This space is not as clean the spaces, much more cramped, but the cost is substantially lower than if you were to rent a commercial kitchen like cloud kitchen and so on and so forth. These are the three types of cloud kitchen. So at the end of the day, there's no pros or cons or whatever the case may be. It's all up to your profile.

What you enjoy, what you like in order to find what's best suited for you as a bonus, we're going to give you bonus number four, it is pick up only delivery service. And what does that mean? It's contradicting itself pick up only delivery. It doesn't make sense button unless this is a model that Starbucks is actually trying out. They have tried this model out in New York where you just order online and you go there and pick up. I don't know whether this is effective or whether this would become a model or whether this is something that would work because people that order online, one, the convenience, they want instant gratification. They don't want to go and pick up something, which is a reason why you would go through food delivery, service apps. So it's a little bit counter-intuitive, but nonetheless, this is a bonus one out there for you let's see in the next few years how this model plays out.

So who is this for this model is specifically for the people who have a passion for delivering their grandma's recipe to the world. Yet they don't have that much funding. They don't have the money to spend on the equipment. They don't have the money to sign a five year, 10-year lease and do all the renovations. They don't have the expertise to run a full-scale restaurant. These, this model is specifically for that type of people that want to start off has a really, really amazing, delicious recipe that they want to bring to the world. And yet they don't have the resources to do so, which is the reason why this is such a great opportunity for you. If you fall into this profile, if you don't mind being held by the neck, by these food delivery service apps, if you fall within this demographic, then this is a really, really promising model, which I highly recommend you to do.

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