Friday, July 30, 2021

Will "ghost kitchens" do to restaurants what Amazon did to retail stores?

      We have adapted to our virtual world in ways that a few years ago would have seemed unimaginable.  Amazon has been a major disrupter for retail stores.  Think about how smartphones have changed how we organize our lives.  If you are not familiar with what a ghost kitchen is let me share some information.

     I had vaguely heard the term ghost kitchen but had no in-depth knowledge of the concept until one of my grandchildren had a "Mr. Beast" burger delivered when he was over at our house.  You may not have heard of Mr. Beast who is a YouTuber followed by boys in the 9-13 age range.  Don't even get into the whole YouTuber explanation.

     The pandemic has been a boom to home-delivered restaurant meals such as Door Dash.  Even ride services like Uber and Lyft are delivering meals from restaurants.  But even with the delivery of meals restaurants found that they underutilized their kitchens.  With the same overhead for rent, they looked at how they could develop new revenue sources.  Here is where ghost kitchens came in.  A ghost kitchen only exists in a virtual sense.  They have a website like a retail restaurant but you can only order a meal from them online and have it delivered to your home.  The meal is prepared at a real restaurant utilizing their underutilized resources.   Think of a Chinese restaurant making your burger or pizza that was delivered to you.  This is how my grandson got his Mr. Beast burger.  With millions of YouTube followers, he developed his Mr. Beast burger formula and found restaurants that would make his burger for delivery.  One of the restaurants in Columbia signed on with him to make his burger.  We didn't know which restaurant made my grandson's burger because it was ordered through Mr. Beast's website.  The reason why restaurants would sign on with Mr. Beast is that he has millions of followers.  Think of the potential of other celebrities who have millions of followers on Instagram or Facebook realizing this as a new potential source of making money and you can see where this could head.  But you can also see this as a way for someone who wants to start a restaurant but doesn't have the resources to open a retail restaurant. In the past, you might think of starting with a food truck or having a booth at a local event.  Now you can offer new business to restaurants if you can show how making your food brings them new revenue.

      The direction this may move-in is to centralized kitchens like the warehouses developed by Amazon that have the capacity to make many types of food for delivery.  Restaurant meals made this way might cost substantially less than what we now pay in retail restaurants.  This could even be the case with the cost of delivery.  You might think that you would miss going out with friends to your local restaurant? Why not invite them to your house or local park and have your food delivered quicker and cheaper than going to a restaurant that you have difficulty making a reservation for at a convenient time.

      If you think this is far-fetched just remember we would have thought the same thing about Amazon 15 years ago.  Virtual is replacing retail businesses quickly.  Keep your eye out to buy stock in the next Amazon.  It might be with the restaurant business.

    

1 comment:

edblisa said...

I like the concept, but just wait until people start getting food poisoning (e-coli/salmonella) or anaphylactic shock syndrome (food allergies) and it can't be traced back to the source of contamination. This will not go well. I think I'll stick to ordering from actual restaurants and food trucks before I use a "ghost kitchen". Uber and Lyft were great concepts in the beginning until women started getting raped/assaulted...now there are some rules and regulations that drove up cost.