The restaurant industry was hit hard by the coronavirus pandemic. Restaurants had to close their doors to dine-in customers during the initial harsh lockdown. Even when restaurants reopened, they had to comply with stringent health and safety regulations to protect customers from the virus. But some restaurant owners also saw an opportunity to develop ideas that would boost profitability during the lockdown – one of these was the concept of ghost kitchens. 

Restaurant Dive, an online news source for the US restaurant industry, recently did a series on ghost kitchens to examine the impact of this restaurant segment. In this blog, we look at some of their findings and apply them to the SA market. According to Restaurant Dive, the ghost kitchen market accelerated by five years in the space of three months during pandemic conditions. They certainly did gain popularity during the lockdown, but do they have a future in the industry?

What are ghost kitchens?

Also known as dark or host kitchens, ghost kitchens are defined in the Restaurant Dive article as “delivery-only restaurant facilities with no storefront or seating areas”. Even in the uncertain times before the pandemic, this concept was gaining a foothold because of the popularity of the food delivery industry. 

The evolution of ghost kitchens

  • Global delivery sales more than doubled between 2014-2019, according to Euromonitor. Food delivery became even more popular when governments closed down restaurants. When they reopened, delivery remained a preferred option for customers who stayed home to avoid being exposed to the virus. 
  • The conditions of the lockdown required restaurant owners to adopt new ideas quickly. In the period preceding the pandemic, restaurants optimised their floor space for the most profitability by focusing on their dine-in customers. But the ghost kitchen model optimises kitchens for delivery. 
  • Some experts predict that the segment will create a significant opportunity for revenue in the restaurant industry by 2030. This is partly due to the fact that consumers are more technologically connected and also have a growing desire for the convenience that it offers. 

Ghost kitchens in South Africa

Before the coronavirus outbreak, food delivery was widely used mainly by the tech-savvy youth. However, the pandemic accelerated its uptake by every other age group in the market. In South Africa, many restaurant patrons shifted their custom online, and this accelerated the adoption of the technology. During the early harsh lockdown, mobile ordering provided a lifeline for restaurants and allowed them to continue operating even when their patrons were confined to their homes. 

South African restaurant owners were keen to maximise the opportunity provided by ghost kitchens – to fully utilise their kitchen resources that might otherwise have remained dormant. 

This model can also save on overheads with chefs from different brands operating in a centralised kitchen. Smart Kitchen Co. is currently South Africa’s most successful local ghost kitchen. Local fast-food companies use its facilities to prepare orders for their customers. This ghost kitchen also services 15 online restaurants that operate from its five different physical locations. Companies that use this service include King Chicken, Jazzy’s Pizza and Quick Convenience.

Ghost kitchens and the future

The ghost kitchen concept has taken the industry by storm, but the question is whether its success is due to pandemic restrictions or if it can be an industry disrupter in the long term. Euromonitor’s global food and beverage lead Michael Schaefer says that the ghost kitchen market could eventually capture 25% of dine-in service ($450 billion), 50% of drive-thru service ($75 billion) and 50% of takeaway food service ($250 billion). He estimates that the segment could be worth $1 trillion in just 10 years. 

This segment is fuelled by innovation, and an example of this is the Kitch website. It’s a platform where businesses with commercial kitchens that are not being fully utilised can list the space they would like to rent out. Essentially, it operates like a kitchen Airbnb. Kitchens can also list their available equipment, what permits and licences they have in place, and the requirements they seek in a restaurant partner, such as rental price and minimum lease commitment.

For more tips on how to keep business booming, download our informative guide, Secrets to a Successful Restaurant.

Author : Rudi Badenhorst