How ghost kitchens are bringing innovation to the restaurant industry during COVID-19
By, Gary-Joseph Panganiban
The global pandemic has rocked the restaurant industry and left many businesses struggling or with their doors permanently closed. A food concept known as a ghost kitchen is on the rise and helping the industry adapt, despite difficult times.
This emerging dining experience, also known as a virtual kitchen, puts an emphasis on delivery, assembles menus from various businesses and cuisines under one roof. The idea is to optimize production operations and find new, efficient ways to get food to the consumer. Put differently, it’s like a digital food hall.
Not all Ghost Kitchens are the Same
Kitchen Hub, which opened its doors in Jan. 2020 just before the pandemic, embodies the virtualized food hall atmosphere. It brings together Toronto staples like Pai Northern Kitchen, Fresh and The Carbon Bar under a single facility that houses over a dozen delivery-optimized kitchens.
While partnered businesses bring their own cooks and ingredients into their dedicated spaces, the Etobicoke-based company deals with the orders, delivery, customer service and nightly cleaning as co-founder Adam Armeland explains.
He says Kitchen Hub even provides restaurants with performance markers to ensure they’re doing well on delivery apps and improving.
“When a restaurant comes into our space, they have line chefs, cooks, and their food,” Armeland says. “We receive the order, it’s streamlined down to their space, they cook it, they bring it to the edge of the unit, and then they can basically forget about it from there.”
The root idea behind Kitchen Hub comes from one of their three co-founders, Oren Borovitch, who was also the former head of merchant strategy at Doordash Canada.
Borovitch noticed that the increase in delivery was a double-edged sword for restaurants. On top of dealing with the hefty delivery fees from the services, more orders meant having to hire new employees and build more kitchen space, which added to the overall costs. Kitchen Hub allows restaurants to expand delivery without hemorrhaging their business.
Ghost Kitchen Brands, which began operating in 2018, approaches the ghost kitchen concept in their own way by viewing delivery services as partners that provide a platform where they can gain exposure.
They also employ their own staff to prepare food from familiar names like Quiznos, Taco Del Mar, Cinnabon, and Ben Jerry’s.
“We look to bring brands people know and have an affinity to, but may not have access to regularly,” says Susi Graf, director of marketing at the Ontario-based chain. “The ones you might see in malls, food courts, or in the U.S.”
The advantage of a diverse food selection for food goers, Graf says, is the ability to cater to different cravings without having to travel to separate places. For the partnered brands themselves, she says the advantage is the ability to test new markets without having to heavily invest in rent and expensive equipment.
Although the definition of the term, or even the difference between a ghost kitchen and a virtual kitchen, is still unclear, the broadness of its meaning allows businesses to come up with their own adaptations and to mould it according to their needs and goals.
For instance, some function completely away from heavy foot traffic, taking advantage of cheap real estate and mostly focusing on mobile deliveries. Other ghost kitchens function as digital branches of an existing restaurant, adding variety to their existing offerings.
There are also a few that combine the delivery-centric infrastructure of a ghost kitchen with the in-person experience of dining in. This model is what former David’s Tea founder David Segal built Mad Radish around.
“We believe the same customer who orders on UberEats is the same one who wants to pop in and eat something in your restaurant,” says Segal. “We want the best of what both [virtual and dine-in] have to offer.”
Segal started Mad Radish in 2017 after realizing there was a lack of healthy fast-food options in the Canadian market. With a focus on serving quality meals, the restaurant’s food selection draws from three different menus - Mad Radish, Luisa’s Burrito and Bowls, and Revival Pizza - all brands developed in-house.
“[This model] allows us to try new things and look to innovate,” says Segal. “We’re always looking at culinary influences around the world, trying to bring new food to different markets.”
Beyond building three separate menus from scratch, the Ontario-based business also stands out with their plans to create their own application from which people can order from. The goal behind this is to eventually encourage customers to come directly to them.
“We’re a small business trying to make it in the pandemic,” says Segal. “We don’t want Uber taking our margins.”
Juggling Challenges
The increasing popularity of mobile delivery services is an issue that is commonly spoken about throughout the industry but, it’s not the only challenge ghost kitchens face. Segal says a key challenge in limiting costs is dealing with supply chains. This problem primarily presents itself when bringing produce into the restaurants.
A drawback for the menu variety you will see in ghost kitchens is having to acquire the ingredients for all those items. For Segal, it’s about getting creative and finding how using produce in one menu can serve the other menus.
“We may have different seasoning that goes on the chicken for Luisa’s than the ones for Mad Radish, but we’re able to use the same process that you’re already using and apply them to different categories,” explains Segal.
According to Segal, having multiple menus also means that quality control becomes a bigger consideration. Extra training and references like cheat sheets for recipes are needed so that cooks don’t find themselves confused by the numerous meals.
“You have to be able to design the dishes in a way that chefs that haven’t been trained would be able to create them over and over the same way and have that consistency,” says Segal. “It’s really hard to do, but it’s like where art meets science.
Quality control is also an important element to consider at Ghost Kitchen Brands in their operations, says Graf, since the global brands they partner with are often global, well-known, and have high standards for their foods.
“When we started, there were fears that our food was an imitation of the brands we partner with,” explains Graf. “But we’re the distributors of these brands.”
Since restaurants bring their own chefs to Kitchen Hub and can focus entirely on their food, broader quality control is less of an issue for them, says Armeland. One of the biggest challenges for his business is trying to support a struggling industry.
“We’re out here to help restaurants get access to new areas, but they’re hurting right now,” says Armeland. “It’s a new world out there and it’s a matter of teaching people you can effectively reach consumers through our platform.”
The Future of Ghost Kitchens
With COVID-19 being far from gone, there is still uncertainty about what lies ahead for ghost kitchens. Operations that offered dine-in options, like Ghost Kitchen Brands and Mad Radish, didn’t go unscathed during the lockdowns. However, many who are adopting the new concept think it’s here to stay.
“Because delivery was already growing before, what the pandemic did was accelerate the trend,” says Segal at Mad Radish. “It doesn’t mean people will never walk into restaurants again... it just means we have to meet the customer where they are.”
Armeland from Kitchen Hub shares similar thoughts about where ghost kitchens land within the industry. He believes that they can coexist with traditional restaurants.
“Restaurants are here to stay, but there are different meal times,” says Armeland. “There’s an ‘I need to go out and be social and there’s also an ‘I need to stay in with my partner or family and just want good food.’”
Other household names in Toronto, like Storm Crow Manor and the Kinka Family - owners of Kinka Izakaya and Kinton Ramen - each started their own virtual kitchen concepts with Mothercluckers and Aburi Bunz, respectively.
Expansion is not only a possibility, but a set plan for several ghost kitchens. Kitchen Hub, Mad Radish and Ghost Kitchen Brands are all looking to open up new spaces within the next year.
Ghost Kitchen Brandsis particularly ambitious with prospects of reaching the U.S. and Quebec markets in the near future.
“George [Kottas, the CEO] has this vision of opening a Ghost Kitchen every 10 km in urban centres to be your neighbourhood food court of sorts,” says Graf.
Whether this novel food experience is the next big thing or merely a bi-product of the circumstances is unknown, what is clear is that there is much exploration happening within the industry.