A somewhat popular option before, the 2020 pandemic was the catalyst that pushed restaurant delivery to the main stage. As the restaurant industry evolves, brick-and-mortar dining establishments aren’t the only game in town. 

While to-go and delivery orders were once a revenue stream add-on, some restaurants now focus on that as their business model. You may hear these entities referred to as delivery-only restaurants, dark kitchens, cloud restaurants, and ghost kitchens.

There are currently over 9,500 ghost kitchens operating in the United States. These virtual concepts are taking advantage of the consumer-driven demand for food delivery. How do they work, what benefits do they offer, and how should they be set up? Read on for everything you need to know about ghost kitchens.

What are delivery-only restaurants?

Unlike a brick-and-mortar restaurant, delivery-only restaurants don’t have a storefront on a busy street or front-of-house staff. They may be located in a small industrial area that offers kitchen space, without obvious signage or fanfare. Their branding exists primarily online and by word of mouth.

Virtual restaurants usually employ websites and social media profiles to advertise to potential customers. They also typically use a third-party food delivery service to gain even more visibility among hungry diners.

The benefits of a virtual restaurant

Ghost kitchens efficiently serve takeout and delivery diners without the need for a dining room. Restaurant operators who have pursued the virtual kitchen concept instead of the traditional restaurant route enjoy several compelling benefits — let’s dive into four of the most impactful.

Reduced overhead costs

Getting into the restaurant business can be an expensive endeavor. A nice building in a busy location, dining room décor, equipment, staff, electricity, and a dozen other costs can run the operating budget through the roof. These costs must be covered by charging higher prices, finding ways to cut costs, or living with a smaller profit margin.

Virtual brands enjoy a much lower overhead. They can operate in a commercial kitchen in an anonymous industrial building where the rent is a fraction of what a popular location would be. They don’t have to worry about pricey tables, artwork, and other dining room decor — nor do they need to hire full-service wait staff.

Saving on overhead lets restaurateurs charge lower prices for their menu items and enjoy a higher profit margin than their traditional restaurant counterparts.

Optimized ordering process

Getting orders right is a crucial factor in your customer’s experience. With delivery-only restaurants, most of the business comes from in-app or online ordering. Both options reduce incorrect orders from being misheard or written down incorrectly.

Implementing helpful technology is essential for cloud kitchens to handle the ordering process efficiently. Online ordering should be connected to a platform allowing operators to view and fulfill orders quickly and transparently. Third-party delivery services like Nash, which offers a network of delivery providers including Uber should be seamlessly integrated into the process.

Restaurants can use technology tools to make ordering easy, fulfilling accurate orders simple, and delivery transparent and painless

Opportunity for expansion

Low startup and overhead costs can help build a delivery-only business. It can also make it easier to scale.

As a virtual restaurant brand gets its name out, it’s not limited by the size of its dining room. With the help of advertising, word-of-mouth, and third-party food delivery apps, virtual restaurants can reach more customers in wider markets.

Running a ghost kitchen also makes it easier to innovate. Try out new dishes easier by popping them into your online or in-app menu. Target a new demographic of customers. These initiatives can help a restaurant grow and are much easier to manage in a virtual kitchen than trying to accomplish it in a physical location.

Convenience for customers

Delivery-only restaurants give customers what they want: an easy ordering process, delicious food at a reasonable price, and fast delivery.

Ghost kitchens check every one of these boxes.

They can focus on popular food items like burgers, chicken wings, pizzas, and tacos that appeal to the masses. Or they can specialize in cultural cuisine to tempt a narrower audience.

Their low operating costs give them the freedom to charge lower prices than dine-in restaurants may be able to offer. A third-party delivery platform also streamlines the entire process from ordering to delivery. Customers are happy with their food, which is brought to their door hot and tasty.

Best practices for running a successful delivery-only business

Big benefits are driving more restaurateurs toward delivery-only concepts. Whether you’re opening a new restaurant or adding a virtual element to your existing restaurant, these tips will help you do it well.

1. Use the right technology

Since virtual kitchens aren’t physically visible to patrons, they rely more on technology than a dine-in restaurant. Point-of-sale (POS) software and user-friendly payment platforms are vital to a ghost kitchen’s success.

The delivery process must be on point, as well.

Choosing the best food delivery software partner for your virtual restaurant is absolutely essential to its success. The platform should be easy for both the restaurant operator and the customer to navigate, be laid out clearly, and should transparently display fees, delivery times, and statuses.

Restaurants that are using more than one piece of software should make sure they “talk to” or integrate. If the tech stack doesn’t work together seamlessly, orders can fall through the cracks or require time-consuming manual attention.

Looking for a food delivery service that checks all the boxes? Get started with Nash today.

2. Establish a strong online presence

Delivery-only brands depend on other ways to get new customers besides drive-by or walk-by traffic. The internet is the answer.

• Website: An SEO-optimized website that’s easy to find with a local search is one of the best ways dark kitchens can get noticed by customers. Once a search engine drives them to the site, finding the menu, choosing what to order, and paying should be easy.
• Social media: Creating engaging, informative profiles on social media changes their audience visits is another avenue for virtual kitchens to connect with customers. Sharing posts with tempting food photos, promotions, and links to order drives hungry consumers to place orders.
• Third-party delivery app or marketplaces: 42% of consumers have used at least one food delivery app since the pandemic began. Patrons looking for a good meal frequently scroll through their favorite delivery app, so restaurants can vastly increase their visibility by partnering with one that’s popular in their area.

3. Prioritize customer service

Like any business, happy customers are more likely to be repeat customers. They’re also more likely to refer your place to family and friends.

Virtual kitchens can’t be nameless or faceless entities. Aside from providing delicious food, restaurant owners must stay focused on the customer experience to build their brands effectively.

• Easy ordering and paying: Ordering food delivery is a matter of convenience. Customers want to pop on a website or open an app, choose their food, and pay without fuss (using their favorite payment option). Delivery-only restaurants with intuitive journeys keep customers from bouncing to another restaurant.
• Order transparency: Diners don’t want to wonder what they’re paying in fees or when their order will arrive. Creating a way for them to see an itemized price list and track the delivery driver at all stages increases customer satisfaction.
• Proper packaging: Cold food and open containers spell trouble for delivery-only establishments. Virtual kitchens must thoughtfully consider the type of food they’re packing and how to keep it fresh until it arrives. Avoiding contamination is another must-do with packaging protocols.

4. Offer a specialized menu

Some in-house menu items simply don’t travel well (looking at you, fries). It’s better to omit them from the delivery menu than have them arrive cold or soggy. Focus your food delivery efforts on the menu items that will keep for several minutes after they’re prepared.

Additionally, some menu items are more profitable than others. If an item has a low profit margin, offering it as a delivery option may not make sense. Creating a delivery-only menu helps make the most of a ghost kitchen’s effort.

5. Streamline operations for efficiency

Cutting out waste and automating tasks when possible is necessary to keep profits strong.

• Create consistent processes: Instead of letting each restaurant employee do it “their way,” implement uniform procedure requirements. There should be a set process for accessing the order, making it, packaging it, and delivering it. This approach will save time and deliver a higher-quality product.
• Integrate technology: Using technology to take and track orders is vital in the delivery-only space. A tech stack makes it easy to receive orders and payments, track orders, and get customer feedback.
• Oversee performance: Restaurant operators need to monitor their delivery efforts. Looking at routes, delivery times, and complaint rates lets them know if they’re meeting client expectations or if they need to make improvements.

Examples of successful delivery-only restaurants

The restaurant industry is still primarily driven by brick-and-mortar locations that may or may not offer delivery. However, ghost kitchens are a growing segment that is reshaping the space. They can be widely different business models, as you can see from the three examples below.

Cloud Kitchens

Established in 2019, this virtual kitchen company pioneered the early deliver-only restaurant business model. It's focused on helping restaurateurs open ghost kitchens. This business is a tool that gets the project off the ground and scaled quicker than an individual could handle on their own.

Deliveroo Editions

This company is another all-inclusive option for setting up a delivery-only kitchen. It includes everything the restaurant needs to open its doors, including delivery options. They charge a percentage fee for their assistance.

All Day Kitchens

All Day Kitchens (formerly known as Virtual Kitchen Co.) creates and manages shared commercial kitchen spaces in the Bay Area, Chicago, Dallas, and Los Angeles. As a self-proclaimed “distributed restaurant platform,” All Day Kitchen handles logistics, online ordering systems, and delivery coordination for primarily independent restaurant partners. 

Kitchen United

Kitchen United offers a turnkey ghost kitchen solution for restaurant operators wanting to extend their existing operations — or who only want to operate virtually. With kitchens located across the country, the company can be pivotal in helping delivery-only restaurants reach more customers and gain visibility.

Optimize your delivery-only restaurant with Nash

The restaurant industry is a constantly changing space. What made you successful last year may not work next year. Being aware of market disruptions like delivery-only restaurants keeps you agile and ready to stay competitive. It also gives you exciting opportunities to expand your customer base and increase your profits.

Are you interested in starting a virtual restaurant? Nash’s delivery  platform and network of delivery drivers can help get it off the ground quickly.

Our system gives you as much or as little control as you want over your delivery process. Use our network of 500+ drivers or your own in-house drivers — or a combination of both!

Together, we can get your delivery-only restaurant in front of interested diners, exceed their delivery expectations, and create a profitable business. Get started with Nash today.

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