Last Updated on August 4, 2023 by Shari Mason
According to Statista, the ghost kitchen market was estimated at over $130 billion in 2022 and is projected to reach $223.7 billion by 2027.
With only between $20,000 and $60,000 as a start-up cost, it’s no wonder many business owners want to put their toes into the ghost kitchen business and try to see if it’s worth the hype and risk.
But really, how does a ghost kitchen work? Before you start planning your next business concept, keep reading and see if this popular business model is suited for you.
What’s A Ghost Kitchen & How Does It Work?
A ghost kitchen is essentially a restaurant without a sitting capacity or a dining space. It only focuses on selling and fulfilling food orders online using third-party delivery apps.
Ghost kitchens only need a commissary space to work. It’s like a rented commercial kitchen that uploads its menu via third-party delivery apps, accepts orders online, prepares and packs food, and then delivers orders to the customer’s doorsteps.
Ghost kitchen is a profitable business model that has affected the food industry and is expected to grow more in the coming years.
How Ghost Kitchens Actually Work
Rent Out Space Where You Can Prepare Delivery Orders
To start a ghost kitchen, you’ll have to rent out a space where you can prepare orders. Fortunately, unlike a traditional restaurant, ghost kitchens won’t need to rent out a big space intended to be occupied by customers waiting for their orders to arrive.
Ghost kitchens only need ample space where the kitchen can perform everything to be done, from accepting orders to preparing the food and packing every item ordered by customers.
A ghost kitchen also needs a space where the orders will be handed off to designated delivery drivers.
Operate Using Commercial Kitchen Equipment
Like all food service operations, a ghost kitchen needs all basic commercial kitchen equipment. It allows restaurants to serve their call-in and delivery customers without the added cost of a full-sized kitchen in a traditional restaurant.
There are four main categories of must-have equipment in every ghost kitchen, namely:
- Food preparation equipment – counters, cutting board, surface for cleaning and sanitizing
- Food storage – Mise en place bowls, airtight lids, dry storage
- Maintenance/clean-up equipment – separate storage for cleaning chemicals, dishwashers, and basic cleaning materials
- Cooking equipment – microwaves, deep fryers, Convection Ovens, pans, kettles, steamers
Launch The Restaurant Brand Online Across Various Delivery Apps
When the commissary kitchen space and the equipment are ready, you must launch your restaurant brand across various online delivery apps.
Third-party delivery apps like Grubhub, DoorDash, and UberEats will help you get orders and deliver the items to your customers. Meanwhile, some ghost kitchens can launch their own delivery apps.
Wait For Incoming Orders
Your chosen delivery app providers will help accept orders for your ghost kitchen. The customers will place all their orders via any food delivery app they have chosen.
Remember to offer a ghost kitchen menu with tasty food offerings that are also optimized for delivery.
Unlike traditional restaurants, you won’t have to put much effort into entertaining your customers. At the same time, they wait for their orders, so you have to make your food extra good to stay in business longer than any of your competitors.
Receive The Orders
As mentioned above, orders are placed via third-party delivery apps. In your ghost kitchen, you must have a dedicated place where you can easily accept orders. If you run a small ghost kitchen, one tablet is enough to accept orders online.
However, you may use more tablets if you have a large pool of orders so you can deliver the orders on time.
Note: Make sure to secure a stable internet connection when receiving orders.
Prepare & Pack The Food
Every order has a required preparation and delivery timeline, so you must prepare and pack the food accordingly.
However, although you may lose customers due to late delivery, you must still prioritize the quality of your food packaging.
Make sure there will be no leakage of any sort to avoid any mess. Airtight lids are also important to avoid food spoilage.
Deliver The Orders
When the appropriate food packing is done, you will mark the order complete in the food delivery app. Then, the designated delivery rider will come into your ghost kitchen to pick up the orders and deliver them to the recorded addresses of your customers.
To avoid late delivery, you must have a designated delivery pick-up station and a smooth and efficient workflow suitable to your kitchen concept.
Compared To Other Business Concepts
The biggest difference between a ghost kitchen and a virtual restaurant is that ghost kitchens are totally independent.– Eat Pallet Restaurant & Food Advice
Ghost kitchens can be a separate business operating to receive and deliver orders using third-party delivery apps. Meanwhile, a virtual restaurant is typically tied to an existing restaurant.
Virtual restaurants operate within brick-and-mortar restaurants, offering additional revenue streams without increasing overhead costs such as rent and staff. 
A dark kitchen is an original concept behind the virtual restaurant trend, where new and existing traditional restaurants lease existing commercial kitchen spaces.
Then, after renting commercial kitchen spaces, dark kitchens install their own equipment and hire staff, chefs, and food preparation staff to design a menu and cook the food.
In most ways, dark kitchens are run just like any traditional kitchen. The only difference is that dark kitchen delivers food to its remote customers rather than offering these customers to visit the restaurant’s premises to dine in.
Some people interchange virtual kitchens and ghost kitchens because they may appear the same to users perusing the different dishes of online delivery apps. However, the major difference between the two business models is that virtual kitchens usually piggyback off or are tied to existing brick-and-mortar restaurants.
Meanwhile, ghost kitchens can independently operate because it isn’t connected to any existing restaurant. Typically, ghost kitchens create their own menu instead of using the menu of any restaurant.
They prepare and pack their own food and deliver them to customers using third-party delivery apps.
How Do You Start A Ghost Kitchen?
To start a ghost kitchen,  you only need to think of a distinct ghost kitchen concept, write a business plan, secure the necessary permits, get equipment, rent a space, and launch it via online food delivery apps.
A ghost kitchen doesn’t need to carry any existing restaurant or use its existing menu.
As a ghost kitchen owner, you can create your own menu, launch your own brand, and just use third-party apps  to deliver them to possible customers.
You can even launch your own online delivery app, or customers may order through your website without a hassle.
Is It A Profitable Business Concept?
Yes, a ghost kitchen business concept is profitable, just like any other traditional restaurant.
According to Toasttab, ghost kitchens can expect to become profitable within the first two years of operation, depending on food costs and local KPIs, with an average profit margin of 15%.
What Type Of A Business Concept Is A Ghost Kitchen?
A ghost kitchen is a delivery-only restaurant concept that operates out of a dark kitchen or a shared kitchen. It can operate independently since it doesn’t have to be tied to a brick-and-mortar restaurant.
“Ghost kitchens are largely a response to margin challenges.”– Technomic principal David Henkes
Basically, it has a physical kitchen space but doesn’t have a physical store location where customers can stay and wait for their orders. It only cooks, prepares, and packs food and delivers it to its customers.
Are ghost kitchens legal?
Yes, ghost kitchens are legal, although there are other legal questions surrounding them. This business concept has proliferated and now lays claim to a firm position in the food industry. 
Can you run a ghost kitchen from home?
Yes, you can run a ghost kitchen from home. However, there are a lot of things to be considered, like the overall kitchen space, location, and other necessary inspections and permits to be acquired.
What are the cons of a ghost kitchen?
The possible cons of operating ghost kitchens are having hefty commission fees, inconsistent customer experiences, high competition rates, and possible alienation of countless potential clients.
A ghost kitchen is like a restaurant but without an existing sitting capacity where the customers can stay, wait, and eat their orders.
Basically, a ghost kitchen works like a restaurant accepting orders through a delivery app or its website. It prepares, cooks, and packs food orders and then delivers them to the doorsteps of its customers.
Starting a ghost kitchen costs up to $60,000, so many business-minded people want to venture into this booming business. Is it worth the risk? Most recent reports say so.
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