Delivery-only food concepts rely on clever digital strategies to get the word out, but they have to make sure they’re not also deceiving customers.
Things aren’t always what they seem. If you’ve recently had food delivered from a restaurant you had never heard of before, there’s a chance it came from a ghost kitchen or a virtual brand.
What’s a 👻 kitchen?
Essentially, they're delivery-only restaurants without customer-facing locations. Sometimes they're even chains that use their existing kitchens to operate separate, virtual brands. You think you’re ordering from a neat new pizza place, but it’s actually Chuck E. Cheese.
Ghost kitchens can present an opportunity for restauranteurs to introduce a new brand without the overhead of running an in-person dining experience. Without physical storefronts, these brands have to take their marketing online, relying on social media and delivery apps to get noticed.
Delivery-only restaurants are certainly not new, but they’ve gained traction in recent years largely due to the dominance of delivery apps and the need for contactless service in the pandemic. They’re often started by individual entrepreneurs—MrBeast Burger, for instance, was started by a YouTuber—as well as established chains like Chick-fil-A and Red Robin.
Whoever’s actually behind them, they appear to be here to stay. Datassential, a food market research firm, estimates that there are more than 13,000 ghost kitchens operating in the US, though it told us the numbers are “notoriously hard to track.” Globally, the ghost-kitchen market was around $43 billion right before the pandemic and is expected to reach over $71 billion by 2027, according to Statista.
Real food, virtual store
Since the delivery-app ecosystem continues to be central to the food industry, many new ghost kitchens rely on those services as a way to gain visibility.
Haley Kabus, associate director of strategy at The Culinary Edge, a food and restaurant consulting firm, said delivery apps serve as a “search engine” of sorts where users can look for what they’re hankering for.
But the delivery apps are a double-edged sword. Sure, they may be a ghost kitchen’s best shot at getting noticed, but they come with fees that could deter customers and commissions that cut into the business’s revenue.
Corey Manicone, CEO of Zuul, a ghost-kitchen technology platform, said businesses can instead use the apps for customer acquisition and to build loyalty, then try to sway them to order again in a direct way that cuts out the middleman. DoorDash, for example, incentivizes restaurants to pay higher commission fees in order to be more visible on the app, and Uber Eats lets businesses buy sponsored listings.
“So, pay GrubHub, DoorDash, UberEats, all of those folks as much money as you can to be at the top of the list. And then you’re fighting tooth and nail to convert all of those customers to your first-party channel,” Manicone said. In practice, that conversion can happen by offering deals that can’t be found on the apps, as well as sending customers their food with a note imploring them to order directly.
Since ghost kitchens don’t have physical storefronts—which Manicone said is normally a primary marketing tool for restaurants—they should focus on social media as a way to establish their presence. “For better or for worse, it’s where our eyeballs are at,” he explained. “You go from really focusing on physical real estate to now digital real estate.”
That means “sexy photography of food, which is becoming a thing, which is crazy,” Manicone said. “Having your own channel that obviously drives engagement with consumers, but also getting it in front of folks that may not be following you is also key.”
And since you can’t control the dining ambiance when you don’t have a dining room, Kabus said ghost kitchens can invest in making their packaging part of the experience.
If you send everything in a generic brown bag, “your brand is really only the food itself. People eat that, and it’s disappeared and it’s gone,” she said, explaining that packaging “is this key place to communicate what your brand is about and build your identity. But then it’s also super shareable on social.”
Divide and conquer
Ghost kitchens aren’t just a way to start a restaurant with low overhead. With virtual brands, existing restaurants can duplicate themselves into variants that attract different audiences.
For example, The Culinary Edge, apart from being a consultancy, operates the Starbird Chicken restaurants in California. The business has existed with dine-in locations since 2016, but if you’re not into fried chicken, you might never consider going there. Hence, the company’s expansion into virtual brands like Starbird Wings, Starbird Salads, Starbird Bowls, and Garden Bird. The virtual brands use the physical brand’s infrastructure to prepare and deliver the food.
“Really you’re competing in those arenas for a search term, because people are craving wings, so they’re writing ‘wings,’” Kabus said. She likened virtual restaurant brands to direct-to-consumer brands built around a specific product.
“Casper is the perfect mattress. Warby Parker is the perfect eyewear,” Kabus gave as examples. “We see a very similar scenario happening in ghost-kitchen brands that are successful, where it’s really built around a menu category or just one kind of product line, at least at first.”
Essentially, restaurants can pretend to be someone else in order to curry favor with whomever they want (relatable). But the practice can backfire. Datassential found that 55% of consumers think it’s deceptive if a restaurant sells the same food under a different name in a survey from earlier this year. And about two-thirds said virtual brands should disclose where they’re located and if they’re delivery-only.
If a brand isn’t transparent about where the food is coming from, customers can feel like it’s “pulling the wool over their eyes,” said Mike Kostyo, Datassential’s senior managing editor and trendologist. “Consumers absolutely say they want to know the brand behind a virtual brand. They want to know who’s preparing their food.”
When existing food chains want to introduce a separate, virtual brand, The Culinary Edge advises them to somehow incorporate or “nod” to the primary brand in the new look. That can mean using the original brand’s primary colors and fonts, or having messaging in the delivered product that informs customers who’s behind this food.
“We never want to feel like we’re keeping consumers in the dark. That’s not a good way to go about things,” Kabus said.
On the horizon, ghost kitchens will have to adjust to the fact that in-person dining restrictions are easing or gone. Kostyo said Datassential found in a July survey that half of consumers don’t expect to use delivery apps as much as they were during the height of the pandemic.
Manicone is optimistic that the ghost-kitchen trend will hold, based on the fact that food delivery was on an upward trajectory before Covid.
“Is delivery going to be as popular as it was during the pandemic? No,” Manicone said. “It certainly won’t be of the same magnitude, but it’s not going to slow down by any means.”
Zaid Shoorbajee is a Marketing Reporter for Marketing Brew, a brand of Morning Brew.
This article was originally published on Marketing Brew.
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