How to Start Your Restaurant Business as a Ghost Kitchen
Jermil and Daqueeta Martin are co-owners of Black Crab Fam - a pop-up ghost kitchen soon-to-be brick and mortar who crowdfunded on Honeycomb!
One of the biggest trends of the past couple years has been brick-and-mortar restaurants disappearing in favor of a mysterious entity - the ghost kitchen. These restaurants aren’t open to the public, but rather exist as just a kitchen that deals out delicious meals for delivery only. Often, there will be several ghost kitchens under one roof, slinging pizza, sandwiches, sushi, and fried chicken out of the same place.
If you’re looking to open a restaurant, but are nervous about startup costs and return on investment, a great way to perhaps get involved in the industry could be to open up a ghost kitchen. Read on to find out more about ghost kitchens, and how you can use one to launch and scale a restaurant business.
What exactly is a ghost kitchen?
A ghost kitchen is a restaurant that doesn’t offer any kind of in-person service - it’s delivery only. They're also known as "dark kitchens" or "cloud kitchens." The primary function of a ghost kitchen is to cook and package food and send it out via either their own delivery service or a third party like DoorDash or UberEats.
Sometimes, ghost kitchens are already-existing brands, such as Wow Bao Now. Popular Chicago-based bao restaurant Wow Bao also sells their dumplings online through “dark kitchens.” These are already-functioning restaurants which also steam and deliver the buns as essentially a side hustle.
However, the majority of ghost kitchens are their own virtual brands. There’s nowhere for a customer to walk in and order anything on the menu, no waiters or cashiers to bring their food, it’s usually just a kitchen and a space to put the packaged meals for pickup by a delivery driver.
Why would I open a ghost kitchen and not a full-service restaurant?
There are pros and cons to running a ghost kitchen over a full-service restaurant. The biggest advantage is that there is significantly less overhead. You’re essentially just paying for rent in the kitchen, ingredients, labor, and packaging - not wages for servers, utilities for a dining room, or anything else like that. This allows you to focus pretty much entirely on the food you’re putting out.
Many ghost kitchens also take advantage of their lack-of-presence by offering food at hours of the day that most restaurants aren’t open. Often, commissary kitchens offer 24/7 access, meaning late-night ghost kitchens can offer dishes like pizza, wings, cookies, and ice cream to satisfy consumer’s late-night cravings.
One item of running a ghost kitchen that can be both a challenge and a boon is that it’s imperative to have strong branding for your product. Often on delivery apps like Doordash, brands can get lost as consumers swipe through their options, so you need to have a strong presence in order to get noticed.
Some ghost kitchens do this through unique packaging, and others do it by rebranding different elements of their menu into different brands entirely! As an example, say you’re an Italian ghost kitchen, and you notice that while your pizza sells really good, the salads and sandwiches on the same menu are essentially ignored. Well, you can rebrand your salads and sandwiches as an entirely different entity on the app and see how much more they get noticed than when they were in the shadow of all your pizza offerings!
Having a strong social media presence can be important for your restaurant as it’s a ghost kitchen, and can be a valuable asset if you decide to open up a full-service restaurant as well. If you can drum up enough excitement for your food through delivery, consumers will likely want to come see for themselves how the food stacks up when you open up a full-service restaurant.
How do I open a ghost kitchen?
Your first step in opening a ghost kitchen is to find somewhere out of which you can cook your food. There are loads of commissary kitchens around where you can work out of, and it would be a good idea to shop around for one that suits your needs. Does it have the right equipment you need? Does it have hours compatible with yours? Is it in a good location for delivery drivers to get to you and to customers?
You also will probably need a bit of up-front funding for your ghost kitchen. You’ll need to pay wages for your staff, purchase ingredients and other working capital, and of course pay rent at the kitchen. While opening a ghost kitchen is cheaper than opening up a full-service restaurant, startup costs can get up to $30,000.
The last major step in opening a ghost kitchen is getting synced up with technology. You’ll need a Point-of-Sale (POS) system like Square or Toast, as well as an online integration system that can link directly to your POS. You can build your own distribution strategy and use in-house delivery if you’d like, but keep in mind this means you’ll have to double down on your own marketing in order for people to know about your restaurant. You also might want to create an account with delivery services like GrubHub and Doordash, but keep in mind that they often come with heavy fees.
How do I grow a ghost kitchen into a full-service restaurant?
Maybe after a couple years (or less) as a ghost kitchen, you decide that you’d like to open a full-service restaurant based on your brand. You could do this either to replace your ghost kitchen, or as a supplement to your already strong delivery operations. This is also going to require a lot of funding up-front.
Now that your business has a strong following, and your virtual brand for your restaurant is well-known, crowdfunding might be a great option to finance the opening of your brick-and-mortar full-service restaurant. You’ve already shown reach with your brand, and have valuable loyal customers - which is an achievement, especially since the only thing tangible about the business is your food!
One great example of this is Black Crab Fam, a seafood restaurant in Cleveland, Ohio. They built up a strong delivery-only business, and in 2021 decided that they wanted to open up a brick-and-mortar restaurant. So, they ran a Honeycomb Credit campaign and raised $39,550 to get started on that journey.
Giving your customers the chance to invest in your restaurant’s opening with a debt crowdfunding campaign can strengthen those bonds between your brand and your customers. When they invest in you, they want to see you succeed after all. Plus, it’s one way of ensuring that there’s a line out the door on your opening day.
Small business financing that won’t “ghost” you
When you’re ready to start your ghost kitchen, or grow your existing one into a full-service restaurant, crowdfunding a small business loan with Honeycomb Credit could be one way to finance it, by accessing funding from the customers who love you the most. Learn more by filling out the form below: