Pandemic catapults interest in ghost kitchens

By Jo Rossman

Major disruptions can quickly popularize some formats even as they cause others to lose relevance. COVID-19 is creating this type of sea change in the restaurant industry. Behavioral changes that began during lockdown have had a lingering effect. For example, visits to U.S. restaurant drive-thrus continued to increase after restaurants reopened, rising 13% in July, according to a report by The NPD Group. And many dine-in restaurants have continued to flounder.

While the aversion to in-store dining may disappear post-pandemic, many restaurateurs are banking on continued high demand for takeout and delivery. This belief is causing some chains to rethink their protoypes. Witness Burger King, Buffalo Wings & Rings, and Fazoli’s. KFC was ahead of the curve with its prescient drive-thru-only pilot, and new brand Brooklyn Dumpling Shop reimagined the automat for a zero-human-interaction customer experience.

The expectation of continued behavioral change also has catapulted interest in a format that previously didn’t get much attention: the ghost kitchen. Also known as dark restaurants or virtual kitchens/restaurants, these facilities range from use of a foodservice kitchen for orders by third-party delivery vendors to restaurants that offer everything but dine-in.

Their recent surge addresses increased demand for delivery, pickup, drive-thru, and takeout. But they also offer restaurateurs other benefits, such as the ability to open faster with a smaller investment. For instance, California-based Lemonade Restaurants opened one in a mere three months.

Consequently, some restaurateurs are using virtual restaurants as a way to test new markets. FSC, for instance, started The Hatchery as a ghost kitchen before adding a dine-in location in Tampa. Lifestyle eatery chain Coolgreens, whose restaurants are all in the U.S. Great Plains region, opened one in Orlando. And Texas-based Which Wich Superior Sandwiches opened two in London.

Here are some of the latest to experiment with virtual restaurants.

Chipotle

Chipotle Mexican Grill has opened its first digital-only restaurant in Highland Falls, N.Y. Offering pickup and delivery only, the Chipotle Digital Kitchen lacks a dining room and a front service line. Guests order in advance via the website, app, or third-party delivery partners. Orders can be picked up from a lobby designed to include the sounds, smells, and kitchen views of a traditional Chipotle restaurant. The Digital Kitchen will also service large catering orders available for pickup in a separate lobby with a dedicated entry.

The new prototype provides flexibility with future locations and lets the brand enter urban areas that wouldn’t support a full-size restaurant. Chipotle will use it to accelerate digital business in non-traditional locations. “With digital sales tripling year over year last quarter, consumers are demanding more digital access than ever before,” says Curt Garner, chief technology officer of Chipotle. “The Digital Kitchen incorporates innovative features that will complement our rapidly growing digital business while delivering a convenient and frictionless experience for our guests.” 

Red Lobster

Red Lobster has opened its first ghost kitchen in South Loop Chicago. The delivery-only location serves classics via Red Lobster’s third-party delivery partners. It enables Red Lobster to evolve its off-premise capabilities, including touchless delivery, and efficiently expand its presence in urban areas in the U.S. and around the world. The delivery-only restaurant model reflects Red Lobster’s investment in innovation and technology to keep up with the rapidly growing consumer demand for food delivery.

“It will enable us to reach new guests who are not currently served by our existing brick-and-mortar restaurants,” says Kim Lopdrup, CEO of Red Lobster. “Off-premise is a huge priority for Red Lobster. We tripled our off-premise sales in the two years before COVID-19 began, and we’ve tripled them again over the last eight months. Opening a ghost kitchen is a natural next step in expanding our off-premise business. It will allow us to reach new customers who want great seafood with a touchless off-premise experience.”

Aloha Poke

Aloha Poke, a U.S. sustainable seafood restaurant chain, is partnering with ghost kitchen operator REEF’s Kitchens to expand into new urban markets, beginning in Dallas, Miami, or Atlanta. As a licensed operator, REEF’s team will prepare Aloha Poke’s menu items, which will be available via third-party delivery platforms. REEF operates out of 4,500 parking lot locations throughout the country, reaching 70% of North America’s urban population. Built on the delivery and quick-serve carryout concept, ghost kitchens are set up in mobile vessels, outfitted to operate as full functioning kitchen and food preparation units.

“Ghost kitchens are an interesting, turnkey solution to bring the Aloha Poke fast-casual concept to a larger population of people in the largest urban areas of the country,” says Paul Tripodes, VP of franchise development for Aloha Poke. “We are excited to work with REEF and feel this is a great way to introduce our brand to new, urban markets ahead of traditional brick-and-mortar development while strengthening the Aloha Poke brand.”

Dickey’s Barbecue Pit

Dickey’s Barbecue Pit has opened its first virtual kitchen in Chicago. The site offers the chain’s full menu through delivery only, with ordering through the international barbecue chain’s website or app. Delivery is through third parties and will cover a 10-mile area. This is Dickey’s fifth Illinois location and the second to open in the Chicago area.

“We are continually adapting our restaurant models to fit the needs of both the economic climate and the fluctuations of guest behavior, and with states such as Illinois cautiously suspending indoor dining operations once again, the opening of our first virtual kitchen could not be more timely,” says Laura Rea Dickey, CEO of Dickey’s Barbecue Restaurants.

Hoffbrau Steak & Grill House: BrauBQ

Hoffbrau Steak & Grill House is using a virtual kitchen concept to test a new restaurant brand. The Texas-based chain has launched a virtual kitchen out of its Amarillo restaurant. The virtual kitchen, BrauBQ, is tucked inside the Hoffbrau kitchen and conceived for delivery only. BrauBQ offers Texas smoked barbecue foods that can be ordered and delivered via website or third-party services.

Nathan’s Famous

Nathan’s Famous is seeking ghost kitchen partners for two programs: the Nathan’s Famous brand and the Wings of New York brand. Wings of New York is a virtual concept offering New York style wings as well as Harlem-style chicken and waffles. The rollout of this concept will only be available through third-party delivery initially in the New York Tri-State area, with expansion plans across the U.S. in the coming weeks. Nathan’s wants to use existing kitchens of restaurants, foodservice providers, and catering halls.