The ghost kitchen dilemma: why some food businesses are turning to this model

In today’s fast-paced, delivery-driven food industry, many businesses are turning to "ghost kitchens" as a way to expand their reach without the overhead of a traditional restaurant. A ghost kitchen, sometimes referred to as a virtual kitchen, operates without a dine-in option, focusing solely on fulfilling online orders via pick-up or delivery. This model has gained traction for its potential to maintain low operating costs and offer greater flexibility for chefs and restaurateurs. But why exactly might a business choose to run a ghost kitchen? Let’s explore the key reasons behind this growing and controversial trend.

What is a ghost kitchen?

A ghost kitchen is a delivery-only restaurant without a storefront where customers cannot dine in. Ghost kitchens operate exclusively to fulfill online orders for delivery, often leveraging platforms like Uber Eats, GrubHub, or DoorDash. In a world where convenience is key and food delivery services are booming, ghost kitchens have become increasingly popular.

Ghost kitchens typically work in one of three ways:

1. Operating out of a commercial kitchen space – In this model, a food business runs its operation from a rented kitchen without any customer-facing areas. The kitchen is purely a back-of-house operation designed to pump out delivery orders quickly and efficiently. There’s no front-of-house staff, no decor, and no seating—it's entirely focused on the food, the cooking process, and getting it out the door.

2. A restaurant operating a secondary business for delivery – Many established restaurants open a second brand, often under a different name or with a completely different menu, to target delivery customers without changing the identity of their primary restaurant. For example, a sit-down restaurant might continue operating its dine-in menu but launch a separate ghost kitchen focusing solely on burgers or another cuisine, delivered exclusively via apps.

3. A very popular restaurant opens a delivery-only location to fulfill the high demand for online orders when they do not have enough production space in their restaurant. 

The pros and cons of ghost kitchens

Pros

1. Expanding revenue streams

• For restaurants where profit margins are notoriously thin, opening a ghost kitchen offers a new stream of income without the overhead of a traditional storefront. Since the focus is entirely on fulfilling delivery orders, operating costs can be lower, and there’s an opportunity to serve more customers across a wider area.

2. Minimizing food waste

• More orders can mean less food waste. Instead of preparing meals that might not sell in a dine-in setting, ghost kitchens can better anticipate demand by adjusting their operations for delivery traffic, helping reduce the amount of unsold or spoiled food.

3. Menu innovation and testing

• Ghost kitchens allow chefs to experiment with new cuisines and dishes. Without the need for a single theme or in-person dining, a chef can run multiple concepts from the same kitchen. This flexibility allows them to test new ideas without the risk of rebranding their entire restaurant.

4. Low-cost expansion

• Popular restaurants or chains can easily scale their operations by setting up ghost kitchens in new locations. Since there’s no need for a physical dining space or construction build-out, brands can open more delivery-only outposts at a much lower cost than traditional restaurants. For example, at Nimbus, you can launch your delivery operation from a private unit for as little as $5,000 vs the hundreds of thousands that opening a restaurant usually costs. Click here to learn more about how much time and money you can expect to spend opening a brick-and-mortar restaurant. 

5. Shorter launch times

• Since there is no need for construction to build out kitchen infrastructure, the time from signing a lease to launching food sales is significantly shorter compared to opening a full-scale restaurant.

Cons

1. Lack of transparency

• For many consumers, understanding where their food comes from is important. Ghost kitchens can often be confusing or misleading to customers, as they may not know that the restaurant they're ordering from exists only virtually. This disconnect may leave some feeling wary or distrustful.

2. Reimagining for delivery

• While ghost kitchens can provide convenience, they pose challenges when it comes to food quality. Many dishes that would be stellar served fresh at a restaurant may not hold up well during the time it takes to prepare, package, and deliver. This requires chefs to rethink their offerings to ensure the food still meets their standards when it arrives at the customer’s door.

3. Expensive and wasteful packaging

• A significant portion of the expenses for a ghost kitchen goes into packaging, which can also be environmentally wasteful. Packaging that keeps food warm and intact during delivery is crucial but often leads to excessive use of plastics and other single-use materials, contributing to waste and environmental concerns.

4. Difficulty marketing new concepts

• The food industry is highly saturated and often difficult for new concepts to break into without preexisting brand recognition. Without foot traffic, you will be relying on delivery apps and your online presence. This poses a unique marketing challenge.

So why don’t we identify as a ghost kitchen?

At Nimbus, we don’t fit the typical mold of a ghost kitchen. While we certainly support businesses that operate ghost kitchen models, we offer a much more comprehensive kitchen rental solution for a much broader audience in food and hospitality. Nimbus is more than just an off-premise kitchen facility — we're a community-driven business that provides flexible kitchen rentals tailored to a wide variety of food entrepreneurs.

Our services include:

• Hourly shared kitchen rentals: A turn-key co-cooking solution for your on-demand needs.

• Private, long-term kitchen units: A customizable kitchen that’s all yours, always.

• Front-of-house event and dining spaces: A versatile venue for in-person experiences.

• Storage space: A temperature-controlled place to store your ingredients.

At Nimbus, we also believe that building a community is essential for long-term success. We’ve reimagined the typical ghost kitchen model by creating opportunities for food entrepreneurs to connect with their customers and with each other.

For example, our digitally-enabled food hall in Downtown Brooklyn allows consumers to order from multiple vendors in one place. customers can either order online for pickup or enjoy their meals in our on-site café seating, fostering a sense of connection between our kitchen users and the surrounding neighborhood.

We also share business development resources with our members on a monthly basis to support them with our network. In addition, our open floor plan kitchens encourage collaboration between members, helping food entrepreneurs learn from each other, share resources, and create meaningful partnerships.

This infrastructure enables us to cater to a diverse range of food businesses far beyond the scope of ghost kitchens or virtual restaurants. At Nimbus, food entrepreneurs have the option to experiment with delivery and catering, but also host pop-ups, events, and participate in our community.

Conclusion

While ghost kitchens play an important role in today’s food industry by offering convenience and new revenue streams, they aren’t for everyone. At Nimbus, we’ve expanded beyond the typical ghost kitchen model by offering a more comprehensive, community-driven approach. By providing flexible kitchen rentals and fostering a collaborative atmosphere, we aim to empower food entrepreneurs to grow and succeed, no matter their business model. We have a diverse member base including caterers, meal delivery businesses, bakers, private chefs, pop-up events, and more. 

Whether you’re looking to launch a delivery-only concept, test new recipes, or connect with customers through in-person events, Nimbus has the space, and community you need to thrive.