Since the beginning of the COVID-19 pandemic, the food delivery service business has experienced a huge surge in growth. This boom in the delivery business has brought with it a curious new trend: the rise of Ghost Kitchens. For the unfamiliar, ghost kitchens are delivery-only restaurants that operate from the kitchens of existing brick-and-mortar restaurants. For chefs and restaurateurs looking to create a new concept, ghost kitchens offer the chance to establish a business and build revenue enough to open a more permanent dine-in space, while also allowing for the chance to do market research on crowd-pleasing favorite menu items.
From the outside, starting a ghost kitchen might seem intimidating, but it’s not as scary as its namesake would have you believe. Here’s a rough guide to opening your ghost kitchen and beginning to build a following.
Start With A Clear Concept
Like any other new venture, if you’re hoping to open a successful ghost kitchen, you need to have a clear and specific idea of what you are trying to sell. Browse through delivery apps and options in your area and take note of what you’re not seeing present – this is prime territory for you to stake your claim in the local market. Your concept should be specific and focused, while “Thai food” is probably too broad, “Thai Noodles and Spring Rolls” is closer to the right neighborhood. Ghost kitchens work well with tightly-focused menus; your business will likely have very specific access to kitchen tools, so “noodles and spring rolls” would clarify what elements of a kitchen space you’ll need.
It’s also important to choose a concept that translates well to the delivery-only format, such as fried foods, nachos, and fine dining options, for example, won’t transition well to delivery. Things like noodles, sushi, hot wings, pizzas, and other well-trodden delivery staples are your best bets for a menu that people will keep coming back to. Consider other elements of your concept, too — are you a late-night business, or do you operate in the mornings? The more specific detail you are able to put into your concept, the easier it will be to formulate a focused business plan.
1. Get Down To Business
Right after establishing your concept, it’s time to focus on the business side of things. The first step, as it is with any new venture, is to create a detailed business plan. There are lots of free resources for creating business plans all over the internet, a quick google search will yield templates, advice, and more. Don’t hesitate to take some time reading things over and choosing the right things for you, but remember not to get too bogged down, your ghost kitchen has to actually open someday, after all. A good business plan should be detailed and as comprehensive as possible, but here are a few critical elements to include:
- An executive summary. This is your quick pitch on your business – the idea here is to create a bite-sized summary of what you do and why it will fit the local market well. This is your elevator pitch.
- A company description. If the executive summary is your hook, then this is your reel. This is the time to go into greater detail about what your business will look like in operation: detailed descriptions of service, delivery, branding ideas like logos, and similar customer-facing elements are your focus here.
- A sample menu. If you’re going to get the financial backing you need to launch your concept, investors need to be able to see what you’re producing. The sample menu doesn’t have to be set in stone, but having a well-designed mock-up can familiarize your potential investors with what they can expect from you.
- Market analysis. Try to gather some data about your new business that might indicate demand. Targeted surveys in social media ads or YouTube videos might be a start, but if there is a highly-trafficked area near you (a college campus or mall might be a good place to start) where you can ask people about an interest in your idea can help too! Knowing there’s a niche in the market for you can strengthen your plan and help you drill down to what potential customers want.
- An organizational structure. This is the layout of your business in terms of its hierarchy – it details the number of employees necessary for an average operational day and lays out a chain of command.
- Financial projections. Having detailed information about the fiscal future of your business will help potential investors know where their money is going, and how it might return to them.
2. Make Some Friends in High Places
With a business plan built out, you need to start looking for the initial funds to open your concept. Depending on the initial needs outlined in your business plan, it’s entirely possible that you might be able to fund it yourself, but it’s always a good idea to look for some investors or small business loans. Here are a few ideas to get started.
- Fundraise at local food events by popping up there
- Partner with local restaurants to pop up in their kitchens, with the profit going towards your business
- Ask other restaurateur friends if their investors might want to meet and discuss your business
- Ask friends and family to invest, if they’re willing and able
- Use targeted social media ads to advertise the investment opportunity
3. Get Your (Business’s) Ducks In A Row
After you’ve established your concept and business plan, it’s time to deal with the nuts and bolts of starting a business. Most important here is to locate a space you can work out of – there are commercial kitchen spaces you can find for rent online, or maybe you can work out a deal to borrow some real estate in the kitchen of an existing restaurant. Whatever your chosen avenue, ensure that all of the necessary kitchen equipment is present and that all necessary permits are secured and health code protocols are being followed. This stage is all about dotting your i’s and crossing your t’s, but it’s vital to enduring future success. Here are a few critical elements that every new food service business needs:
- A business license to operate in your state
- Health inspections
- Fire safety inspections
- Food handling certifications for employees
- A contract with your venue to use the space
4. We’re Putting Together a Team
Your kitchen might be a ghost, but it still needs workers to operate it! Advertise on online platforms like Indeed, Craigslist, or LinkedIn to find people with the right availability and training. Don’t go crazy with the hiring process. Hire the staff you need so you can treat them right–with great pay and good benefits. This might help your business down the line, too. If you establish yourself as a good company to work for early, you’ll have little trouble finding enthusiastic workers.
5. Enter The Internet
Now that you have all of the functional elements in place, it’s time to get established on delivery platforms like UberEats, DoorDash, Postmates, or others. Set up your menu through their platform, and be sure to check things out from the customer-facing side of the apps. By doing this, you can avoid missed upcharges or manage spaces where customers might type in difficult modifications. Be warned: platforms like UberEats can charge a 30% cut of the revenue for every order through their platform, but most delivery platforms are willing to negotiate on their rates. If you don’t want to go through a platform like this, services like Bento, ChowNow, or Toast can help you create a platform to host your own online ordering, and you can expand your service to include delivery or enable your customers to pick their orders up.
6. Get Your Business On The Map
Once you’ve got the physical elements of the business together, it’s time to get the word out. This is a great time to set up social media accounts promoting your business and pursue targeted advertising. Using polished social media posts and branding is a great way to spread the word about your new venture, but there’s also a lot to be said for word of mouth. Check local event calendars about things like food festivals and farmers’ markets, and contact organizers to see if you can be added to the lineups! While you’re there, make sure you have physical flyers and handouts that prospective customers can take home with details like your menu, operating hours, and how to order.
Let It Fly
Open your doors! (Well, your digital doors, as it were.) At this point, you should have everything you need to operate; now it comes down to your preparations paying off. The first few weeks of your operations will be critical; this is the time to identify pain points and pay close attention to what repeat customers seem to love. Many delivery services offer review and rating systems, and UberEats specifically does so per item ordered – use this data to figure out what your new customers are loving time and time again.
There are lots of great analytics software systems like Toast, Upserve, and Domo that you can utilize as well to see what’s popular and hone your concept into a well-oiled machine. If you plan to eventually open brick-and-mortar premises, this can be invaluable for modifying your existing business plan at a later date. The only way to go from here is up, and with some hard work and dedication, you can be sure that your ghost kitchen’s food will haunt your customers’ cravings so that they keep coming back for more.