Are Ghost Kitchens a safe harbor in stormy waters?

TrendTalk by RATIONAL Interview during Session 10

Michael Jones and Stephan M. Leuschner discuss about the question "Are Ghost Kitchens a safe harbor in stormy waters" and if so why, and is "pickup the new delivery?"

Michael: Good Morning Stephan, looking at today, what would you like to focus on?

Stephan: Well, Michael, today we focus on the question: “Ghost Kitchens: a safe harbor in stormy waters?” For me, that addresses:

• Are ghost kitchens and food delivery businesses in general, the solution to overcoming the current challenges in hospitality business?
• Are they a contemporary and sustainable way to fulfill the customer’s needs best?
• And if so, what do you need to consider to make your ghost kitchen operations successful?

These elements raise many questions, and I am sure we can give some answers to them today.

Michael: Only a few years ago many of us hardly knew what a ghost kitchen was, while there were only a few start-ups in this space. Today, we have seen many successful operating companies, as well as some serious challenges out there, so it’s very much time to discuss the evolution of ghost kitchens: the next level, so to speak.

Stephan: Absolutely! So, let’s have a look into the current situation.

What we can see is that many ghost kitchen operators have identified the same issues which they now have to change or adapt to if they want to stay.

Michael: Which challenges are they specifically, Stephan?

Stephan: Firstly, there is a systematic issue, which is both a curse and blessing at the same time: the lack of direct interaction with the end- customer. Whilst perceiving to save costs for service staff, this results in something of a gap when it comes to receiving direct feedback and to creating additional revenue per guest.

Michael: What do you mean by that?

Stephan: Let me give you an example: when I was a young apprentice chef many years ago, we got very good training by our Ma?tre D’ Hotel in the restaurant which has stayed with me ever since… There were actually many great training sessions I recall, whether it was about cigars or doing a flambé at the table, but the one which stuck in my mind was about the topic of “soft selling”

Soft Selling - The idea, to inspire you to buy something you actually want, but did not think about yet. We all know what I mean, the “Would you like a soup before your steak” or “some Espresso or Coffee for you?” after a great meal. – It was about inspiration. Everyone who goes to a restaurant has the intention to typically eat one main dish only. The skilled service staff however, given a talent for soft- selling, can make you dramatically increase your order, unleashing the full potential, therefore.

These, presumably small things, however, are key when it is about margin in any F&B operations. The bottle of water, The French fries as a side for 5 bucks, the Espresso, the mixed salad… all these add-ons contribute to the overall margin massively due to their low food cost.

A second thing related to service is the ability to get direct feedback and tap into the emotions of the customer. Things which help any restaurant crew to improve and to motivate themselves, because their aim is to satisfy the customer fully with best services and products…. That is why we call them Guests!

You may ask, what has all this to do with ghost kitchens? Why is he talking about that??

The answer is quite simple:

• The genuinely designed ghost kitchens do have customers, but they do not have guests!
• There was NO direct and personal feedback possible!
• There was NO personal interaction when ordering food!

The later delivery process is completely out of the hand of most ghost kitchens – no corrections possible. What is gone is gone. And finally, we may lose the up-sale potential in any order.

Whilst improving efficiency in the kitchen production and point of sales, due to digitization and smart, flexible cooking equipment like a RATIONAL AG iCombi or iVario, we may have lost some chances to connect with the customers and satisfy them, ultimately. So, the big question is how to be more effective and utilize the resources we have in a modern ghost kitchen.

One solution could be to go where the customers are, to allow impulse ordering, to interact with them and to allow a kind of “Soft Selling” on a virtual level. The most successful ghost kitchen operators right now decided to team up with establishes retailers. To leverage their customer volumes as well as their locations.

Kitchen United at Kroger locations, Ghost Kitchen Brands in a 沃尔玛 , or the newcomer from Denmark, Noahs , to be found in or next to Dagrofa ApS stores. They go where the people are, they show presence and allow interaction.

In fact they are not so “ghostly” or “dark” anymore… maybe we need to give these optimized food delivery kitchens a new name… But for the sake of common understanding, let’s still call them ghost kitchens.

Michael: Do you mean, Stephan the classical ghost kitchen needs to be a discontinued model?

Stephan: Somehow, it seems like this. Though existing and establishes sites will continue to operate successfully, my expectation is that newcomers need to do more, need to offer more to stand out and to sustain in this competitive market. Creating a virtual brand is one thing but operating them from a ghost kitchen with the highest efficiency is another.

Those companies that manage to interact with the customers more directly and which take the feedback serious to improve will succeed.

Besides that, inspiring the customers to pick-up their orders from your sites will allow you to leverage some extra sales, e.g. beverage like coffee to-go or some additional impulse items such as bakery goods or?snacks…. Yet another opportunity for soft selling.

On the other hand, that would reduce the efforts of costly delivery and the related “problem of the last mile”… Pickup is the new delivery, I would say.

Michael: So you say, newcomers should rather not “jump on the Ghost Kitchen train” at the moment?

Stephan: No, I think there are many opportunities still, just to plan and think through your model thoroughly.

I recently heard some wise words from the great Troy Hooper , our former TrendTalk by RATIONAL speaker and one of the leading voices when it comes to Ghost Kitchens and virtual brands. ?

He said that every brick & mortar restaurant ideally should have its’ virtual brand.

I totally agree. This allows opening new channels without massive additional efforts. All you need is a simple webpage, if at all, some name and logo and to leverage the food you have on your menu already anyway. Either by selecting some of your classics for virtual offer or creating some spin off from your existing brand or dishes. In any case, you should try to “use what you have” and not to pump up your offer with additional items that eventually need more resource during your daily operations.

In a nutshell, taking the best of both worlds, virtual and brick & mortar, reducing the efforts of third-party delivery where possible and leverage your current capacity and menu ingredients. That’s the way to go.

I firmly believe that the future of ghost kitchens within the online food order & delivery eco system will become a hybrid model. That is our safe harbor so to say

Let me show you a concept we designed which will give you an idea.

Michael: That really looks great, I like the idea of integrating the concept into various environments.

Stephan: Yes, the aspect of being closer to your customers was very relevant when designing this hybrid model. If we want to encourage pick-up, we need to be where the customers are. Offices, malls, train stations, airports, you name it…

But still, we use all the benefits of a classical ghost kitchen. Optimized for online ordering, offering multiple brand concepts in a shared environment, flexibility to change you concept anytime and designed for operators of all skill levels. Digitalization, connectivity, and automation are already there but will increase even more in near future.

The small ADV’s you see for example are just the beginning. Technology will become the key for efficient operations. More sophisticated technology, not necessarily calling them robots, but smart automation for sure will take over routine work where possible.

Packaging, cooking, delivering this may become automated sooner or later, thus giving us more time for interaction with the customers, getting direct feedback, creating a customer experience, and making them guests once again.

Michael: Great summation, Stephan. Thank you for showing us this inspiring concept and let’s hope that our future TrendTalk will not be taken over by robots too.

Stephan: Sure not, Michael.?I am already looking forward to our next session: TrendTalk 11 on February 15th next year.

Michael: Stephan, thank you very much for presenting today.

Stephan: Thank you Michael.