GOING VIRTUAL

Unless you live under a rock, some of the buzz words that have dominated the restaurant industry for the past year have been “ghost kitchens”, “virtual restaurants” or even the “WeWork for restaurant kitchens” (this one probably stung the founders of ghost kitchen companies the hardest). Like the words "finance", "medical" or "health", the nomenclature “ghost kitchens” puts you in the right sport... food services... but just like these other industries, you need to dig deeper in order to understand the specific services being offered and the value of such services (this is of course critically important from an owner & operator and investor perspective).

For avoidance of any doubt, the ghost kitchen space is going to have a truly meaningful presence in the hospitality industry and is here to stay. If you’re not familiar with this space, it’s critically important that you spike your learning curve because Branded expects virtual kitchens to approach 50% of the entire industry by the end of the decade.

Since providing people with numbers, especially large ones, tends to garner greater attention, please allow us to provide the following statistics from our friends at Euromonitor:

What is a Ghost Kitchen

To understand the ghost kitchen market, let’s first put some definitions around it and what Branded refers to as the “Kitchen Type”. You can essentially delineate the ghost kitchen market into two distinct categories: (i) the Virtual Kitchen; and (ii) the Shared Kitchen.

What both Kitchen Types afford restaurant owners are a combination of reduced rent and overhead costs, maximized workflows, the ability to meet the current and increasing demand for off premise food services and an increased speed to market. However, there are more differences than similarities when comparing these two distinct ghost kitchen strategies. 

The Future of Ghost Kitchens

Branded will be writing much more on the topic of ghost kitchens and will also be exploring opportunities to deploy capital in this specific vertical. To understand why we care so much about the momentum associated with the ghost kitchen space, Euromonitor predicts that the virtual kitchen space will continue to expand and will reach the following thresholds:

These are numbers and predictions that can’t be ignored. Global foodservice delivery sales have more than doubled from 2014 to 2019 and over 50% of global consumers are comfortable ordering from a delivery-only restaurant with no physical storefront.

When you look at these numbers and consider the growth that will take place over the next several years in the virtual kitchen market, you can see why Branded continues to be so excited about this segment of the hospitality market and is why we’re going virtual.