March 27, 2018

Ghost Restaurants Might Have an Afterlife

A Ghost Restaurant is a kitchen located in an obscure place that feeds the delivery stream 
for that brand. The ghost restaurants I've read about are one-off new brands in big cities.

But it's got to be difficult to scale an operation that customers have not heard of and can't 
visit. Web sites and brochures in hotels will only take them so far.

But what about an established national brand with universal name recognition?

It could work like this - a franchised restaurant chain launches a delivery program using an outside food delivery service. The company sets things up in such a way that their franchisees absorb all the costs and of course do all the work. Eventually this establishes which markets will be high volume delivery markets. 

The company then establishes "Ghost Kitchens" in the middle of the best delivery markets.

The build out is simple - a modern kitchen layout in a warehouse or in the basement of a building. The most important location requirement would be easy in/out for the delivery vehicles.

No drive-thru, no dining room, no sign package, no crew uniforms, just a kitchen. They probably wouldn't even need a POS.

Once the kitchen is ready the franchise company gives the delivery company a list of zip 
codes where all deliveries will be routed to the new company operated kitchen.

What about the industry wide movement away from company operated restaurants? This
is something different. It's the restaurant business reduced to it's simplest form. It should 
be extremely easy to run and very efficient (even a McOpCo manager could run it). If it 
does a decent volume with free standing restaurant menu prices it could be very profitable.

No need for franchising. The capital outlay would be small, and again, the operation would
be simple.

The above speculation assumes the delivery business will be huge for QSR restaurants. 
That's still doubtful. With nearly all restaurants getting into delivery the sales are going to 
be spread so thin that individual restaurants will not profit from delivery.

Food delivery services make way for Baltimore's first 'ghost kitchens' - Baltimore Sun
.

12 comments:

Anonymous said...

Would not put it past Mcd Corp to make ghosts all McOpco in the hottest markets.

Richard Adams said...

Do McOpCos pay the full UberEats commission?

Anonymous said...

no 10 year required remodels either !

Anonymous said...

I believe there is a large MCD grill area in the basement of a Manhattan High rise that only exists for UBER orders.

Richard Adams said...

Any idea who operates it?

Anonymous said...

Makes no sense for McDonald's to have ghost kitchens they already have the market penetration in local units/kitchens and can run more volume through those kitchens. McDonald's could care less about the cost of a ghost kitchen costing less it is on the franchisee to bare those costs of keeping up a restaurant, McDonald's picks up more top line sales whatever that might be when open to the public. That would be the same as McDonald's saying only open the most profitable hours of the day so your profit can improve. But not saying the ghost concept cannot happen to be in direct competition with McDonald's at a lower operating cost.

Anonymous said...

The previous post is probably by a Pajama boy, NOT an Operator

Richard Adams said...

I don't think the person who wrote that understood that I was talking about the Ghost Kitchen being a McOpCo. The idea is that McDonald's lets the Operators bear the costs of making McDelivery popular and then open ghost kitchens and suck up all the delivery business.

It's just a conspiracy theory.

Will McDelivery ever be that popular? I still don't think so.

Anonymous said...

The Kitchen located in the basement of a high rise in Manhattan is run by the company and business is booming!!

Anonymous said...

"The idea is that MCDbletsnthe operators bear the costs of making Mcdelivery popular and then open ghost kitchens and suck up all the delivery business."

You mean like they did with having operators build up the McCafe business with operator money and then going into retail stores and got dries with McCafe products and sucking up all of the revenue?

Adding insult to injury, MCD only lets us charge a max price of $1 and $2 for our own drinks but charge whatever they want for MCafe in grocery stores.

Anonymous said...


"The idea is that MCD lets the operators bear the costs of making Mcdelivery popular and then open ghost kitchens and suck up all the delivery business."

You mean like they did with having operators build up the McCafe business with operator money and then going into retail stores with McCafe products and sucking up all of the revenue?

Adding insult to injury, MCD only lets us charge a max price of $1 and $2 for our own drinks but charge whatever they want for MCafe in grocery stores.

Anonymous said...

Last time I looked you can set your own prices, anyone that mentions pricing to you FSM, BC I would let them know would like to discuss pricing with you but that is illegal under my states and federal antitrust laws to discuss those with the franchisor.

As for delivery raise your prices on the delivery side so it profitable for you just put 15% increase in RMS.

It is your business or are you letting your BC & FSM run it, that is the problem to many weak franchisees in the system.