A Ghost in the Kitchen

Ghost kitchens have seen an explosion in popularity over the last two years. The idea of delivery only kitchens was intriguing in 2019; however, the idea caught fire during the pandemic when it became a near necessity for some restaurants. These provide a cheaper real estate option because they do not need to be in a prominent area and the buildings require no signage, dining room, or drive through. The delivery only restaurants also allow chains to reach new customers and staffing at each location is reduced. The pre-pandemic benefits were enticing, although not every restaurant was on board. Once the pandemic closed dining rooms across the nation, the concept of a fully-fledged restaurant with no dining option became a golden ticket. Ghost kitchens were initially geared towards smaller locations that sought cheap expansion; however, they have adapted in ways that would have seemed impossible a few years ago. Completely new restaurants have chosen to operate only as virtual kitchens and recognizable chains have created spin-off brands that are delivery only. It has also captured the interest of industry giants with Wendy’s planning to open 700 ghost kitchen locations and the recent announcement that Walmart will begin opening these concepts within their stores. Retail stores also developed a similar concept last year when several began to use empty or closed stores as makeshift distribution centers or dark stores to deal with increased delivery demand.

Ghost kitchens have had a successful evolution over the last few years that led to the massive Walmart deal. The usefulness of this concept came into focus when hard hit brands like CEC Entertainment Inc. used it to launch a familiar product with a new name. Pasqually’s Pizza showed up on third-party delivery sites early last year and it didn’t take consumers long to recognize the familiar Chuck E. Cheese pizza that was being delivered to them from the same locations they used to visit. Virtual kitchens also helped Wingstop combat the recent wing shortage by launching brand Thighstop that allowed them to utilize a greater percentage of their inventory. Entirely new concepts like MrBeast Burger were created and it represents an easier and cheaper point of entry for perspective restaurateurs. These kitchens have not just added a new revenue stream to restaurants; it has changed how the industry operates on a conceptual level.

If the Wendy’s partnership with REEF Technology meant that ghost kitchens had gone mainstream, then the Walmart announcement means they are here to stay. Walmart’s partnership with Ghost Kitchen Brands is a massive windfall for the restaurant and retail industries. Partnered Walmart stores will feature kiosks that allow customers to place an order and then shop while they wait for their food to be prepared. A major benefit of this format is that multiple restaurants will be present at each store, and they will not just feature national brands, rather local brands as well. It will give these restaurants additional reach while also extending the time shoppers spend at Walmart. Retail stores have had their own share of issues during the pandemic and the inclusion of these concepts as destinations in stores could provide a roadmap to recovery for both industries.

The restaurant industry has adapted a great deal over the last year and ghost kitchens have been the catalyst. National and local restaurants being available at Walmart stores can reimagine the industry with new brands being created to cater to a new type of consumer. If this partnership is successful then we will likely see other retail stores look to get in on the action. These “dark” kitchens have staying power and will persist even after the pandemic has subsided. This new kind of restaurant will hasten recovery by allowing brands to pare down to the necessities of delivering memorable meals without worrying about the frills of design and service of a traditional restaurant. Despite prior indications, these ghosts won’t be disappearing anytime soon.