how ghost kitchens might evolve
For restaurants that have already established themselves in the physical world, ghost kitchens can be a way to adapt to shifting trends. Frjtz, a San Francisco restaurant beloved for its Belgian-style fries, closed its brick-and-mortar location in the Mission in 2019, after 20 years in business, and now operates—delivery only—via CloudKitchens. Delivery-only kitchens can also work as a sort of triage effort for restaurants that are doing well. Recently, the owners of DOSA, a 15-year-old upscale Indian restaurant with locations in Oakland and San Francisco, told Eater they planned to move to a virtual model: a central commissary kitchen will supply food to a network of 20 delivery-only kitchens, where it can be reheated and delivered. In recent years, Souvla, a rabidly popular chain of fast-casual Greek restaurants in San Francisco, saw 30% of its business come from delivery. The restaurant group recently converted its commissary kitchen in SoMa into a “delivery-only restaurant,” intended to accommodate large orders and catering.
Consolidating kitchens has yet another side benefit: aside from increasing the sample size of restaurants and thus lowering the variance, it has higher employee utilization and less food waste. Food and labor costs are both 33% of restaurant operating costs, and the average profit margin from restaurants is 3-5%; a 3-point improvement in either food waste or labor waste adds 1 point of net margin, and getting both of those makes a restaurant 40% more profitable. Low-margin businesses are tough, but if there’s a way to improve them it creates a lot of operating leverage.
Gregor J. Rothfuss 