Observations from 2nd ghost kitchen conference

The stage with four people speaking at the Ghost Kitchen and Virtual Restaurant Conference

Written by James Shea

Editor’s note: Last week, OnTrend Concepts held the 2nd annual Ghost Kitchen and Virtual Restaurant Conference in Dallas. There was a lot of discussion about the future of ghost kitchens and virtual brands. As well, people talked about where ghost kitchens and virtual brands fit into this post-COVID world. Below are a few observations:

Off-premises is here to stay: Multiple speakers were confident that the shift to off-premises dining is permanent. Consumer buying patterns were already changing prior to the pandemic, and the last two years just sped up that process. People have an increased interest in eating at home. As a result, of-premises will continue to play a huge role in the restaurant business.

Robots are set to become a large part of restaurants: We toured the Middleby Innovation Kitchens in Dallas and watched robots make fries and pizza. The food was good, and I can see a role for robots in the kitchen. Labor is a huge issue for the restaurant industry, and a restaurant could use robotics to do low-skills tasks like making fries. Multiple speakers said that we are a year or two away from the major adoption of robots in a kitchen at a restaurant. This is no longer science fiction, but the model is moving toward a monthly subscription rather than buying the machine outright.

Virtual brands are a perfect testing ground: Brinker, Applebee’s and others said virtual brands have been the perfect tool for testing new concepts. Many have failed but some have stuck. The upfront costs are low enough that restaurants can use virtual brands as a way to test and innovate new concepts.

Logistics is becoming a growing part of off-premises: The timing of having food ready for delivery when the driver or customer picks up the food is a challenge. As well, how a customer or driver navigates the parking lot and restaurant to pick up the food upon arrival was discussed a lot. The use of lockers seems to be a growing trend for picking up food at a location. A representative of Ghost Kitchen Brands was pressed about the logistics of ordering food for pickup at a Walmart, where the company plans to open numerous kitchen facilities. How does someone park in a crowded Walmart parking lot, navigate a crowded store, pick up the food and leave? Will a third-party delivery driver know where to pick up the food? These types of logistical questions are a growing part of the off-premises conversation.

Dynamic pricing is on the horizon: Restaurants have been hesitant to use dynamic pricing, but the airline and hotel industries have been using them for years. Companies like Sauce are helping restaurants introduce dynamic pricing into third-party delivery apps., but several speakers see wide adoption of dynamic pricing in the near future. Digital menus make that possible even inside the restaurant. It seems this could be easily done with online ordering from a restaurant’s website.

The drones are coming: Restaurants are looking at a more efficient way to deliver food and drones were mentioned several times. Brinker International and Flytrex are testing drone delivery and a representative for Brinker at the conference said he can see mass delivery of drones in two to three years. But he was quick to point out that Brinker does not want to get into the drone delivery business. He foresees something similar to today’s third-party delivery where a company is paid to deliver the product with a drone.

Virtual brands work best for large names: Several people talked about how the most successful virtual brands have been big names. It’s hard for a bootstrapped restaurant to start out of a ghost kitchen and be successful. Mr. Beast, Brinker’s It’s Just Wings, and Applebee’s Cosmic Wings have been successful but many individual operators have failed to thrive out of a ghost kitchen. The startup costs are low for a virtual brand, but money still needs to be placed into marketing.

Doordash labeling virtual brands: DoorDash is going to start labeling virtual brands. While ghost kitchens and virtual brands do not have the best reputation, some at the conference expressed concern about being singled out. A representative for ClusterTruck was adamant that his food was as good or better than anything in the market. Several people thought the language of virtual brands and ghost kitchens was outdated but what is the alternative?

Still need to be grounded in hospitality: Technology has changed the restaurant business but multiple speakers emphasized that the restaurant business is still about hospitality. That is the same for ghost kitchens and virtual brands. Virtual brands and ghost kitchens must do a better job of connecting with their customers.

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