At the start of 2020, delivery-only virtual restaurants were already a disruptive force in the food industry. Commonly referred to ghost kitchens or dark kitchens, these technology-driven concepts use empty or under-utilized cooking facilities to produce food for delivery, with no customer facing or eat-in areas. Off-premise dining had already more than doubled since 2016, as evidenced by the explosion of third-party aggregators such as Door Dash, Uber Eats and Grubhub.
At the end of 2019, CloudKitchens, a start-up from Uber’s former CEO Travis Kalanick had raised $400 million. Concurrently, Robert Earl, the founder of Planet Hollywood, was building a virtual empire of delivery-only brands. “Food delivery has quickly become an everyday occurrence for many people,” said Earl in a statement. “With this business model, the sky is the limit.”
When the Coronavirus pandemic forced the nation to stay-at-home, it added fuel to the fire. The global pandemic accelerated America’s growing appetite for delivered meals, and the opportunity for industry-wide disruption has become more primed than ever.
In comparing both business models, the per-unit economic advantages of virtual restaurants to traditional brick-and-mortar ones becomes apparent. On a $10 customer spend, the average profit is $3-$4 for virtual restaurants— more than double that of sit-down locations. Traditional restaurants typically lease on average 2,000+ sq ft of prime retail space ,whereas ghost kitchens require only 200-300 sq ft to serve the same neighborhood, but at a much lower cost. This allows virtual restaurant owners to create a kitchen that emphasizes improved preparation processes and workflow.
That is why virtual brands rely even more heavily on technological solutions to help their operations scale efficiently. A "ghost kitchen" can launch from scratch in under three weeks and open up to 20-30 locations in a year. A dine-in establishment is lucky to grow to 10 locations in 5-10 years.
Foodhaul, a Chicago ghost kitchen venture that delivers a mixed menu of celebrity chef entrées, has teamed with Grasp software development to launch immersive food prep training in VR. “We're opening one new location per week. With VR training for our chefs, we are able to scale more effectively.” Says Kyle Kaszniak, the Director of Culinary at Foodhaul. “The time it takes to onboard staff is cut down and dishes are prepared with consistent quality."
Forward-thinking operators such as Foodhaul are establishing new standards for off-premise dining. They are tailoring new menus to boost off-dining sales and rethinking packaging to retain the correct temperatures of the food to the end user. But with rapid expansion and a catalog of 100 to 200 dishes, tech solutions such as VR training is an effective way to train food preparers across dozens of locations to practice cooking each dish correctly and consistently. In an industry with significant employee churn the cost savings are substantial.