Delivery-only “ghost restaurants” with no physical storefront are (virtually) popping up all around us, changing the rules of takeout. But how do they work? And, with no storefront, can they survive long-term? At Tech-licious, we had a look into the business of “ghost restaurants” and tried to shed some light on what’s on offer.
Home-delivery surely is not the “next big thing” when it comes to the food trends – on the contrary, it is so popular among hungry diners all over the world that it is even starting to make us all a bit bored (or maybe not yet?). This is why US entrepreneurs Todd Millman and Peter Schatzberg at Green Summit Group felt the need to push food-delivery to its extremes. How? By inventing restaurants that are no restaurants at all. They call them “ghost restaurants”: 100% virtual, storefront-deprived eateries operating several food-delivery services out of central NYC commissaries in midtown Manhattan, Brooklyn, and Chicago.
Kick-started in 2013 with an initial $1 million investment, Green Summit brings the food straight to the customers, but in a peculiar way: it offers menus from eight different virtual restaurants, each with their own branding and homepages. Diners order from these restaurants through delivery platforms (Seamless and GrubHub are the most popular), and the food is prepared and delivered from one of Green Summit’s two commissary kitchens.
Too complicated? The recipe is very simple: eight virtual restaurants, two kitchens, one company and zero storefronts is the winning formula that enabled Green Summit to deliver over 7.500 meals per week in 2015, generating millions of dollars in revenue.
Among the keys to success, the variety of the food on offer requires a special mention: you can buy salads through the virtual resto Leafage, sandwiches at Butcher Block, Mexican food at Maya Blue, meatballs at Grind – and soon you’ll be able to buy sushi, too. There was also a Mediterranean virtual restaurant in the group once, but it was “shut down” because it wasn’t paying off well. Very sad indeed but, hey, think about it: nobody got fired and it literally took a couple of minutes to pull it off Seamless/GrubHub, leaving no traces behind.
Food: the future is virtual?
Maybe, then, this is the revolution and the future of food is bound to be virtual?
Well, if we look at some of the advantages of virtual restaurants, we might be tempted to answer a timid, even fearful yes. Here’s a list for you:
Saving on the rent:
No rent to pay, no square footage to be devoted to customer seating and waiting areas (the “kitchen-only” model, as we will see in a bit). In the case of Green Summit, for example, the company made an exclusive agreement with the major food online ordering services Seamless/GrubHub – et voila, the rent has never been cheaper. In a phone interview reported by Fastcompany.com, Schatzberg says that, while other restaurants have to dedicate 75% of their space to seating when a 90% of customers just grab and go, Green Summit “can open a kitchen with as little as 200 square feet of space and operate a viable restaurant business with a minimal footprint.”
The kitchen-only model:
How does a “ghost restaurant” look like? Basically, there’s a grill area and a room for orders assembling. There is specialised staff too, each focussing on preparing a certain dish in their dedicated category-sorted food stations. Specialisation is thought to ensure a better-quality product.
New day, new menu:
Not having an actual storefront means Green Summit can switch menus rapidly (see the case of the Mediterranean resto mentioned above). It also means more versatility in the food they can offer: despite they tend to promote cross-utilization and similar menus of delivery-friendly food are in place in all the eight restaurants, Green Summit is also more flexible to jump on the latest food trends, see if they work and –if they don’t – just replace them if this turns out to be a flop. Normally, this would extremely costly for a “regular” restaurant, but not for Green Summit.
But of course, as the saying goes, it can’t be all peaches and dandelions: “ghost restaurants” encounter some major hindrances to their survival, too.
The cons are, for example:
Missing on walk-in traffic:
While online delivery-only services might have lower maintenance costs, they are also missing out on a significant cash flow from occasional walk-in clientele, as well as from the selling of alcoholic beverage.
Opening your delivery bag to find out someone else’s dinner? Or not finding your bag of rocket salad to top your Rustica pizza? I bet this won’t make you jump for joy, would it? Certainly, messing up with the deliveries won’t make you very popular with the community of online-ordering diners.
But maybe these are only smaller, all-too-common issue, after all, easy to overcome. Maybe the solution to that is already underway with the next big foodie thing.