Ghost Kitchens Pop Up in the Age of COVID

Arielle Feger | 28 Aug 2020

As the COVID-19 pandemic continues, restaurants are finding new ways to stay in business, including operating from ghost kitchens, facilities that produce food for delivery only, with no dine-in or customer facing areas.

This creates a huge opportunity for the foodservice industry worldwide; a $1 trillion opportunity by 2030, according to Euromonitor. Operators, distributors, and even staffing platforms are hopping on this trend and making delivery cheaper, faster, and more reliable.

In the U.S., ghost kitchen operators Zuul, Kitchen United, and Kitopi have expanded within the last year, aiming to open ghost kitchens in New York, Chicago, San Francisco, and Los Angeles.

Most recently, New York-based Zuul secured $9 million in funding which will be used to “Continue to play a central role in the restaurant industry’s accelerating shift toward delivery while addressing the challenges this shift presents,” according to Corey Manicone, CEO and co-founder. Currently Zuul partners with Sarge’s Delicatessen and Diner, Naya, Sweetgreen, Junzi, and StoneBridge Pizza & Salad in the New York City area.

On the distribution side, US Foods launched US Foods Ghost Kitchens, a program designed to guide restaurant operators every step of the way when opening their own operation.

“The Ghost Kitchens program was developed in response to growing interest among our customers, but we’ve also been tracking the trend … making them an attractive concept for operators even after dine-in restrictions are lifted,” said Jim Osborne, senior vice president of customer strategy and innovation at US Foods, in a statement. “We also know ghost kitchens are a departure from the traditional brick and mortar format, so some independent operators need help to jumpstart a new venture, which is why our program takes out all the guesswork. We help the operator through every major decision. And since operators using the program often set up within their existing facilities, we’re able to help them open a ghost kitchen with minimal start-up costs in a matter of weeks, with the goal of higher profit margins and expanded customer reach.”

Despite the success of the overall category, COVID-19 is still presenting challenges for ghost kitchen operators. In January, Dubai-based Kitopi signed a 10-year lease for a 7,500-square-foot space in Manhattan, on the ground floor of a six-story building. In April, the brand partnered with Nathan’s Famous’ Coney Island restaurant to bring its hot dogs to the rest of the city. James Walker, SVP of restaurants at Nathan’s, told Nation’s Restaurant News that Kitopi’s platform is what drew him to the company. “Kitopi caters to the entire customer experience journey—from the call center to delivery, allowing restaurant owners to focus on running their dine-in space, marketing, and menu development,” he said.

However, later that month, Kitopi had to lay off 124 of its NYC employees, and, according to a statement provided to Menabytes, it has since suspended operations in the city until further notice. Kitopi is still operating in Dubai, where, according to CNN, it prepares food for some 100 eateries across the Middle East and produces over 200,000 meals a week.

Ghost Kitchens on Screen

After the COVID pandemic hit, Shiftpixy, an online staffing platform, began to notice the growth of these ghost kitchens and saw an opportunity to help struggling restaurants. “With dining room activity on the decline, if you want to stay in business, you have to be agile and become more invested in technology, Shiftpixy CEO Scott Absher told SFA Daily News.

To this end, the company launched Shiftpixy Labs, an initiative that seeks to help quick service restaurant operators meet the demands of the changing marketplace. In addition, Shiftpixy announced that it will hold a Ghost Kitchen Incubator contest, which Absher says will be like, “Shark Tank meets Iron Chef.”

“We want to elevate our story telling and use a ghost kitchen operation as a theater,” said Absher. “We want to chronicle everything with high quality video, from the initial idea, to developing the cuisine, to building the brand and the marketplace. We want to treat it like a culinary accelerator.”

Currently, Shiftpixy is moving its headquarters from California to Miami. Part of the move includes finding a space that will function as the base of operations for the contest, which Absher hopes to do by early next year.

Then, Shiftpixy will hold a casting call, open to anyone interested in ghost kitchen operations. With the multitude of culinary schools in the area, Absher feels like it’s the ideal place to look for participants.

The contest will be open to corporate chefs, private operators, or even line cooks. “We just want to take people with great ideas and show their journey,” Absher said.

Related: Zuul Secures Funds to Operate NYC Ghost KitchensGhost Kitchen Market May Reach $1 Trillion.