The Evolution of “Ghost Kitchens” and Their Course in the Latin American Market
The Evolution of "Ghost Kitchens" and Their Course in the Latin American Market
The foodservice industry continues to evolve constantly, proposing new ideas and business models, some very successful and others a bit premature to determine their success.
One of the models that has positively exploded since the time of COVID due to the change in format for doing business is ghost kitchens.
On this occasion we will see some general concepts about them, models, characteristics and perspectives for Latin America.
What Are They?
Initially known by its English term as Ghost Kitchens and variants such as Cloud Kitchens or Virtual Kitchens are gastronomic service business models with menus like any other business, but without a physical location. They base their entire service to consumers on delivery.
In addition, they are complemented by the Dark Kitchens and Shared Kitchens business models that can be part of the equation due to the characteristics they entail.
The idea of the model is to focus on the menu and the brand, promote them through advertising and then partner with operators who have the ideal equipment and real estate so that they can take charge of the preparation of their products.
Differentiating From Each Other
There are several terms that have been born around the world of delivery, but business models have also been born that do not necessarily have to do with ghost kitchens, but they do become operators with whom they are naturally associated.
A continuation, the main models and characteristics
Dark Kitchens
Locations with all the necessary equipment to develop business menus, prepare catering, banquets or similar.
Its success is based on providing assistance to operators in the gastronomic industry by renting spaces and staff.
They are not necessarily ghost kitchens, but they can become a fundamental part of this model.
Shared Kitchens
As the name mentions, they are kitchens with all the equipment and elements necessary for gastronomic businesses.
In these kitchens several businesses converge by agreement between them. It makes it easier to bear production costs and the purchase of specialized equipment. Delivery platforms are one of the channels to connect with customers, but they also come to share a location.
Ghost Kitchens
“Take-out only” restaurant model. They conceive a strong brand, an attractive menu and the ability to manage from the cloud.
They enter into agreements with operators, mainly national fast food chains or at least those that are not multinational, which allows them to produce their menu in each location.
The team that conceives the brand will seek to partner with those who have the ideal equipment to produce their products.
Cloud Kitchens
They are similar to Ghost Kitchens, but with the difference that Cloud Kitchens franchise their menu and business to other operators or chefs.
The model is more common in the US, UK and India where, due to the great geographical distances, it is preferable to franchise the brand and services to operators that cover a larger territory.
The foregoing is much clearer with fast food chains in the US, despite the fact that large multinationals are known, there are also chains specific to each State.
In this business model, both the original brand and its ghost kitchens establish efforts, the latter according to their geographical area.
Virtual Restaurants
The virtual restaurants are of a “take away only” model, and focus on menus somewhat disassociated from fast food, although they maintain the idea of ghost kitchens.
Their difference relies on the fact that instead of partnering with independent restaurants, they move away from national chains or local chain restaurants to focus on independent operators.
However, this would imply a risk in the investment for dealing with different know-how and different menus, however, as with the rest of the ghost kitchen models, the association depends a lot on the team that the restaurant has.
The partner brand is the one that runs the marketing and advertising.
What Do They Need to Function?
An Initial Brand
The initial brand is the one that will develop the menu, know-how, processes, presentation packages and everything necessary to bring this business to life, with the difference that it does not seek to have its own location.
The idea is that the brand is so attractive that it has the capacity to negotiate with other operators so that they can develop their products for delivery.
Strong Online Presence
Not having a location to focus on, the objective of your sales funnel is focused on the presence in virtual media.
They need a website with strong SEO, a presence on social networks, constantly creating content and a presence in the main delivery applications.
Celebrities/Popularity
Good SEO and a strong social media presence can mean great success or may not ensure success, which is why it is common for brands to be born from a very popular theme or even developed by a celebrity.
In the US, the model uses a lot of celebrities, who do not really invest in the world of foodservice (when it comes to equipment, staff, etc.), but instead focus on providing constant publicity for their brand.
Attractive Menu
From burgers to pizzas or even salads, everything is technically possible to achieve, but it must be attractive and very well designed.
At this point it is similar to any other restaurant. You need a product that is worth consuming again.
Right Partners
It is possible to associate with a shared kitchen or even have agreements with restaurants so that they prepare your recipes and triangulate the orders.
However they develop the model, they need the ideal partner based on their menu, brand and goals. The equipment will play a fundamental part in determining if there is a partnership or not.
Strong Delivery Platforms
Since the birth of applications such as UberEats, Rappi, PedidosYa, Glovo and the like, it has become easier to solve delivery problems.
Delivery platforms are one of the main allies for these ghost kitchens.
Virtual Management
Although many management processes can be done in person, it is clear that this model is evolving towards management from virtual platforms that allow clear control for both the ghost kitchens and the operators.
Model Status Around the World
- The model has gained a lot of strength in the US, where it has evolved to become a nationwide phenomenon.
- Famous people, from musicians, actors to youtubers, have boosted this business by launching their own brands
- Mr. BeastBurger from the famous youtuber Mr. Beast is one of the most successful businesses and possibly the most important case study
- There are models that have even operated from the Walmart foodservice area as a ghost kitchen
- Representation agencies are born to expand the reach of ghost kitchens by connecting brands with operators
- Currently there are already programs for the management and management of ghost kitchens remotely
Is It Possible to Achieve It in Latin America?
To begin with, there are already models of ghost kitchens in Latin America, they may not be as sophisticated or have evolved as in other markets, but they are beginning to develop within the market.
It is clear that since COVID, delivery and non-face-to-face models have obtained much more acceptance.
And to answer the question if it is possible to implement this model in Latin America, one would have to ask: are the market conditions correct?
These conditions are seen from the infrastructure, robust delivery platforms, the importance of SEO, well-structured social networks, understanding of how to distribute costs and profits, etc.
It is enough to consider, but in conclusion it is possible to affirm that in the future we will see this model more often in the Latin American market as it evolves.
Pros and Cons
Pros
- Quite flexible models
- Risks and gains are shared through association
- Easy to focus on the menu and leave aside the atmosphere of the place
- Cost reduction: local, personal, operational, etc. (not all costs are reduced, but some are pretty obvious)
- Ease of territorial expansion
Cons
- The profit margin is reduced by taking few risks, this is the opposite when it comes to the operators who produce the products
- Strong and aggressive investment in digital marketing and SEO is necessary to keep the brand alive
- Interacting with clients only through virtual means is a barrier to creating good relationships