Ghost kitchen, dark restaurant, or virtual restaurant are just some of the names used to describe this new-age concept. Whether you’re searching for a cheap first step into the restaurant business or looking to expand without incurring additional debt, developing a virtual restaurant business plan could be the way forward.
Brands like Wendy’s and Cracker Barrel have already taken advantage of the growing demand for online food delivery and joined a $43 billion industry.
Could you be the next virtual restaurant in your area?
Virtual restaurants operate solely with a kitchen and a delivery team. There are no dine-in services, and customers can only order food online. If you intend on using Uber Eats, GrubHub, or DoorDash to complete deliveries, you need nothing more than a kitchen team.
Customers place orders via a website or app, the dark kitchen makes up the order, and the customer has their food delivered. After receiving the order, your restaurant gets paid.
The main benefits of adopting the virtual restaurant business model are decreased costs, lower overheads, and less risk. It’s also an excellent model for testing the waters of a new market.
You also don’t need to factor in metrics like staffing and table turnover because you simply don’t offer a dine-in option.
How do you build a virtual restaurant model that works? If your restaurant already accommodates online food delivery, the simplest way to view it is through the lens of a restaurant that only offers online food delivery.
Before diving into different virtual restaurant concepts, let’s go through the steps of a ghost kitchen business plan.
Firstly, comb through your current operations and work out whether you even have the capacity to start a virtual restaurant business model. You need to have the resources and available funds to get it off the ground.
You also need to choose a menu that strikes the right balance between profitability and performance. Create a minimum viable menu based on your most popular, profitable food items. Start small to keep things simple.
Remember, your customers who want to dine in will have different preferences from those who order from home.
After giving the green light, the next step in your virtual restaurant business plan is to train your staff to manage a virtual brand. Develop a virtual business restaurant lesson plan to train your staff in driving new technology and managing the different work processes of a virtual restaurant.
Consider a formal training course to lessen the friction of moving into the virtual restaurant space rather than teaching on the fly.
How will you name and brand your business? Online marketing is the key to success in this industry. Throwing up your restaurant on a third-party app and hoping something happens is not a plan and will only lead to you losing money.
Also, you may want to consider creating a unique name for your virtual brand. Keep it short to better accommodate smartphone screens. Make it snappy. Make it memorable.
Any virtual restaurant model is driven by technology. Your virtual restaurant business model lives or dies based on your chosen restaurant point of sale (POS) platform.
This is the part where we’ve got to plug the Revel Systems® POS platform, which is well-equipped to handle the demands of a ghost kitchen. When you build a virtual restaurant model, the goal is efficiency. Speed is of the essence in impressing your customers and keeping them loyal.
Look for the following characteristics:
Make sure you do your research before committing to a full purchase. The wrong decision could cripple your business.
The final step in launching a ghost kitchen is logistics. The bulk of your orders will require you to work with a delivery partner or establish your own fleet of drivers. At the same time, some restaurants may allow for pick-up services, not all will.
Weigh up the pros and cons of working with a delivery partner, such as GrubHub, and consider the commissions to work out profitability.
There are several business models to consider when deciding on the right way to start your ghost kitchen.
You will find an incredible number of unique combinations, but there are only three overarching models you can choose from. Beyond that, your setup is entirely your business.
Let’s run through the most common business models on the table.
The ownership model involves owning an operating restaurant or renting out kitchen spaces to chefs and other business owners.
The main benefit of the ownership model is you have complete control over an independent location. You can set up your kitchen to meet your brand’s specific needs.
Some brick-and-mortar restaurants decide to open offshoot locations to accommodate more guests. The dark kitchen may even be connected to the dine-in restaurant itself. Owners who opt for this model typically need greater capacity and want to enhance their order numbers.
Some virtual kitchen origin models start as pop-up delivery hubs in locations around their city and define themselves by it.
Virtual kitchens using the structure model work in tandem with other providers and often share spaces. Entire complexes dedicated to the structure model will come with multiple kitchens in one place to accommodate several brands at once.
Splitting the facilities enables restaurant owners to test the waters in an extremely small way before expanding later. It’s also the cheapest way to start a ghost kitchen for the first time, as you don’t need a full-size facility.
Any company needs a business plan to get off the ground. Your virtual restaurant business plan comes with several steps you must follow if you’re going to map everything out and anticipate problems before they happen.
Here’s what you need to know about your ghost kitchen business plan.
Most people will start with evaluating labor costs and location, but these factors are determined by the products you sell and your margins.
Come up with the cuisine you intend on selling, work out your margins, and create multiple phases for trialing new items as time goes on.
What do you need to push out your products, and what capacity are you anticipating?
It’s always best to opt for a slightly larger location to accommodate scaling if your virtual kitchen takes off. Likewise, don’t immediately rent a massive facility because if things grow at a slow pace, you may find yourself losing money.
Will you maintain a small skeleton crew or opt for a complete kitchen team? It depends on the areas you are serving, your state’s rules on compensating employees, and any additional labor-related costs, such as workers’ compensation insurance policies.
Branding and marketing are two different things. Your brand is who you are and what allows you to stand out from the crowd. Your marketing strategy determines how you will reach your target market and how much you expect it to cost. You need plans for both.
At this stage, these plans may be rudimentary. These are living documents, so they will evolve as your business and the market change.
Think about the viability of your promotional plans. Check out what your competitors are doing and see what’s working best. Never make assumptions about the customers in your community. Survey your target clientele and determine what convinces them to place an online order.
Logistics are a huge part of your workflow. The big decision is choosing between in-house delivery and a third-party delivery model.
Some ghost kitchens may even opt for a hybrid model if they promote themselves via established third-party online food delivery apps first.
Your decision depends on your finances and what you want to achieve. There’s no reason why you cannot move from one logistics plan to another later.
Will you be funding your ghost kitchen out of your own pocket? Are you seeking external financing from a traditional lender?
Make sure you have precise calculations for cash flow, expected takings, and growth predictions. If you already run a brick-and-mortar restaurant, you will also have to consider how your new venture will impact your existing operations from a financial standpoint.
Starting a virtual restaurant has so many benefits and allows you to unlock the potential of online food delivery. While there is considerable overlap between dine-in and home delivery customers, they have different needs.
Join the cloud kitchen revolution and take your brand to the next level. Diversify your income streams, create a better customer experience, and manage your organization from a central location with the world’s most advanced dedicated restaurant POS.
Find out why so many restaurants choose Revel Systems and request a free demo now.