John Meyer is gearing up to solve what he considers a glaring problem within the ghost kitchen segment. The CEO of Ghost Financial — a fintech that provides loans, insurance, payroll and other financial products to ghost kitchen operators — worries restaurants are diving into this business before they’re ready.
The result? A low success rate, leading many ghost kitchen operators to default or break their leases, according to Meyer.
“[Ghost kitchens are] growing so fast that it’s attracting operators that don’t have inherent industry specific skills for ghost kitchens, such as digital advertising, targeted advertising and how to get your brand to the top of the delivery apps so that your sales are high enough so that you aren’t operating at a loss,” he said.
To bridge this knowledge gap, Meyer has developed GhostU, an educational program designed to help restaurateurs build, scale and run a profitable ghost kitchen.
The program’s MasterClass-style videos cost $1,000, but will be available for 75% off at $250 through June 30. GhostU will provide a minimum of 12 videos as well as step-by-step worksheets and three months of access to Ghost Financial’s Ghost Kitchen Community, where ghost kitchen owners can share their experiences and access interactive workshops and Q&A sessions. Meyer envisions the Ghost Kitchen Community as a platform that can function similarly to a social media network, but specifically for ghost kitchen operators.
“Ghost kitchens are revolutionary in that they have lowered the barrier to entry for foodies with a dream by taking the cost and timeline down to start a restaurant from $500K and an entire year, to $25K and 30 days. Now that it is so easy to start a ghost kitchen, I want to ensure that with proper education, the industry sees failure rates drop to 5% or lower,” Meyer said in a press release. Meyer estimates that current ghost kitchen failure rates are at least seven times that, or roughly 35%.
Many restaurants began experimenting with ghost kitchens at the height of the pandemic, as the off-premise-only models offered one of the few ways to keep businesses alive during dining room lockdowns. Now that restrictions have eased, many restaurateurs are still seeking their own slice of the ghost kitchen business, which Euromonitor predicts will be worth $1 trillion by 2030.
“We want to see these folks succeed,” Meyer said.
The right ingredients for a profitable virtual kitchen
After following the space for about five or six years, Meyer opened his own ghost kitchen, Keto Kitchen, in January 2021. He operates out of a CloudKitchen facility in Austin, Texas, and reached profitability within 60 days.
His success was based on two tactics: leveraging targeted ads and building an online community excited for the brand. Targeted ads helped Keto Kitchen reach the right audience and boost its position on third-party marketplaces. Instead of being buried within a long list of restaurants, Keto Kitchen secured a higher position than many virtual brands normally have at launch.
Once it created a strong customer base, Keto Kitchen offered promotions and deals through Instagram and Facebook to stoke further interest in the brand. The concept generates average ticket orders of $33 compared to most ghost kitchens, which are typically in the low to mid $20 range, according to Meyer.
Meyer hopes Ghost Financial’s GhostU program will help other operators develop similarly profitable brands by reviewing the state of the market and strategies to develop viral menu items that don’t require additional marketing investment. The program will also teach operators how to negotiate with landlords to lower rent rates and create more favorable lease terms, and how to sell a ghost kitchen asset once it becomes a revenue-generating business. Another video will provide an up-to-date look at the ghost kitchen marketplace.
Ghost Financial has already developed trust within the ghost kitchen community, becoming the preferred financial partner for over 300 operators at ghost kitchen provider Maker Kitchens in May.
“We’re really hoping GhostU will [create] an environment in which it’s no longer really too risky at all for any foodie with a dream to start their own ghost kitchen restaurant,” Meyer said.