- Restaurant operator expectations for the future of ghost kitchens are firmly divided, according to the National Restaurant Association’s 2023 State of the Industry Report. About one-third of operators expect these businesses to become more common, and roughly the same amount expect them to become less numerous.
- Consumers prefer ordering from brick-and-mortar restaurants, the report found, with 70% of diners saying it’s important for their food to come from a publicly accessible, physical location.
- A growing number of experts feel that ghost kitchens will need to embrace omnichannel service to succeed as companies face lackluster unit volumes and regulatory struggles.
The luster seems to have worn off the ghost kitchen business model, as most operators expect the number of these businesses to remain flat or even decline. At the low end, only 25% of fine dining operators expect ghost kitchens to become more common in their segment in 2023. At the high end, 38% of coffee and snack operators believe ghost kitchens would become more common.
More operators believe ghost kitchens will decline in number than increase in casual, fast casual and fine dining segments. Three in 10 family dining restaurateurs believe ghost kitchens would become more common, but the same proportion predicts the concepts will shrink in their segment. Across segments, narrow pluralities of operators expected the number of ghost kitchens to remain roughly the same.
The last year has seen some investors and brands lose confidence in ghost kitchens. The most high-profile retreat from the segment was Wendy’s, which decided to cut its development deal with Reef by about 550 units. Fat Brands also has stepped back from tests of ghost kitchens. Though confidence in the category’s potential was once high, ghost kitchens have failed to generate enough sales to drive and sustain significant growth in the U.S. market. Some ghost kitchen operators, including Wonder, have abandoned their initial business models due to financial challenges.
There are still successes in the segment, Chris Baggott, CEO and co-founder of Indianapolis-based ghost kitchen company ClusterTruck told Restaurant Dive in a previous interview. Baggott said ghost kitchen companies that figure out how to deliver food while still hot and fresh can grow and compete with other restaurants. ClusterTruck, according to Baggott, solved that problem through vertical integration (the company employs its own drivers) and by limiting delivery to a 7-minute radius. Kitchen United also has seen growth, driven in part by partnerships with retailers and new fundraising.
NRA’s report shows enduring customer demand for off-premise food, which could mitigate some challenges faced by ghost kitchens. Some 55% of adults surveyed said delivery or takeout food were essential elements of their lifestyles.