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Gratuitous Fears of Ghost Kitchens
Are ghost kitchens the future of restaurants or a dark cloud hanging over the industry? Probably neither.
Ab Ovo is a twice-weekly newsletter produced by Clay Dillow (CD) and Tim McKirdy (TM). If you enjoy our work, we’d love to have you as a subscriber (it’s free!). If you already subscribe, we appreciate the support — and don’t forget to forward this to a friend. Thanks for reading.
A quick note from CD+TM: You may have noticed (but probably didn’t) the lack of a new edition of Ab Ovo in your inbox last Friday. Having published several of these newsletters and processed some much-appreciated reader feedback, we’ve decided to temporarily scale back publication to once a week. We’re using the extra time to tinker with new story formats and explore different modes of presentation — things you’ll see incorporated into Ab Ovo in the very near future. In the meantime, we’ll still be right here in your inbox every Wednesday. Thanks, as always, for subscribing.
Travis Kalanick, the oft-maligned founder and former CEO of Uber, scooped up some real estate in my Queens neighborhood in March of last year, though I doubt he’ll be moving in any time soon. The billionaire acquired the 18,000-square-foot warehouse through City Storage Systems, a real estate business that’s also the holding company for his latest startup, CloudKitchens. This, we can only assume, means a number of so-called “Ghost Kitchens” are set to imminently go online in my area, offering a range of delivery-only food items to Sunnysiders.
The news passed me by at the time and I only recently learned of the development via a neighborhood Facebook group. “Proprietors of small, independent restaurants should tighten their apron strings,” the poster warned. “This CloudKitchen, multi-brand restaurant facility could mean doomsday for many dining haunts.”
The notion that this new business could be “catastrophic” for local restaurants may strike you as reasonable or shocking, depending on your preferred source of food-focused media. Over the last year or so, food writers have afforded the model no shortage of hyperbolic coverage. Some believe ghost kitchens are the “the future of restaurants” — one that could account for up to $1 trillion of the global food spend by 2030. Others view them as a dark cloud that poses a looming and very real threat to the restaurant industry. Some simply believe they are — and will always be — “dumb.”
Though it doesn’t make for good headline writing, I think the truth instead lies somewhere in between. The ghost kitchen model poses no more of a threat to the future of small and independent restaurants than the fast-food franchises and dedicated delivery spots that have existed for decades. Rather than be wary of individuals looking to start their own businesses with the “help” of companies like CloudKitchen, we should likely be worried for them.
First, a quick recap on these supernatural entities that are springing up all around the country. Much like specters themselves, the ghost, cloud, or “dark” kitchen can take on many forms. In its simplest guise, a budding entrepreneur with cooking chops leases a commercial space purposed for food production, connecting with customers via third-party apps like UberEats, Doordash, and GrubHub. Depending on the service used, they may need to employ their own delivery driver(s), though servers, sommeliers, and bartenders have all been 86’d from payroll.
Then there are companies like Kalanick’s CloudKitchens, which offers an even lower-lift plug-and-play solution — the SquareSpace of food delivery, if you will. Lease a kitchen in the startup’s growing real estate portfolio, and CloudKitchens will process and dispatch delivery orders for you. Keys to the space are handed over with everything the burgeoning business needs, other than cooking appliances. And, as the business’s website notes, they’ll also “take care of the cleaning, maintenance, and security — so you can focus on the food.”
According to CloudKitchens’ own sums, which should be viewed with a dose of skepticism, the capital investment to take a delivery restaurant online clocks in at $30K, though the business can be up and running within four weeks and churning out a profit after six months. Compare that to the million-dollar, one-year investment cited to open a brick and mortar restaurant — one that apparently won’t break even for at least five years — and you, too, may be tempted to get into the ghost kitchen game.
But just how enticing is this business proposition? For reasons that will be obvious to anyone reading, 2020 was a blockbuster year for food delivery. As Grub Street reports, “the pandemic created an estimated $19.3 billion in revenue for delivery companies.” Despite this, DoorDash and GrubHub both came out of the year with losses of around $150 million. Even more importantly, user signups, order frequency, and growth were all “stalling” on delivery apps prior to the pandemic.
Still, you can’t fault individuals for wanting and trying to make a go of running a profitable ghost kitchen. And I mean that quite literally: Whether you’re a worried resident in a Facebook group, a media commentator, or an independent restaurant owner, there is really no right to complain.
To be crystal clear, we should be concerned about the predatory practices that may soon be employed by businesses like CloudKitchens, but it’s their “clients” rather than competitors we should be worried for. (For more on why, read this “thought experiment” from Andrew Rigie, Executive Director of the New York City Hospitality Alliance.) But in the grander scheme of things, what compelling case is there backing the notion that ghost kitchens will have a catastrophic impact on local restaurants?
When I order takeout or delivery, I do so because I want to eat at home and can’t be bothered to cook. Whether the business preparing my food has the capacity to “host guests” (read: feed paying customers on-site) seldom dictates where I order from. And if I do consider this, the restaurant is probably at a disadvantage. I’ll be more concerned about the in-house diners receiving preferential treatment over myself, the faceless off-site customer who’s already paid up and committed to a tip.
There’s also a common argument that the wool is being pulled over our eyes by businesses posing as restaurants. And sure, ordering delivery from an anonymous commercial kitchen that could be offering multiple different cuisines under different business names might seem transactional at best. But does that really matter when all you’re craving is decent grub delivered to your door in a timely manner? I don’t think so.
What really rankles me, I think, is the implication that brick-and-mortar restaurants are somehow more entitled to offer food delivery than ghost kitchens. By extension, ordering from a ghost kitchen is therefore some kind of traitorous act against noble local establishments.
All too often, we ignore the fact that restaurants are businesses. We are told that independently owned eateries are deserving of our support. While I’d much rather support a mom-and-pop operation over some franchise or corporation, at some point we have to face the fact that what’s often being advocated for is charity.
The number of bad restaurants that exist greatly outweighs the number of good ones. Countless dollars have and will continue to be wasted on failing projects by those who believe their ability to cook or host well equates to business nous in the restaurant industry. As someone who ran a kitchen in Argentina during a one-year period of 40-percent inflation, let me tell you this: your grandmother’s signature paella recipe will not get you through the bad times.
The “ghost kitchens spell the death of local restaurants” argument also ignores that such businesses have existed for decades — only they weren’t always named so. Don’t try telling me you’ve never ordered from Domino’s or picked up from a treasured Thai, Chinese, or Indian takeout spot. One’s a franchise but the others are almost always family-run businesses; all have long operated as exclusively to-go operations (and are therefore basically ghost kitchens).
A recent article on the threat of ghost kitchens in The Restaurant Manifesto concludes: “If we don’t do something to reverse the trend soon, our communities won’t only have ghost kitchens, they’ll become ghost towns.”
Yet, as anyone who’s tried and failed to secure a weekend (indoor or outdoor) dining reservation in a major city can attest: reports of an on-premise demise are greatly exaggerated. With or without ghost kitchens, there’ll be no need to cue up this 1980’s classic from The Specials anytime soon. — TM
The 150-Word Endorsement: Citadelle ‘Jardin d’été’ Gin de France ($25)
We’re well into G&T season here in the Northern Hemisphere, so far in fact that we might be considered derelict for not having spent more word count talking about gin in this space. This brand new offering from French distiller and all-around spirits savant Alexandre Gabriel provides the perfect opportunity to correct this oversight. Inspired by the garden cultivated by his wife at the couple’s chateau in Charentes — as well as the juniper orchards planted just across the road — Jardin d’été builds on Citadelle’s flagship recipe of 19 botanicals by adding whole lemon, additional orange peel, yuzu zest, and melon flesh to the mix. The resulting gin is light, bright, and fruit-forward, elevating citrus and juniper atop layers of coriander, cardamom, star anise, fennel, and the like. No need to mess with the classics here — one part gin to three parts quality tonic with a sliver of citrus peel will get you exactly where you want to be. — CD