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The New Food Franchise Frontier: The Ghost Kitchen

The “ghost kitchen” trend has been around for some time. Still, with the rising popularity of food delivery apps and the changing dining habits brought on by the pandemic, they’ve become an even bigger presence in the food franchise world. It’s not a specific, strict blueprint but more of a general approach to delivering food service to customers.


What Are Ghost Kitchens?

Also known as “virtual kitchens,” ghost kitchens are essentially standalone kitchens that prepare their brands’ menus but without a dine-in component adjacent. Some may have walk-up or drive-through service, while others are exclusively delivery. For franchises that use the delivery-only model, the kitchen locations won’t be publicly findable through directories or other resources, as they are mainly a prep location, not a customer-facing one. Food is ordered and delivered to customers through direct interfacing with the brand or partnerships with gig-based food delivery apps.


Restaurant franchises may find ghost kitchens useful in expanding their network or trying out new ideas while mitigating the operating costs that come with a full-service, customer-facing location. Ghost kitchens have also gained notice through celebrity partnerships and exclusive or pop-up events, adding an air of exclusivity and flexibility. When used effectively, ghost kitchens can reduce costs while driving demand and improving convenience for franchise customers.


Before jumping on board with the trend, however, careful consideration should be paid to the organizational structure of a franchise’s ghost kitchen offerings. Many franchisors will choose to leverage their existing corporate structures and offer a ghost kitchen model integrated with its existing franchise offering, while others will choose to separate their ghost kitchens and create a new franchisor entity to contract with ghost kitchen franchisees.


Ghost Kitchen Trends in 2024

Because ghost kitchens operate differently than traditional franchise restaurants, different trends, demands, and expectations apply. Based on current trends in the franchise and food delivery industries, here are a few expectations for ghost kitchens and delivery-only franchise groups in 2024:


Continued rapid growth: Ghost kitchens, along with other “virtual restaurant” concepts, have grown quickly over the last few years as customers rely more on delivery habits. Franchises looking to capitalize on this demand will need to ensure their teams have flexible franchise leaders in place who understand the unique demands of this concept and can shepherd it to success.


The emergence of hybrid models: Some brick-and-mortar restaurants are likely to open complementary ghost kitchens to boost delivery capacity. Franchisors may offer hybrid kitchen models to franchises interested in adding a delivery business unit, leveraging an existing brand into the delivery space. Success will depend upon the presence of leaders with experience in delivery models and their specific customer service/customer experience demands.


An evolution of commissary kitchens: Shared commercial kitchen spaces allowing new food concepts to test ideas and menu offerings are expected to grow. These communal ghost kitchens reduce overhead for franchisees through shared rent and supplies. In order to take advantage of these opportunities, franchises will need franchise and operations leaders with the cooperative experience to manage shared spaces and ensure brand cohesion across locations.


Enhanced use of customer data analytics: Franchises will utilize data on delivery order patterns, menu performance, and customer preferences to optimize operations and tailor offerings to boost sales. Data integration across digital orders and on-site purchases may also improve. 2024’s top franchise leaders will need a firm grasp of the latest data-gathering and analytic technologies, how to interpret and apply data, and how to adjust for new information.


Increased adoption in suburban and rural areas: Delivery services are expanding beyond dense urban areas. This will create delivery opportunities for franchise brands in smaller residential areas where regular restaurant locations may not thrive, requiring leadership who have experience working in these areas and who understand how to guide a franchise brand to success.


The growth, technology, and changing consumer preferences around delivery and digital ordering will continue reshaping the franchise industry in 2024 and beyond. Franchisors able to capitalize on these trends and well-situated with top leadership talent will be well-positioned for success. Blue Rock Search is here to help you identify and recruit the franchise executive talent you need to take advantage of this and other significant opportunities in 2024.


About the Author

Nancy Estep-Critchett is a founding Partner of Blue Rock Search, with oversight of the Franchise Practice. She has 30 years of successful working experience as a business advisor and executive recruiter in the franchising space. Nancy has built solid relationships which have spanned decades with industry professionals and internationally recognized brands.

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