Ghost Kitchens Feeding Revenue Stream for Virtual Food Brands

Fast Casual, April 13, 2023

In the wake of the pandemic, ghost kitchens — also known as virtual kitchens or dark kitchens — have emerged as one of the fastest growing foodservice channels.

While posing a competitive threat to traditional foodservice operations, the ghost kitchen also offers an opportunity for companies already operating a kitchen to expand their delivery sales to include “virtual” brands.

Virtual brands are brands that customers order from delivery services that are not necessarily associated with brick-and-mortar foodservice establishments.

Sisto Perez, director of food and beverage for High 5 Entertainment, a Lakeway, Texas-based family entertainment chain, shared his experience taking orders for virtual brands by becoming a ghost kitchen during the recent Amusement Entertainment Expo at the Westgate Hotel in Las Vegas.

Sharing the stage with Perez was Kelly Grogan, vice president of sales for Virtual Dining Concepts, an Orlando, Florida based provider of a turnkey service for virtual food brands. Nathan Schneider-Smith, director of beverage for Toca Sports, a family entertainment center, served as moderator.

What’s a ghost kitchen?

Grogan began the presentation by defining a ghost kitchen as a location not necessarily open to the public that creates virtual food brands.

“A virtual brand is going to be executed inside of that ghost kitchen,” she said. “There’s no physical location for that virtual restaurant.”

From the existing foodservice provider’s perspective, the goal of the ghost kitchen is to make better use of existing assets.

“A lot of times you’re looking to cut labor during slow times,” Perez said. “When you have these virtual brands, you’re basically opening up other opportunities to have more revenue streaming at different times during the day … I feel like bringing these virtual brands in really help keep multiple streams of revenue coming into your building.”

The expansion into virtual brands has enabled High 5 Entertainment to make better use of its labor, which today costs $16 to $20 per hour, he said.

“For me it justifies, when you’re paying someone that dollar amount, that they’re doing almost two to three jobs essentially,” Perez said. “Essentially, you are cross-utilizing ingredients that would otherwise sit there.”

The Virtual Dining Concept brands, which can be found on third party delivery service platforms, include MrBeastBurger, PardonMyCheesesteak, BuddyVsCakeSlice, MariahCareysCookies, RobertivinesAmericanHeros and RealHouseBowls.

Are they credible for customers?

Several listeners in the audience wondered whether customers question the credibility of virtual brands since they are not associated with physical establishments…