Independent restaurants go dark to keep the lights on

The Independent Restaurant Coalition estimates that as many as 85% of mom-and-pop restaurants could close by the end of 2020. But some are finding new life in virtual brands and ghost kitchens.

Part 4 of a 6-part series by Emma Liem Beckett, originally published in Restaurant Dive, October 26, 2020

Never before have the lights gone out at so many independent restaurants in such a short amount of time. But there may be opportunity for some to bring their kitchens back to life — in the dark.

There’s no question that more restaurants big and small are embracing dark kitchens amid the pandemic. The number of eateries using these concepts grew from 15% pre-pandemic to 51% in May, according to Technomic data.

But while major chains are entering the space to open up another revenue stream or expand into new markets at a reduced cost, plenty of small operators are turning to ghost kitchens just to survive.

The trend may already be having a ripple effect on the industry. Over the past few months, third-party ghost kitchen platforms serving independent restaurants have grown — and are growing — substantially.
Demand for virtual kitchen companies is growing

Reef Kitchens, which manages food truck-like hubs that can host up to six restaurant brands, has seen an uptick in interest from independent restaurants since the pandemic hit in March. The company expanded its capacity by doubling its kitchens in its top markets, and plans to sign over 100 restaurants this year. COO Carl Segal said local brands now make up about 20% to 30% of the business, while regional and national restaurants comprise 70% to 80%.

“Pre-COVID, we had a good percentage [of] our own digital-only brands that we created to get our system up and running. Throughout the past few months, we started to [shift focus from] our brands and amp up the intensity around local, relevant brands because of demand,” Segal said.

Denver-based ChefReady, which rents delivery-only kitchen spaces, has also experienced a “tremendous” amount of interest since the pandemic hit, ChefReady co-founder Nili Malach Poynter said.

“Before COVID, the ghost kitchen model was growing, especially in major cities. Now that COVID has shaken things up, more people are looking into it. Previously, a lot of independents couldn’t wrap their head around this new model, but the devastation they’ve experienced has changed that. I think the pandemic has opened up everybody to at least consider it,” Poynter said.