This annual list of the best ghost kitchen franchises was revised and updated on September 1, 2023.
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A distinctive and innovative business model, ghost kitchens involve restaurant brands that don’t exist on their own premises but make use of other restaurants’ kitchens to cook for the delivery market. Though they were quietly growing by 53% between 2014 and 2020, ghost kitchens came to public attention as people sought more delivery food during Covid lockdowns and restaurants sought a way to survive the economic turmoil. Now, ghost kitchens are consolidating their place in the food landscape, providing up to 8.3% of US restaurant sales.
Ghost kitchens are virtual restaurants set up within existing restaurants, using the same space and equipment. They might make use of slower periods in the restaurant’s day or week, or take up capacity that is empty due to lower customer numbers. This allows two or more businesses to share space, cutting costs on rent, utilities, taxes, and equipment. As a result, the initial outlay for equipping a ghost kitchen is often lower than for other franchises catering to similar markets, and some of the complications in finding a suitable venue are removed, though others may be added due to the need to negotiate with host businesses. Shared premises and not needing to find a prominent location mean that costs on rent can be 20-40% lower than for a traditional restaurant.
Ghost restaurants save money by avoiding dine-in service in favor of deliveries. This means that there’s no need to cover the costs involved in staffing and equipping a seating space. Some use their own delivery systems, which can increase control over and reliability of deliveries. Others keep down overheads by using third-party delivery apps such as Grubhub, Uber Eats, and DoorDash. However the food is delivered, there are still costs in establishing the restaurant’s presence and marketing it to customers. There is no discoverability through people seeing a shop in the street, but this may not be a big loss for delivery businesses. Online presence and the ability to grab customers’ attention within ordering and delivery apps is more important.
The ghost kitchen industry is currently worth $3 billion in the US. It includes over 9,000 businesses employing nearly 44,000 staff. Globally, the industry is expected to double its revenues in the six years to 2027, and many commentators are bullish about the industry’s future. The popularity of takeout food and the financial savings that a ghost kitchen can provide seem to provide an obvious route to profit.
But the past performance and future outlook for ghost kitchens is more complex than it first appears. While their public profile increased hugely during the first waves of the Covid pandemic, revenues fell by 18.7% in 2020. People were cooking at home more and trying to save money during financially uncertain times. This hit the industry’s revenues. Now, ghost kitchens seem to be growing again, but it’s modest growth, with predicted annual growth of 1.5-1.6%.
Some of the biggest restaurant brands on the planet now play host to ghost kitchens in their restaurants. In some cases, these are run by the same people as the main restaurant, and a ghost kitchen can increase the profits for an entrepreneur already running a franchised restaurant. In other cases, the ghost kitchen is a completely separate business that pays the main restaurant owner for access to their facilities.
Their existence outside of a physically branded space makes it easy for ghost restaurants to accommodate mixed cuisines, whether run as a single brand, multiple different brands, or as a shifting menu. This allows a single business to provide for a wider range of customers and to weather changing tastes. Companies can experiment with new menus, styles, and brands with low costs and risks. Menus can change in line with current trends or to reach different demographics and parts of the local customer base.
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This combination of low overheads and greater flexibility could potentially provide a ghost kitchen with wider profitability and greater resiliency than traditional sit-down restaurants. Efficient work practices contribute to this profit margin. But the multiple moving parts in a single space make ghost kitchens into complex operations, and it’s important to invest properly in training and procedures that will counter this.
Online ordering systems mean that ghost restaurants are also in a strong position to make use of technology, tracking customer data, and making data-driven decisions. The popularity of items, customer feedback, customers’ locations, and wait times can all be used to shape ever-changing menus and marketing. Being the technological disruptor of its sector makes a ghost kitchen less vulnerable to the impact of other disruptors. But as with any disruptor, it’s not yet clear how regulations might change to take account of the presence of ghost kitchens, and what impact this may have in the long run.
Despite their advantages, ghost kitchens may suffer from trends in the wider economy and the food industry. High competition in the delivery food sector is squeezing revenues while rising agricultural costs are expected to increase costs for restaurants over the coming years. Ongoing economic uncertainty means that people are trying to save money through more home cooking. And while their lack of a public profile allows ghost kitchens greater flexibility, it also means that they don’t benefit from the customer loyalty that’s such a powerful tool for many fast food businesses.
A leaner and less capital intensive version of a traditional restaurant business, ghost kitchens are a distinctive and disruptive player on the fast food scene. Whether these benefits can outweigh a lower profile and greater complexity remains to be seen.
Franchise Chatter’s Top Ghost Kitchen Franchises of 2023
1. Combo Kitchen
Combo Kitchen is one of the world’s first ghost kitchen franchise opportunities. With its motto of one kitchen, many concepts, the idea is simple: Instead of going through the expense and hassles of leasing or building a storefront, interior design, construction, lining up furniture and décor, and hiring servers, a restaurateur can instead use a dedicated professional food preparation and cooking facility to focus on the food for to-go and delivery orders of a whole range of types of food (Asian, Mexican, Peruvian, burgers, pizza, and healthy dishes).
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The company has worked with more than 32 restaurant chains to make select items available for replication in the Combo Kitchen, and the restaurateur can choose which items fit what they think will sell well for their take-out and delivery business.
Founded by Hossein Kasmai in Miami, Florida in 2020 and franchising since then, the number of locations has skyrocketed to the current total of 106 (up from the previously reported total of 55), of which only one is company-owned and 10 are located outside the US.
2. The Local Culinary
The Local Culinary is another ghost kitchen concept (also called virtual kitchens, cloud kitchens, shadow kitchens, dark kitchens, or delivery-only kitchens). The Local Culinary has cultivated relationships with 32 different menu brands covering such options as American, Healthy, Mexican, Italian, Asian, and more.
Whether an existing restaurant wants to expand its take-out and delivery options, or a restaurateur wants to start a dedicated kitchen-only facility, The Local Culinary company team provides franchisees with unlimited training on recipes and cooking techniques, kitchen design optimization, food cost management practices, and supplier support.
Home delivery of meals has never been more popular and is simple for franchisees to arrange without hiring drivers if they instead take full advantage of food delivery services such as Uber Eats, Postmates, GrubHub, and DoorDash.
Founded in 2019 by European restaurant guru Alp Franko in Miami, Florida in 2019 and franchising since 2020, the number of locations currently stands at 44, of which only one is company-owned and all are located in the US.
An Important Note About Our Methodology
The franchises on this list were ranked according to the number of units in the franchise system. If you are a prospective franchisee searching for franchise opportunities that meet or exceed certain performance benchmarks for sales, profits, and return on investment, please check out this list of America’s Most Lucrative Franchises.