Traditional restaurants are expensive to begin with - nevermind when a pandemic rolls in. You may be looking for a commercial kitchen to rent in order to keep your business running at a time like this. When dining restrictions are slashing your delivery revenue, paying the rent on a traditional brick-and-mortar is no small task. Plus, with consumer behavior moving more and more towards online ordering, restaurant owners are trying to navigate a world that’s delivery before dine-in.
It’s a huge shift for the industry as a whole, but thankfully, restaurateurs have found the secret ingredient to cut costs while capturing delivery orders. And they’re doing it from prime real estate locations in the heart of delivery demand. Instead of searching for a brick-and-mortar restaurant for sale, restaurateurs are finding more cost effective delivery solutions.
But let’s back up. Opening a new brick-and-mortar restaurant in the best location requires a large upfront investment. In fact, the best restaurant real estate usually comes at a cost of $500,000 or more depending on the city you’re in.1 Why? Because up until now, your criteria for a good location has been focused on getting the highest amount of foot traffic and visibility possible. That means busy street corners, and proximity to other top businesses in your area that will bring the masses.
But now with ghost kitchens, the focus is on proximity to the highest amount of delivery orders, rather than dine-in guests. And that’s opening the door for restaurants to find top notch restaurant space for lease without breaking the bank, because foot traffic is no longer part of the equation.
At CloudKitchens, we find the best possible location that captures the most delivery demand, at the lowest cost. With demographic data, key data points of interest, and proprietary software, we develop delivery heatmaps that drive where we set up shop. In other words, we’ve done all the homework to determine the best market fit for your delivery business.
With the ghost kitchen model, each commercial kitchen rental is designed to help you run your delivery business with maximum efficiency and minimum cost. Each comes fully equipped with a commercial kitchen hood and three compartment sink so you’re up and running in no time.
Let’s say you have a sandwich shop in a prime location in the heart of downtown Los Angeles and you’re paying monthly rent for a 2,000 square foot space. With a severe lack of foot traffic due to the pandemic, the revenue you’re generating isn’t enough to constitute the high cost of your location. Instead of spending so much on your rent, you could focus on delivery orders and minimize costs. This would allow you to maximize your delivery potential with a location in the heart of delivery demand.
Or, if you’re looking to start a concept for the first time and searching for a restaurant for lease, ghost kitchens are a low cost way to go to market with your idea and test the waters with consumers online.
Although you’re in a lower cost location with a delivery-only kitchen, you aren’t giving up any of the demand for your business. It’s just online instead of in person.
If you’re going to make the shift to a ghost kitchen, you’ll also need to shift to a delivery-first mindset. Here are a few tips for success when it comes to leveraging this prime real estate, designed for delivery.
Get on Every Delivery App to Maximize Reach
In order to reach a high volume of customers, you’ll want to be widely available on restaurant delivery apps such as Grubhub, DoorDash, and Uber Eats. Ensuring your restaurant is on multiple restaurant delivery apps is crucial, given you’re no longer relying on foot traffic from a brick-and-mortar location in the heart of a major city. The more apps you’re on, the more eyeballs will see your brand online.
Make sure to include updated imagery and menus within each delivery app. Think of your restaurant page within each delivery app as your digital storefront. Focus on driving visibility and providing an online menu that’s easy to navigate, with a seamless ordering experience for your customers. Similar to a traditional brick-and-mortar, you want your restaurant to be highly visible, accessible and easy to navigate.
Level Up on Digital Marketing
With a delivery-only kitchen, your restaurant presence is completely online. This means digital marketing is crucial for your success. With a traditional brick-and-mortar location, you may have been able to get away with minimal marketing effort, but shifting to a digital presence means you’ll need to reach people online. This means strengthening your marketing efforts to help drive traffic to your online menus and increase the number of online orders you’re raking in.
Since overhead costs are lower with a ghost kitchen, you’ll have more funds to reallocate for marketing that’ll have a strong ROI for your business. This includes building a social following, running promos within each restaurant delivery app, email marketing and paid advertising to increase your customer volume.
Launch Multiple Brands Out of One Kitchen
As passionate foodies, experimenting in the kitchen is one of the best parts of being in the industry, but traditional brick-and-mortar makes it difficult to test new concepts. Launching a new location every time you want to test a concept just doesn’t make sense, especially without knowing how successful it’ll be. The stakes are high, given the upfront capital and lengthy time to open. Regardless of your location, restaurants for sale typically come with a hefty price.
But the ghost kitchen trend has made it much easier to experiment. Since your consumer-facing presence is digital, you can test new concepts with lower risk - and do it all from one commercial kitchen rental. Our best operators are often running five brands out of a single kitchen. Think about the efficiency this creates - you can launch multiple concepts, expand your reach on delivery apps with more targeted brands, learn what works, and save money on real estate in the process.
You might even be using the same ingredients across multiple brands, but if a customer is craving a burger for lunch and searching on UberEats, they’re more likely to order from a burger brand than a more general American food concept, since it’s closer to exactly what they’re craving. That’s why the idea of multiple concepts is so valuable - you’re increasing order volume by becoming more relevant to customers online.
If this sounds daunting, don’t worry. We’ve got a team of experts to provide all the help you need to get multiple brands up and running.
Leverage Data to Optimize Your Delivery
With the ability to test concepts, leveraging data becomes more important than ever. Since ghost kitchens come with proprietary software to aggregate all your delivery orders into one place, you can use those insights to determine which items are the most popular, and which ones to 86. It’s crucial to determine which menu items are in the highest demand and shift other menu items that aren’t performing well out of the everyday workflow.
This allows you to test new concepts and quickly gauge how successful they’ll be on every app you're using.
You can also leverage data to forecast demand, which will help you save money on food supply and cut down on wasted food. You’ll be able to staff your ghost kitchen accordingly and fully optimize how you run your business.
At CloudKitchens, ghost kitchens are offered at a fraction of the cost of a traditional brick-and-mortar location. You’ll have an optimized delivery kitchen at a lower cost with higher return. These ghost kitchens are cheaper than brick-and-mortar locations because you have about 200 to 300 square feet of prime real estate in the same area but at a low cost, low traffic address. With a CloudKitchens delivery-only restaurant, you can break even in as little as 6 months whereas with a traditional brick-and-mortar restaurant, it could be five years before you break even.
CloudKitchens is launching markets all the time in locations such as Los Angeles, Chicago, and Miami. The delivery industry is rapidly growing and expected to reach $490B by 2025.2 There are more and more ghost kitchens entering the market in multiple cities.
If you’re looking for restaurants for lease, ghost kitchens could be a much better way to build your food business. This is your chance to save money while unlocking your delivery potential.
CloudKitchens provides you with commercial kitchen space in locations as close to delivery demand as possible so you can grow your business. Not only that, but you’re also provided with turn-key solutions to launch your kitchen in one month, with little capital.
You may be wondering, “Is there a commercial kitchen for rent near me?” Get in touch with a delivery expert today and see for yourself just how easy and quick it is to get started with CloudKitchens.
Ready to get into a prime location at a fraction of the cost?
2 Morgan Stanley. 2016