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Why Location Technology is Key to Finding Optimal Ghost Kitchen Sites

March 24, 2021
Location Intelligence, Real Estate Development
By: Rachel Scott

When restaurants started shutting down in March 2020, demand for meal delivery services skyrocketed. Many restaurants suffering the economic impact of the pandemic realized they needed to get creative to continue serving customers and saw an opportunity for reinvention. The growing trend of ghost kitchens provided many restaurateurs with the solution they were looking for.

Also known as ‘dark,’ ‘cloud,’ or ‘shadow’ kitchens, ghost kitchens are delivery-focused kitchens located in large commercial spaces that can house multiple brands. They don’t typically have a customer-facing side, but some do serve takeaway orders or offer limited onsite seating. 

Capital investment for ghost kitchens offers opportunities for wider profit margins compared to a dine-in restaurant, where labor and rent consume a huge portion of operating costs. A few well-known ghost kitchen examples include CloudKitchens, DoorDash Kitchens, Epic Kitchens, Kitchen United, as well as several independent owners. Additionally, many well-known national brands like Kroger and Inspire Brands (owner of Arby’s, Buffalo Wild Wings, and more) have indicated they will also be entering this space

As many restaurateurs and chefs seek to leverage the opportunities offered by ghost kitchens, location technology will play an increasingly important role. Ghost kitchen investors will have very specific needs in terms of what they are willing to pay, the amount of space they need, where they want to be located, the type of customers they seek to serve, and whether their space will provide opportunities for growth. 

Commercial real estate brokers seeking optimal ghost kitchen sites for clients will be able to quickly and easily find exactly what clients are looking for when using a location technology platform.

Requirements of an optimal ghost kitchen site 

Location technology allows users to get very specific about their property requirements, and easily locate the exact properties they are looking for. This includes everything from ideal square footage and proximity to areas of interest, to preferred lease terms and demographic data.

The kitchens most likely to thrive in coming years are those that are visible to the surrounding community, even if they are not serving customers in person. Additionally, many customers want the option to order onsite for take-out as well as for delivery, making a space that offers foot traffic highly desirable. As ghost kitchens continue to expand, many will want to offer some onsite dining, so locations should allow ghost kitchens to remain somewhat flexible as customer demand shifts.

Some of the criteria ghost kitchens require may include:

  • Located in an area with customer visibility
  • Cost is lower than restaurant space
  • Large enough to accommodate full kitchen and support staff
  • Close to foot traffic
  • Ability to order food onsite
  • Ability to offer some limited onsite seating

However, needs will be different depending on the type of restaurant and what their unique setup is. Some restaurants will require more square footage than others, while others will require the ability to install specific machinery for cooking and baking. Location technology provides the data needed to find these spaces. 

Leverage under-utilized space

Some commercial spaces have been hit hard in recent years, either because of the pandemic, the growing dominance of e-commerce, or a combination of both. These include hotels, retail, malls, and large event spaces. Developers and investors are discovering that ghost kitchens can offer new value to underutilized real estate, with many of these spaces offering the ideal setting to house ghost kitchens.

Location technology can help commercial real estate professionals pinpoint where these underutilized spaces are, and identify the best opportunities. 

Will the popularity of ghost kitchens continue to grow?

Ghost kitchens were on the rise before the pandemic, and demand for delivery services like DoorDash and Uber Eats was also already soaring. Cushman & Wakefield found that ghost kitchen funding in 2019 grew at 12.5 times the rate from the previous year to more than $520 million, and is expected to continue growing. Many restaurateurs are seeing ghost kitchens as an opportunity to grow their footprint, particularly in metro areas like Los Angeles, Chicago, Denver, Seattle, and New York City. 

COVID-19 served as an accelerator, highlighting the efficiency and cost savings ghost kitchens bring to the restaurant industry. Additionally, the pandemic changed how people engage with food services, particularly in that they are more likely to order from higher-end, expensive restaurants. All economic indicators point to the fact that the delivery boom isn’t going anywhere, even as the pandemic recedes. 

Location technology makes it easy to find ghost kitchens that best serve your business

With their expected growth in the coming years, commercial real estate investors and developers will be eager to provide food and beverage clients with the space they are looking for.

LandVision offers commercial real estate developers and investors the ability to zero in on the exact spaces that will best serve their clients’ site selection needs. Likewise, brokers with a listing that would make an ideal ghost kitchen location can use LandVision to conduct trade area analysis and create presentation-quality images and reports for their marketing materials

Click here to contact us and learn how LandVision can help your business discover optimal commercial sites for ghost kitchens and much more.