Ghost restaurants: The new virtual dining trend

category: Trends

sectors: Restaurant

Thanks to online shopping the pattern of order and delivery has become the new norm, and now, people have begun searching for the same customer journey when dining ‘out’. This has led to a surge in off-premise dining. These people still want good quality food, but in the comfort and convenience of their own home.

To accommodate these people, restraunteurs are redesigning restaurant dining. Focusing exclusively on delivery, these new-style eateries have been labeled ‘ghost restaurants’.

These ghost restaurants have no storefronts and offer no direct interaction between the customer and staff. Orders are made through an online site or app and then delivered straight to the customer’s door.

As a generation, millennials eat out more than any other. Always on the search for a service that can be scheduled and personalized specifically to them, this style of dining appeals to younger consumers.

Ghost restaurants have their benefits for booming business as well. Saving overhead costs, vendors don’t have large real estate bills, but still reach high value areas. They don’t pay for waiting staff, décor or tables, and this money can instead be invested into creating great food.

‘Virtual’ restaurant menus are far more versatile and are adapted day-to-day based on dining trends and customer preferences. This goes for alterations in general; it’s much easier and costs less to experiment with new concepts, because you can easily scrap ideas that aren’t working.

"Saving overhead costs, vendors don’t have large real estate bills, but still reach high value areas."

If sales for a certain restaurant or menu are much lower than expected, the idea can be scrapped and swapped for something totally different. This gives restaurateurs more versatility. Peter Schatzberg, founder of Green Summit, told Crain’s New York that it would cost a traditional restaurant roughly $800,000 to test out new concepts but Green Summit loses as little as $25,000 if a concept flops.

Green Summit operates from bases in Manhattan, Brooklyn and Chicago. It’s the brand behind multiple ghost restaurants, such as Butcher Block and Leafage.

Schatzberg told Fast Company that Pret A Manger dedicates 75% of their space to seating while 90% of their customers grab-and-go. In comparison Green Summit can still appeal to the 90% takeout customer base, but with a much smaller footprint.

Of course, it comes with its drawbacks. These virtual eateries can’t make money on impulse purchases, like a cheeky dessert after a three course meal, plus they miss out on awareness from footfall. They must have a strong online presence and effective marketing strategy to get their name out there to have a chance against competitors.

"If sales for a certain restaurant or menu are much lower than expected, the idea can be scrapped and swapped for something totally different."

With delivery services and robots evolving, waiting time for food is getting shorter and shorter. These businesses focus their attention on aspects like cutting delivery time down in order to compete with bricks and mortar.

Similar to the e-commerce versus physical retail debate, both real and ghost restaurants hold attractive qualities for consumers, and it will be more about finding a balance than one wiping out the other.

Dining-in will always draw people as it offers entertainment. Ghost restaurants appeal to people buying food for convenience or in a rush – neither of these markets will fade away so it looks like they are both here to stay.