Handy in the Kitchen? How to Start a Ghost Restaurant

Post Date: November 19, 2019

There is nothing scary about ghost restaurants.

The National Restaurant Association’s 2019 survey reveals 46 percent of phone users order food from ghost restaurants once a month, at least. That eye-opening statistic underscores the notion that a ghost restaurant might be a great business opportunity for an aspiring entrepreneur with a flair for cooking.

What Are Ghost Restaurants?

Ghost restaurants are delivery-only food providers. They are basically just a building with a kitchen and a cashier. Also called virtual diners or virtual restaurants, these set-ups are changing the face of dining today. 

Customers enjoy the fast pace of ordering and receiving meals with affordable menu offerings. Owners enjoy the fact that, without dining space, wait staff, and busboys to compensate, ghost restaurants can save on overhead operating costs and may even be able to pass the savings on to their customers. 

If you have a flair for creating culinary dishes that have people raving, and have dreamed of opening your own restaurant, a ghost restaurant might be in your entrepreneurial future.

Opening a Ghost Restaurant? Spirited funding solutions from Benetrends Financial.  Pre-qualify.

Benefits of Ghost Restaurants as Business Opportunities

    1. Incur fewer expenses. Overhead costs for ghost restaurants are comparatively low.  Since there’s no physical location, you don’t need to hire staff or furnish a dining space.
    2. Reap the benefits of a quick startup.  Without the need for a major build-out for a highly trafficked location, many ghost restaurant owners find that they can start working much more quickly than their dining-area-bound competitors.
    3. Enjoy increased flexibility. Without the heavy overhead expenses and cumbersome staff, it may be easier to experiment with this business model. Try your hand at that ethnic recipe you have learned from your grandmother and been itching to share with your customers. Do not be afraid to break out the real ghosts of your kitchen by summoning your ancestors. Your unique dish just might be the next talk of the culinary world. 
    4. Win the numbers game. You may have heard about all the key performance indicators and other metrics that dog traditional restaurants, such as guests per table, occupancy rate, and front of house labor. Many of these metrics simply do not apply to ghost restaurants, making it less difficult for you to project your break-even point and profit margins.


Potential Pitfalls of Ghost Restaurants 

The restaurant business, in general, is often plagued by a high failure rate. Everything from lack of sufficient capital to poor menu choices can doom a restaurant to failure almost before it begins. In addition to some common challenges that restaurants encounter, ghost restaurants come with a different set of challenges as well. Some of them are:

    1. Packaging problems.  Because your food is delivery-oriented, problems with your packaging design can create a poor customer experience, leading to a lack of repeat business over time. 
    2. Delivery worries. If you choose to partner with a third-party delivery provider to increase your customer base, you will have to pay that provider a commission for the service and you may have little to no control over the quality of the customer service that the provider gives. 
    3. Online reputation is everything.  Because the vast majority of your customers will find you online, online reviews and comments will be critical to your success. Managing your online reputation is of particular concern in the ghost restaurant business.   

What Makes a Ghost Restaurant Successful? 

As is the case with any business opportunity or entrepreneurial venture, it is wise to do your research before you jump into the ghost restaurant business. How can you make a go of this opportunity?

    1. Carefully count the cost of your ingredients. What works for a small dinner party will not work for a full-scale ghost restaurant. You will need to source high-quality food ingredients from reputable vendors, while still keeping your costs down.  
    2. Choose packaging that reflects your brand ideals and keeps your product safe and attractive. Packaging is an extremely important consideration, both from an aesthetic and safety-conscious standpoint.  
    3. Ensure that you have appropriate insurance and licensing for your business.  The food industry is highly regulated, which means that you will need to carefully comply with any federal, state, and local mandates regarding food services and business permits. 
    4. Choose a reputable third-party delivery service for seamless customer service. Running your own delivery staff can be time-consuming and cost prohibitive. Partnering with the right delivery service can enhance your brand reputation and save you both money and time. 
    5. Use social media ads so you can tempt palates with pictures of your delicious meals to your desired target audience. Hire a digital marketer if you need help to get the word out.  
    6. Invest in quality control. Train yourself and any staff to check the meal box one last time before sending it out for delivery. Accuracy matters since customers will not have the option of sending the wrong meal back to your restaurant once the delivery person leaves.  
    7. Keep meticulous records. As is the case with any business venture, keeping meticulous records will ease any accounting worries at year-end and keep your business in good graces with the Internal Revenue Service. It is advised to talk with your financial advisor to research acceptable business accounting practices for your ghost restaurant.

Benetrends Can Help 

If you are interested in starting your own ghost restaurant or another type of small business, Benetrends can help you with both funding and business services. Download Innovative Funding Strategies For Entrepreneurs to learn more today.

Categories: Blog

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