The COVID-19 pandemic that has kept people at home and curtailed restaurant visits accentuated a trend for so-called “ghost kitchens.” Ghost kitchens, also known as virtual kitchens or dark kitchens, do not have a storefront or dining area, but instead rely on customer pick-up or delivery services. Their popularity boomed during the pandemic, as consumers opted for delivered meals and some restaurateurs expanded or started up inexpensively in small spaces with low overhead.
The term “ghost kitchen” was first used in a 2015 investigative report referring to several operations operating below regulatory standards, some illegally, in New York City, according to Francine Shaw, CEO of Savvy Food Safety Inc., a Hagerstown, Md.-based food safety consultancy. The phrase has evolved to mean a delivery- or pickup-only restaurant. These facilities take a variety of forms, with the simplest having one location with one or more restaurants under the same roof, sometimes sharing equipment and space. In many cases, independent kitchens are the result of major restaurant brands, such as The Halal Guys, taking their delivery and catering services offsite, according to King & Spalding, a New York-based law firm.
Commissary ghost kitchens, the most common arrangement, feature multiple ghost kitchens sharing kitchen space that could be owned and operated by third parties. A newer trend is to have a ghost kitchen operate within a brick-and-mortar restaurant. The ghost kitchen uses the same staff and equipment as the restaurant but offers food from a national brand for delivery only. One example is Combo Kitchen, a Miami-based franchise that partners with large chains so that they can expand inexpensively in a small kitchen on the premises of a different established restaurant.
The Industry Takes Off
In 2020, the United States had approximately 1,500 ghost kitchens. Their numbers continue to grow as restaurants adapt to less expensive ways to operate and respond to changing consumer demand, says Shaw. “They are much less labor-intensive,” she says. While a typical brick-and-mortar restaurant might process 15 to 20 delivery orders per hour, a ghost kitchen may process 60 or more with a single employee. They’re also a less expensive way to open a “restaurant” because they don’t require the added dining space and decor.
Food deliveries increased dramatically during the pandemic, changing the nature of the restaurant industry, with delivery orders increasing almost 70% in March 2020 over the same month in the previous year, while restaurant traffic declined 22%, according to NPD Group.
Brett Buterick, counsel with the franchise and hospitality group at A.Y. Strauss in Roseland, N.J., agrees. The law firm is one of several that has found a new business around the proliferation of ghost kitchens, advising franchise restaurant brands about federal and state regulations. “The pandemic left a big impact on the restaurant industry and accelerated the growing trend of ghost kitchens,” he says. That has benefited many restaurants because they can expand with little cost, and a franchisee can get into the restaurant business at a low cost.
Ghost kitchens and brick-and-mortar restaurants are regulated in the same way, Shaw says. FDA regulates some ghost kitchens that could be defined as “food facilities,” which manufacture, process, pack, or hold food for consumption. But the agency does not regulate facilities that prepare and sell food to consumers for immediate consumption, such as most restaurants and ghost kitchens. Those are subject to the same state and local food quality and safety regulations and oversight as eat-in or quick-service restaurants, including allergy management and hazard planning.
Because of their secretive nature away from the public eye, public health and other officials question whether the largely virtual operations are meeting sanitation standards. There’s also little information available to consumers to assess whether the food they are ordering is safe to eat, as ghost kitchens typically do not post ratings from health officials on their doors or websites, leaving reviews up to crowd-sourced platforms like Yelp.