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.
The growth of ghost kitchens has New York City and other cities looking into their practices. That includes the New York City Council’s Committee on Small Business, which has floated three bills related to regulating ghost kitchens, says Reginald Johnson, chief of staff for Bronx councilmember Mark Gjonaj, who heads the committee. One would require the city’s letter grades to be posted where customers interact with the ghost kitchen, whether online or at a pickup location, Johnson adds. The council also wants clarification from city administrators about how the kitchens are inspected, so health issues can be traced. “If they have several different restaurants operating in the same space, is there one grade for the entire operation or does each individual kitchen get a separate grade?” Johnson says.
Hossein Kasmai, CEO of Combo Kitchen, says that his business model helps solve this issue. The company operates 50 locations in 20 states, partnering with brand-name restaurant chains to license their food and menu in a ghost kitchen operation that runs within various brick-and-mortar restaurants. The physical restaurant can leverage its staff and equipment with the new business from the ghost kitchen, while the virtual kitchen has a low-overhead operation within an existing restaurant, he says. That also unites the inspection and food safety activities because both operations use the same staff, premises, and equipment.
He adds that Combo Kitchen also inspects each location to protect the quality and reputation of the brand-name restaurant chains. “We use recognized brands with an established reputation so we can ensure the quality,” Kasmai says. “And there are regular inspections.”
Many of the independent or shared ghost kitchens are smaller than typical restaurant kitchens, however, and thus require special planning for workflow to avoid contamination, such as keeping raw and cooked food separate, says Paula Herald, PhD, technical consultant for Steritech Group Inc., a food safety assessment company based in Charlotte, N.C. She says that some states allow shared kitchens among several ghost kitchens in the same building, while others don’t, and it’s important for those setting up a kitchen to verify regulations with local inspectors. “Some states require a shared kitchen to have a totally independent water heater, their own walk-in cooler, and their own three-compartment sink to prevent an outbreak of foodborne illness,” she adds.
Dr. Herald says it’s important to guard against cross contamination, especially when it comes to food allergens. She advises ghost kitchens to work with local health inspectors to learn what they can and cannot share, avoid short cuts, and incorporate food safety practices into the work environment. She also recommends that those starting ghost kitchens have contracts with delivery services that assure the cleanliness of vehicles, employ low-touch food transfers, and keep records of when the food leaves a restaurant and when it’s delivered.
While Shaw says she doesn’t expect restaurants as we traditionally know them to go away any time soon, one thing is for certain: Ghost kitchens offer convenience to the consumer, and they’re likely here to stay.