Make Sure Your Franchise Restaurant Succeeds
In the pandemic of 2020, many restaurants had to close due to extreme loss of capital. Opening, running and expanding a food and beverage (F&B) business isn’t easy, especially with many overhead costs that can be burdensome. Many restaurant owners realized during 2020 that using an efficient food delivery service was the best way to preserve their business, and many opened ghost kitchens to do this.
Since the devastating effects of COVID-19 on the F&B industry, online food delivery revenue is predicted to reach US$541 million in 2021, with as much as 2.7 million people using this service.
Many customers who use these services realized in 2020 that they can have intimate meals with their partners at home, or even hearty meals with their families without the effort of cooking at home. Restaurateurs are accommodating this resurgence in dining at home – which is why some have started expanding their businesses into ghost kitchens.
What is a Ghost Kitchen?
Ghost kitchens sound more hauntingly ambiguous than they are. Also known as virtual, cloud and dark kitchens, they differ from dine-in locations in that they put all their energy and resources into a food-delivery-based model.
Upfront and operational costs are slashed enormously, allowing all the focus to be on the customers and their needs and wants, but in a fast and efficient manner. It is the perfect way to expand your restaurant under COVID-19.
When you work with a kitchen space provider like Smart City Kitchens, you can open a ghost or virtual kitchen and have it operating functionally and efficiently in no time at all. You get to open shop in locations all over Singapore and enjoy many new customers – customers you would never have attracted with only a dine-in restaurant.
The fantastic thing is that there is hardly any risk involved at all, and therefore you won’t lose a lot of capital should your business not work out. This guide will tell you all about ghost kitchens, and the ease at which you can grow your F&B business by using ghost kitchen spaces, such as those provided by Smart City Kitchens.
Why Ghost Kitchens?
There are so many options when you enter the fast-paced and dynamic world of F&B. There are franchises all over the place in the form of drive-throughs, food trucks, flea market food stalls, and the more sophisticated dine-in restaurants. The sad truth of the matter is that no matter how many Michelin stars your restaurant may have, during the pandemic, you’ve probably had to pivot towards providing food delivery options!
Things had to change…
Smart City Kitchens has stepped up to the ‘plate’ by providing shared kitchen spaces for all those in the F&B business. Since there were no more in-house dining experiences during the pandemic, many costs had to be cut, such as rent space and front of house staff. Ghost kitchens allow restaurants and franchises to expand their food businesses by shifting their entire F&B business to delivery-only methods. Ghost kitchens give you all the desired space and tools you need to expand your business, at only a fraction of the cost!
By operating this way, you will be able to attract more profit in ways you could never imagine, potentially reaching thousands of new customers. Set up is easy and fast, and you can watch your business grow at an exponential rate.
5 Ways Ghost Kitchens Benefit Your F&B Business
1. Lower Upfront and Operational Costs
When you open and run a ghost kitchen, you are saving thousands of dollars. There are no huge upfront investments, and it will cost you less than SGD$41K compared to the usual costs of between SGD $50K-$600K that you would fork out when opening a brick and mortar restaurant. This money may be your own, or it might be a loan from the bank, and if your restaurant doesn’t work out, you might land up in a situation of having a large debt on your hands.
Besides the upfront investment, ghost kitchens’ operational costs are also much lower. In a regular restaurant, you need many waiters, bartenders, a maître d’, chefs (including a head chef), dishwashers and cleaners. You’re taking care of an entire team and ‘culinary family.’ That’s a lot of salary layout.
However, ghost kitchens only need a few employees. This way, operational costs remain low, allowing your focus to be on delivery-only food. The only extra cost that you may incur while operating a ghost kitchen is fancier delivery packaging to make the food more attractive looking when it arrives at customers’ doors.
With ghost kitchens, efficiency plays a crucial role, as costs for rent, wasted food, and certain other various logistical requirements of a dine-in restaurant fall away. You will have higher margins, lower costs, and best of all, more profits.
2. Fast Return On Investment (ROI)
The COVID pandemic hit hard, sudden and fast, and people in the F&B business had to move just as fast to keep up. Ghost kitchens provided them with a way of setting up a business quickly. By using a ghost kitchen, you will be able to break into new markets and locations with ease.
There is no more waiting for months of construction and renovations, or even approval from city councils before you can operate your business. Within a few weeks, your business will be up and running. All you need with a ghost kitchen is your basic equipment and your chefs.
When following this business model, your ROI will be high in a much quicker time frame. You may even be able to save some money, instead of taking unnecessary risks and gambling away your financial future.
You will usually break even on your investment within 6 months, instead of the typical 5 years it takes a typical dine-in restaurant to do the same.
3. Attract More Customers Than Ever Online
The food delivery business is a big business and is predicted to be valued at a staggering USD$470B by 2025. This is also a business that is full of competition. If you don’t grasp the new trend in the F&B business, others will.
By focusing on delivery-only orders, your food business will be streamlined to produce food fast and have it out on the road being delivered in a matter of minutes. The best part is that your customers will be happy and will use you again.
At Smart City Kitchens, we’ve done the hard work and necessary research to locate the areas that are the most promising and profitable for Singapore-delivery businesses. Affordable rents and desirable hotspots mean you’ll be able to sit back and watch your F&B business grow!
4. Grow Rapidly
Ghost kitchens allow you to expand very quickly in different locations. This equals minimum risk at maximum profit.
You won’t need to worry about locations and rental leases each time you open a new franchise. Just open your ghost kitchen and voila – orders will begin pouring in. By manoeuvring your strategy to appeal to several locations at the same time, you’ll attract many more customers. Everything will be done online, which is perfect as almost everyone has a smartphone nowadays.
5. Partner with Your Delivery Experts
When you move into Smart City Kitchens, you automatically gain access to all the technology you need to streamline your business. Ghost kitchens go hand-in-hand with food delivery businesses, as a ghost kitchen cannot truly survive without such services. There are many Singapore food delivery services, such as Deliveroo Singapore, WhyQ, Foodpanda Singapore, Grain, and Food Matters Singapore. However, things can become complicated when tracking all these orders.
This isn’t a problem when it comes to Smart City Kitchens. You will easily be able to track and manage every single order through one tablet. The only thing you need to concentrate on is getting the orders cooked and ready for delivery.
When you use Smart City Kitchens, you’ll have great support in your F&B endeavour to help you transition from your in-house dining restaurant to a food delivery business. Smart City Kitchens also take care of all the maintenance and security, so you don’t have to.
Ready to Open a Ghost Kitchen?
The main goal at Smart City Kitchens is for us to drive innovation and help create a brand-new era of successful F&B franchises that are focused towards the future. We are at the forefront of delivery-centric business, helping the F&B industry find renewed and positive success in a world that is ever-changing.
Want to capitalise on the fastest growing trend in kitchen spaces? Get in touch with us today. We’re more than happy to help answer any questions you may have!