June 18, 2021

Ghost Kitchens: The Best Concept to Make a Profit Off Your F&B Business

Make sure your food business succeeds

Running a food and beverage (F&B) business isn’t easy, especially with high overhead costs and huge risks, which make starting an F&B establishment hardly a worthwhile undertaking for many aspiring F&B owners. In recent years, the concept of using ghost kitchens to fulfil online delivery orders really caught on as it provided a cheaper alternative than traditional brick-and-mortar restaurants. Singapore is now embracing normality, and its online food revenue is predicted to reach US$ 1.6 billion in 2024 and keep growing to US$2.1 billion by 2027.

This, together with many consumers’ changing preferences toward favouring ordering food in instead of dining out, makes food delivery the future of the F&B industry. Therefore, it’s imperative for F&B businesses to embrace this trend. A key step to ensure success and adapt to this evolving landscape is through the adoption of ghost kitchens.

This guide will tell you all about the concept of ghost kitchens and the ease with which you can grow your F&B business by using ghost kitchen spaces, such as those provided by Smart City Kitchens.

What are ghost kitchens?

Ghost kitchens – also known as virtual kitchens, CloudKitchens® delivery kitchens, or dark kitchens have a concept different from traditional dine-in restaurants in that the space and operations are optimised for delivery or takeaway orders. The sky-high costs associated with rent and labour are eliminated, thus paving the way for greater profit.While ghost kitchens have gained prevalence in recent years, many traditional restaurants may still be unfamiliar with the concept. Ghost kitchens can be characterised by the following traits:

Delivery-focused operations

Without a physical dining place by design, the ghost kitchen concept prioritises delivery services as their primary focus, catering to the growing demand for convenient and efficient food delivery. 

Running multiple restaurant concepts from a shared kitchen

Ghost kitchens have the ability to run multiple restaurant concepts, brands, or menus using a single kitchen space and shared kitchen facilities. The shared space allows for increased efficiency and flexibility in meeting diverse customer preferences.

Digital presence for broader reach

Built for fulfiling online orders, ghost kitchens emphasise and leverage the use of technology and online platforms to connect with many customers more directly. This direct connection enables convenient access to a wider customer base.

Why ghost kitchens? 

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The fantastic thing about the concept of ghost kitchens lies in their ability to reduce initial and ongoing expenses, ensuring a faster start and return on investment. These allow businesses to expand quickly to various key locations and precisely target their online customer base, making them an ideal choice for launching innovative F&B ideas while minimising risks. It is simply the answer to streamlining the operations of fulfilment delivery orders for food businesses in Singapore.

5 ways ghost kitchens benefit your F&B business 

Taking advantage of these benefits brought on by the concept of ghost kitchens is the key to success for your F&B business. Discover how you can thrive in this innovative concept and leverage its benefits to propel your business forward in the following 5 ways:

  1. Lower upfront and operational costs 
  2. Faster launch and ROI 
  3. Grow rapidly at prime locations across Singapore
  4. Target your customers more accurately than ever online 
  5. Proprietary software to manage your delivery orders

1. Lower upfront and operational costs

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With ghost kitchens, you are saving thousands of dollars.

The upfront investment for a ghost kitchen costs less than SGD$10K – much lower compared to the usual cost of a traditional brick-and-mortar restaurant which ranges between SGD $50K-$600K. The ongoing rent of ghost kitchens is also much lower than that of a traditional restaurant by virtue of its smaller space.

Apart from upfront investment, operational costs of ghost kitchens are also much lower, which has further spurred the concept’s popularity among F&B businesses in Singapore. In a regular restaurant, you need to hire waiters, bartenders, dishwashers, and cleaners. That’s a lot of salary costs for an F&B establishment that is just starting out.

However, with ghost kitchens, you only need 1 or 2 chefs. This way, operational costs remain low, with food packaging being the only extra operational cost incurred. Hence, with the efficiency of ghost kitchens, costs of rent and other various logistical requirements of a dine-in restaurant also fall away.

At Smart City Kitchens, maintenance and security are also taken care of, so you don’t have to spend extra on them.This gives you lower costs, higher margins, and, best of all, more profit.

2. Faster launch and ROI

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Ghost kitchens’ streamlined operations also mean that they have a shorter time to launch than traditional restaurants.

The smaller space needed for a ghost kitchen means no more waiting months for renovations and decor. On top of that, Smart City Kitchens provide guidance on ensuring you have the necessary licences needed. Within a few weeks, your business will be up and running. All you need with a ghost kitchen are your basic equipment and chefs.

When utilising the ghost kitchen concept as the basis of your business model, your ROI will be high in a much quicker time frame.You will usually break even on your investment within 6 months. Instead of the typical 5 years, it takes a typical dine-in restaurant.

3. Grow rapidly at prime locations across Singapore

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. With locations all over Singapore, you can attract and enjoy many new customers – customers you would not have reached with only a single dine-in restaurant.

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The ease of opening a ghost kitchen also allows you to expand very quickly in different locations. 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 putting your resources into operating in many ghost kitchens instead of a single traditional dine-in restaurant, you can run multiple menus and food concepts simultaneously, and appeal to customers at different locations at the same time. It helps generate exposure to a more diverse pool of customers and attracts many more customers. Everything will be done online, which is perfect as almost everyone has a smartphone and prefers convenience these days

4. Target your customers more accurately than ever online 

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 your delivery businesses. Information like the demographic and preferred cuisine type will also be shared with you by our kitchen specialists, making sure that you pick locations that are best for your business. 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 – creating a pool of happy customers!

5. Proprietary software to manage your delivery orders 

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When you move into Smart City Kitchens, you automatically gain access to all the technology you need to streamline your business. Managing orders on various food delivery platforms is not a problem with 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. This is what has made our ghost kitchen concept a hit within the F&B community.

What’s more is that no food delivery service platforms are out of bounds. As such, you can partner with any delivery platform – like GrabFood, Deliveroo, WhyQ, and Foodpanda Singapore.

When you use Smart City Kitchens, you’ll have great support to help you transition from your in-house dining restaurant to a food delivery business.

Ready to embrace the concept of ghost kitchens – a simpler way to own and operate a food business?

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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 on the future. We are at the forefront of a delivery-centric world, helping the F&B industry find renewed success in a world that is ever-changing. Want to capitalise on this fastest-growing trend in kitchen spaces and embrace the concept of ghost kitchens? Get in touch with us today.  We’re more than happy to answer any questions you have!


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