Jorge Santillán – GF2GO CEO

Venture capitalists and restaurateurs have one important thing in common: their businesses are high risk, high reward. However, if there’s one opportunity in the hospitality world that seems like it’s primed for success, it’s ghost kitchens. Venture capital is driving a huge shift in the market—one that’s filled with incredible potential for growth and profit.

What is a Ghost Kitchen?
Ghost kitchens, also known as virtual food hubs, are facilities that serve one sole purpose: providing a space to prepare food for delivery. What sets them apart from traditional restaurants is simple—they don’t have space for guests to dine-in, and they’re designed to be a less expensive way for restauranteurs
to serve up delicious fare.

Most ghost kitchens rent out their spaces to brands, who then rely on third-party delivery services such as DoorDash, GrubHub, and UberEats to transport meals to customers’ doors. Since there’s no dining room, no parking lot, and no need for waitstaff, ghost kitchens provide an incredible opportunity for businesses to focus solely on crafting innovative, delicious cuisine.

A Restaurant Trend on the Rise
Demand for off-premise dining has skyrocketed in recent years, which helps explain why ghost kitchens have simultaneously taken off. In fact, according to a study conducted by real estate giant CBRE, ghost kitchens are predicted to occupy an astounding 21% of the American restaurant industry by 2025. A report from Euromonitor predicted that by 2030, ghost kitchens will become an astounding $1 trillion market.

The pandemic has also helped spur demand for ghost kitchens, as more and more diners wish to dine at home, and many restaurants can no longer afford to offer full-service locations. While the pandemic has wreaked havoc on the industry as a whole, ghost kitchens offer a beacon of hope since there’s a lower barrier for entry, and they can pay off financially for those willing to take the leap.

Venture Capitalists are Catching On
Venture capitalists are noticing the unique possibilities ghost kitchens present. According to research firm PitchBook, venture capital firms Sequoia and Y Combinator have invested $55 million in ghost kitchens. A great demonstration of the eagerness investors are showing when it comes to ghost kitchens is that in 2020, investment firm SoftBank poured $120 million into a ghost kitchen concept called OrderMark.

Virtual Kitchens with Real Financial Opportunity
While ghost kitchens are a relatively recent phenomenon, there’s good reason to believe in the long-term financial opportunity they present. Venture capital firms are acting quickly to take advantage of this emerging market, and entrepreneurs who get into the business now are likely to see lasting benefits. It costs significantly less to operate a ghost kitchen than it does other restaurant concepts, so the profit margins on each item sold are significantly higher. This means more money for both investors and owners alike. Not to mention, there’s fewer things that could cause the concept to fail (bad service, lack of ambiance, accessibility, etc.), so everyone involved can feel good about their prospects.

All it takes is a restaurateur with a delicious product, the right space to cook in, and smart investors who are aware of ghost kitchens’ unlimited potential. Understanding what ghost kitchens have to offer is a great way to stay ahead of the curve, and to set yourself up for success.