If you have ever seen a new restaurant on an ordering app and noticed that it shares an address with another local chain like Chili’s or Applebee’s, then you have encountered a ghost kitchen. These restaurants exist only online and operate out of existing eateries with a different name. The ghost kitchen craze exploded during the pandemic when foodservice establishments pulled out all the stops to keep customers engaged. CSG followed this concept long before the pandemic when eating places were reluctant to utilize an all-digital business. Now, after dumping resources into phantom businesses to boost engagement, companies are pulling back and possibly exercising these haunted galleys for good.

Ghost kitchens utilize misdirection and can be as hard to pin down as the name implies. When searching online, it is not always obvious when you are dealing with one of these providers. Often a customer only finds out when their order arrives in a box with the branding of a more familiar business. This tactic was useful for restaurants that wanted to test new products or sell items at higher prices by convincing consumers that they were a new mom-and-pop location. Prior to the pandemic, ghost kitchens were few and far between, meaning that most customers were unaware that they even existed. Once the pandemic started though, the number of virtual kitchens ballooned, and customers started to catch on. With consumers now fully aware of their presence, why have ghost kitchens started to disappear?

A major part of the appeal from the company perspective was the use of already existing kitchens. When the pandemic hit, most restaurants were forced to reduce operations or shut them down entirely. Suddenly these companies had kitchens that were barely being used and running a ghost kitchen let them get additional use out of existing equipment and supplies. An example of this was the creation of the high end Pasqually’s Pizza that operated out of temporarily closed Chuck E. Cheese locations. As businesses have returned to more normal operations the difficulty of running multiple restaurants out of a single space has increased. Companies have also been struggling with pricing and customer traffic which has made it burdensome to manage physical stores alongside multiple digital storefronts. Some chains, like Wingstop, have rolled their ghost kitchen menus into their physical stores in an effort to increase efficiency and focus branding on the core product. Others, like Wendy’s, have pulled back their initial investment in phantom locations and instead are moving those resources to traditional storefronts that also cater to digital orders.

Ghost kitchens are on the decline, and it appears that most major chains are not considering them as a factor going forward. The role of virtual kitchens operating out of supermarkets has also taken a hit as Kitchen United, a leading ghost kitchen operator, quietly announced that they have closed all of their locations operating out of Kroger just a few weeks ago. The company did not give a reason for the closure, yet it is a sure sign that this concept is losing its foothold in the industry.

However, these specters are not gone completely, and we are likely to see new ones pop up next year. It does seem that digital only kitchens are no longer a focus of major brands and the exponential growth that they enjoyed over the last few years is over. Consumers are looking for convenience and restaurants want more brand loyalty in the face of higher prices. These virtual operations don’t accomplish either of those goals and companies have moved to synchronizing their physical and digital platforms to drive sales. The success of ghost kitchens was a perfect storm caused by the pandemic and without major changes, they are no longer the future of the restaurant industry that they once appeared to be.