July 15, 2024
Ict

The Rise of the Ghost Kitchen: How Virtual Restaurants Are Driving Growth in The Food Delivery Market

Ghost kitchens, also known as virtual or cloud kitchens, have gained significant traction in recent years by allowing restaurants to operate without a physical storefront. Food delivery demand has surged due to changing consumer habits and lifestyles, with many preferring convenience over dining out. Ghost kitchens have become prevalent among chain restaurants and food brands looking to test new concepts or expand into new markets through delivery and take-out only facilities. Their operations are centered around optimizing kitchen space for maximum order volume and reducing overhead costs compared to traditional restaurant models. This allows for lower menu pricing which attracts more customers. In addition, many ghost kitchens fulfill orders from multiple virtual restaurant brands running out of the same facility. This enables operators to benefit from higher unit economics without significant additional investment.

The global Ghost Kitchen Market is estimated to be valued at US$ 70.37 Bn in 2023 and is expected to exhibit a CAGR of 12.% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market key trends:

One of the key trends driving growth in the ghost kitchen market is the rise of delivery kitchen aggregators. Companies such as Kitchen United, CloudKitchens and Reef Technology not only facilitate the shared infrastructure and market making capability for single and multi-brand kitchens, but also provide turnkey solutions for all operations including menu design, online ordering platforms integration, delivery/takeout logistics and marketing. This significantly reduces the entry barriers and startup costs for new market entrants looking to leverage opportunities in food delivery. Ghost kitchens are also increasingly being developed by third-party real estate owners and developers who recognise lucrative opportunities from renting out turnkey commercial kitchen spaces dedicated for prep, cooking and order fulfilment. As the demand for delivery and takeout continues its robust expansion worldwide in the coming years, ghost kitchens are poised to rapidly proliferate fueling growth of this evolving sector.

Porter’s Analysis
Threat of new entrants: The ghost kitchen market requires high initial investment for setting up cloud kitchen infrastructure and penetrating into market, acting as a barrier for new players. However, low maintenance costs make business model viable for new startups.

Bargaining power of buyers: The buyers have moderate bargaining power due to availability of multiple operators. However, differentiated offerings and wider coverage by major players restrict options.

Bargaining power of suppliers: The suppliers of raw materials and packaging have low bargaining power due to availability of substitutes and less scope of integration.

Threat of new substitutes: Alternate distribution channels like dine-in and delivery pose low threat as ghost kitchens focus on a specific customer base with alternate experience.

Competitive rivalry: Major players dominate the market through wide coverage and brand visibility. However new regional players intensify competition through niche differentiation and localized model.

Key players: Key players operating in the ghost kitchen market are CloudKitchens, Kitchen United, REEF Technology, Virtual Kitchen Co., Zuul Kitchens, Deliveroo Editions, Kitopi, DoorDash Kitchens, Grubhub/Seamless, Swiggy Access, Uber Eats Kitchens, Rebel Foods, Ghost Kitchen Brands, JustKitchen, and Keatz. Major players are focusing on expanding their presence through partnerships and investment in new infrastructure to leverage emerging opportunities.

Regional analysis: Asia Pacific is anticipated to be the fastest growing region in the ghost kitchen market during the forecast period. This is attributed to the growing young population, increasing disposable income, and rise of online food delivery platforms in countries like India and China.

Key Takeaways
The global Ghost Kitchen Market  is expected to witness high growth due to rising demand for delivery and shifting consumer preference towards convenience. North America currently dominates the market owing to high adoption of online food delivery systems and presence of major players in the region.

*Note:

  1. Source: Coherent Market Insights, Public sources, Desk research
  2. We have leveraged AI tools to mine information and compile it