When Leonard Wetzel, general manager of Graze! Shared Kitchen in Toledo, OH, first heard he’d be endeavoring into the ghost kitchen business, he was spooked — but mostly because he had no idea what a ghost kitchen was.
“I envisioned someone in a basement — something a little spookier than what it is,” he said. “I imagined a kitchen that didn’t really exist. I was really skeptical… I’m usually a little scared of change.”
Ghost kitchens — also known as dark kitchens, cloud kitchens or virtual restaurants — are an entirely delivery or pickup business, but come in a variety of shapes and sizes. These “virtual restaurants” often have no physical storefronts or seating, and can only be found through delivery apps and online. According to USA Today, the online ordering market is worth $26.8 billion and is the fastest-growing source of restaurant sales.
While ghost kitchens aren’t an entirely new concept, cropping up in large numbers as far back as 2019, when celebrities like Wiz Khalifa, Mario Lopez and Guy Fieri were already selling new and interesting flavor combinations on apps like GrubHub and UberEats, the number of existing ghost kitchens nationwide increased dramatically during COVID-19, when dine-in opportunities were few and far between and the popularity of online ordering skyrocketed. According to cloudkitchens.com, 60 percent of consumers order delivery or pickup at least once a week. Meanwhile, costs of running traditional brick-and-mortar restaurants are steadily rising, and more and more chain restaurants are choosing to operate virtual locations without sitdown components.
In some cases, several different restaurants occupy a shared space, operating delivery and pickup services separately and from a central location. In other instances, like for Graze! Shared Kitchen, a singular team operates a number of different restaurant concepts out of their kitchen space.
Before his boss Rod Brant decided to open three additional kitchens, Wetzel was the general manager of Oasis Mediterranean Cuisine. Abruptly, he found himself ordering, training and cooking for three additional types of fare.
“All of a sudden, I was running four restaurants in one location,” Wetzel said. “It’s been a little tougher than a normal restaurant, but it’s working.”
Graze! Shared Kitchen is the only locally-owned and operating restaurant labeling itself a “ghost kitchen” in the Toledo area, according to owner Rod Brant. With two Toledo area locations serving four menus worth of food, Graze! aims to improve the takeout experience by creating a one-stop shop for those who can’t quite agree on dinner.
“I know when I order takeout, my girlfriend loves Chinese, and I don’t,” Wetzel said. “So I’m either stuck with Chinese, or I have to order from two different places. Here, you can get a burger for yourself, a pizza for the kids… and we keep each menu pretty small, so it’s all specialized and done well.”
Brant and Wetzel serve items from four different menus out of their kitchen: Oasis Eats Mediterranean, Mozza Italian Takeaway, Big Knuckle Burgers and The Sandwich Factory. Though he owns all four restaurants, Brant aims to present the four menus as separate restaurants and brands, while maintaining a consistent level of quality and service.
“I think there’s a lot of growth to be had in the takeout and delivery field, and that starts with improving variety,” Brant said. “You want a bunch of options that people want and will enjoy, so we focused on using ghost kitchens to do that.”
Brant first had the idea to start a ghost kitchen five years ago, and decided to purchase Oasis in February of 2020.
“I could see it as a coming trend,” Brant said. “Even pre-pandemic, I knew that customers were beginning to do a lot more takeout and delivery — Doordash, GrubHub, and Postmates were beginning to take off — so I knew that people were beginning to order many more of their meals outside the home. I wanted to bring this new model of takeout to Toledo.”
Devin Eichler, owner of Crafty Cow, a family owned and operated restaurant in Milwaukee, presently operates three ghost kitchens out of his brick and mortar restaurant. At the start of COVID-19, Crafty Cow was forced to shut down any and all in-person seating and regular restaurant operation, and experienced a sharp downtown in revenue as a result. Eichler brainstormed the ghost kitchen concept to help Crafty Cow make back some of that money.
“They closed the restaurants in Wisconsin on March 17, which is still so surreal. I don’t know how to describe it completely,” Eichler said. “I remember being at home and not being able to sleep, thinking about all of the things that were about to go wrong. I went into my wife’s room at three in the morning and I swung the door open. I told her: ‘I got it. I know how we’re going to save the restaurants. We’re going to open three new restaurants. Tomorrow.’”
Eichler’s restaurant concepts have evolved over time. Created as an immediate response to the pandemic, his first three restaurants were plays on “staying home and binge-watching TV.” They hosted “Fish and Chip,” advertised with Rick and Morty artwork, a Curb Your Enthusiasm themed menu and “Brunch and Chill.”
Eichler described the first three concepts as “pop-up kitchens,” rather than fully-fledged ghost kitchens.
“We put brown paper up all over our windows and wrote the menus there,” he said. “It was a funny play on the whole COVID situation. And those three concepts evolved into the three we have today.”
In addition to dining in-house and munching on Crafty Cow’s burgers and tots, customers can use a variety of online ordering services to order wings from Big Wings, sandwiches from Down South Sammies, Asian-Mexican-American fusion from Fiesta Panda, or they can order takeout or delivery from Crafty Cow itself.
“I wanted to give the food world good news,” Eichler said. “Everything else coming out was sad.”
Although his Crafty Cow team prepares the food for all four restaurants, Eichler has worked hard to establish them as separate online brands and entities.
“It’s still Crafty Cow,” Eichler’s general manager, Owen Minahan said. “Even though the ghost kitchens operate out of here, customers don’t really associate the ghost kitchens with Crafty Cow. It always looked like a different person running it, even though it’s all Eichler.”
While that was his goal, Eichler says that can be confusing.
“Sometimes people don’t get that there aren’t separate brick and mortar locations,” Eichler said. “We’d have delivery drivers who would be here for more than one order, and they’d pick up for Crafty Cow, leave, and come back all confused two minutes later looking for Fiesta Panda.”
Like Wetzel, Eichler’s kitchen manager, Ivan Mendez, was skeptical at first.
“I honestly had no clue what he was doing,” Mendez said. “Then, after about a week, we adapted. It was all about learning how to cook new food. In the end, it’s just a way to make more money by adding more menu items.”
Now, Mendez says, he would recommend the model to anyone.
“Opening a ghost kitchen is definitely the move,” Mendez said. “It’s going to increase your sales, you’re going to have a variety of food for people to choose from. I think everyone should do it.”
Eichler develops the recipes for and and tests each item on the menu, beginning the process by considering what ingredients Crafty Cow is already ordering. Starting from there means that there is never any money or food wasted as a consequence of the ghost kitchens; they can only serve as an asset.
In the end, Eichler said, Crafty Cow had to order 20 new items, and made 60 new dishes.
“We were busier right away than we had ever been,” Eichler said. “It was the biggest team-working project that I’ve ever been a part of.”
Moving forward, Eichler is looking to continue operating his three ghost kitchens, incorporating them more substantially into Crafty Cow’s brand by hosting “Pop-Up” nights where different menus are available. And, while ordering from the ghost kitchen menus has slowed as pandemic restrictions eased, Eichler has moved a couple of menu items onto Crafty Cow’s permanent menu.
Still, Minahan doesn’t see a reason to ever stop offering ghost kitchen menus. “It’s a way to build up your profit margins without killing the kitchen staff. Now that regular customers are coming back, we’ve adapted by condensing the ghost kitchen menus a little bit to make sure it stays feasible.”
Brant, on the other hand, is looking to expand his menu offerings. He owns all four of the restaurants currently operating out of Graze!, and is looking to contract external recipes.
“As people get more used to ghost kitchens and the idea and concept, we’ll actually be adding more,” Brant said. “We’re in talks right now with regional restaurants to add some of their menu items to both locations. We’re telling restaurants, ‘At a much lower price, you can be up and running in our locations in just a couple of weeks.’ They’re all over that. They know how much it costs to open a restaurant from scratch.”
Brant has also noticed a slight drop in sales, but holds better weather primarily responsible for that change.
“This is still a growing market,” he said. “There was already a shift happening from dine-in to delivery pre-pandemic, and people are definitely more attuned to ordering takeout than they were two or three years ago. Expectations have changed too––people want a little more quality and higher-end product than the Wendy’s drive-thru.”
Eichler says that, in part, that growth is also why sales have decreased slightly.
“Everybody’s opening a ghost kitchen,” he said.
