The rapid rise and fall of ghost kitchens

  • Restaurants are scaling back 'ghost kitchen' operations due to added stress and customer complaints.

  • Brands like Wendy's and Kroger are shutting down their ghost kitchens, the Times reported.

  • Ghost kitchens were an exciting pandemic-era innovation. But the anonymity bred lower standards.

Ghost kitchens — once celebrated as an efficient innovation for the food industry — have instead been haunted by their own anonymity.

Ghost kitchens are restaurants with no storefront and no seating that customers never see and which only do delivery. It seemed like a good idea during the COVID-19 pandemic. Restaurants and so-called virtual brands invested heavily in them.

But demand decreased as the pandemic subsided and reliance on multiple layers of faceless technology gave rise to complaints about quality. Ultimately, customers never connected to many of the brands. And, now, many restaurants and virtual brands say the stress is not worth the payoff, according to The New York Times.

Several influencers and celebrities have used ghost kitchens to produce their own lines of food, like YouTuber Jimmy Donaldson, known online as Mr. Beast, who created MrBeast Burger in December 2020.

"Stranger Things" actor Noah Schnapp also opened a chicken tender chain called TenderFix in March 2023, which worked out of about 1,000 IHOP kitchens to prepare its food. It's also unclear if TenderFix is still in operation. The company's social media pages have not been updated in at about a year and its website is no longer available.

Large brands like Wendy's and Kroger are scaling back on their ghost kitchen operations after the kitchens struggled to keep up with orders and received customer complaints, according to the Times.

Brinker International, which owns Chili's and numerous other restaurant chains, opened two virtual restaurants during the pandemic called It's Just Wings and Maggiano's Italian Classics, which used the Chili's locations to prepare their food. But last year, as more customers started to return to dining in person, the company found it difficult to juggle both. So Brinker closed Maggiano's and reduced the scale of It's Just Wings in 2023, according to the Times.

"Everyone thought if you have the labor and the equipment, it would be easy to run virtual brands, but the reality is, most of the delivery times for virtual brands transact during busy times for the regular restaurant," Brinker CEO Kevin Hochman told the Times. "It was too much to have a busy dinner rush with an influx of virtual orders coming in, too."

And as quality issues and late delivery times worsen, some ghost kitchens are starting to see legal challenges. In August 2023, Donaldson sued his ghost kitchen partner, Virtual Dining Concepts, claiming in court documents that some customers complained they had received raw meat. For now, Virtual Dining Concepts is still operating MrBeast Burger.

"One father of two felt as though he had 'let his children down' by ordering MrBeast Burgers when he received terrible quality food in unbranded packaging that he was able to trace back to a 7-11," the lawsuit says.

Cracker Barrel also opened its own virtual restaurant using CloudKitchens, another ghost kitchen group, according to Restaurant Business.

CloudKitchens, which Uber cofounder Travis Kalanick owns, is facing a class action lawsuit that claims the company misrepresented the true origin of the food that customers are ordering on food delivery apps like Grubhub and Doordash.

Still, some chains like Denny's are fully embracing the cloud kitchen model, the Times reported. The company owns three virtual brands, Banda Burrito, The Meltdown, and Burger Den.

Denny's President and CEO, Kelli Valade, told the outlet that it is able to meet higher customer demand than most other chains because Denny's locations are open 24 hours a day.

Read the original article on Business Insider