You may have heard the term “ghost restaurant” within the restaurant industry. Also called a virtual restaurant, these are establishments that don’t have a storefront, seats or servers, and their business model is only offering off-premise dining.
Ghost restaurants are a definite departure from the traditional restaurant model, but they’re popping up everywhere to meet the increasing demand for digital ordering and delivery. According to Nation’s Restaurant News, both have been growing 300% faster than dine-in traffic.
If you’re considering opening a ghost restaurant, you’ll want to take the time to learn all about the pros and cons of establishing this type of business. Here are some advantages and disadvantages to consider.
The Advantages of Ghost Restaurants
Opening a ghost restaurant is a great way to get into the restaurant industry because they’re easier to set up, take a smaller financial commitment and are less risky. Think about it: You don’t need to lease a space, purchase furniture and equipment or pay for bills and repairs.
According to RestaurantOwner.com, the cost of opening up a restaurant ranges from $175,500 to $750,500. Plus, there is no guarantee that just because you invest all that money, it’s going to pay off. The restaurant industry has a notoriously high failure rate. According to CNBC, about 60% shutter within the first year, and almost 80% close prior to their fifth anniversary. Usually, the top reason why restaurants fail is due to location, which is a problem solved by opening a ghost restaurant instead.
Another advantage of ghost restaurants is that you can easily change the menu and concepts by incorporating new items to see how they perform. This gives you creative flexibility. Ghost restaurants also require less staff and dishwashers, since only take-out containers are used for purchases.
The Disadvantages of Ghost Restaurants
Of course, there is a downside to opening a ghost restaurant. You’ll miss out on potential profits from walk-in clients and clients that aren’t online, for instance.
Your online reputation will make or break your success; one bad review can deter future customers from ordering, so you have to always be on your A-game and consistent when it comes to the quality of your food and service. Also, since there are no in-person touch points, it can be harder to connect with customers.
What This Trend Means for You
In the coming years, ghost restaurants are expected to grow more popular as the restaurant industry continues to evolve. If you want to stay competitive with these ghost restaurants – as well as profitable in the long term – then you need to offer delivery.
Our world is moving faster than ever. And people are busier because of rising demands in the workplace and the ever-increasing presence of technology in our lives. To keep up, and benefit from these changes, restaurants need to adapt as well. By focusing on convenience first and foremost, they can do just that, and not only survive, but also thrive for years to come no matter what further transformations the industry undergoes. For more information about the restaurant delivery software Focus provides, contact us today.