Closed restaurant but lively kitchen
July 27, 2021
Ghost kitchens are THE new trend in the food business. Predictions say that it will create a 1 trillion $ market in the next 10 years (Euromonitor). The benefits? Ghost kitchens are suitable for food startups just as much as for established restaurants. You want to try out your very first product. A ghost kitchen is an easy and affordable way to do so. You would like to try out a new menu or introduce your brand to a new neighbourhood. A ghost kitchen gives you this flexibility without setting up a whole new restaurant.
What is a ghost kitchen?
A ghost kitchen or digital kitchen is a facility in which food is produced for delivery or take out. This means that customers can’t sit down and the building most likely will not be heavily branded on the outside. There are several ways businesses can operate a ghost kitchen.
It might be that a restaurant is renting a location specifically to produce their take-aways. Other times restaurants might hand over their recipes to a sub-contractor who cooks the meals for them. There are also virtual brands who never had a brick and mortar restaurant and solely optimized their business for food-delivery and take-away.
The cost of a ghost kitchen
Geoff Alexander, CEO of the US-American restaurant Wow Bao, calculates that establishing a ghost kitchen costs their company approximately 2000$. According to his experience, there are three main components that need to be considered:
1) Ingredients and Packaging
About 36% of the cost for a ghost kitchen will be used for ingredients and packaging.
2) Third party delivery
If you don’t want to deliver the food yourself or have it picked up, you should calculate around 25% of your budget for a third party delivery. While these companies already have figured out efficient ways of working they might also give you more visibility so that you can save on marketing costs.
3) A contractor that cooks the food for you
39% of the cost is paid to the restaurant who cooks the food in your name. However, it might be that you don’t want to pay a contractor to cook your food for you or there is none available in your area. Instead you will have to consider the cost of paying your own staff as well as the cost of finding and renting a kitchen in which you can prepare or cook your food.
Paguro's take on it
Many of our tenants are passionate about opening up their own food business. While they might experiment at first with cooking at home, they soon realize that they need the setup of a professional and certified kitchen to take their business to the next level. Especially in times of Covid many of them feel more comfortable to choose a food-delivery and take-away only approach as the situation of restaurants remains uncertain. On the side they might still have another job, which gives them only the weekend to run their business.
All these are motivations to rent a ghost kitchen. In the past it has been difficult to find a kitchen that is available for only a few hours or days. Paguro noticed that many kitchens in Oslo, such as those of hotels, were left empty after breakfast or lunch time and saw the opportunity for them to be used more efficiently. At the same time we met ambitious food entrepreneurs who couldn’t find a place to grow their business.
So we decided to connect the two and provide them with an easy and safe contract to ensure a smooth cooperation. Here you can read an interview with one of our tenants and how they started their ghost kitchen business. Since we know from our own startup experience that it is hard to tell in the beginning which needs for a space you will have in a few months, we also want to give our tenants the opportunity to only commit short-term.
So with our platform we would like to show that finding a kitchen and operating it can be fast, easy and professional from the beginning of your food journey, as our kitchens are certified and located all over town. If you feel more comfortable sharing the cost of a kitchen with another business, you might be interested in the “Paguro Community”. Here you can find other food businesses to share the kitchen with, which is ideal if you only need the kitchen only a few days a week.
If you wonder what is required from a legal perspective to run a food business in Norway, you can find our recent interview with mattilsynet (the Norwegian Food Safety Authority) here.
Happy Cooking !