Modern technology is becoming increasingly focused on creating the best customer experiences. Consumers can buy the latest smartphone while sitting on their couch and get their favorite burger delivered at their doorstep. It is fair to say that today’s consumers literally have the power to fulfill all their needs at their fingertips. This has made it difficult for brick-and-mortar businesses to attract paying customers.
The advent of e-commerce businesses and food delivery services has hit shopping malls and restaurants all over the world. In the absence of growing foot traffic, many shopping malls are struggling to retain tenants and manage overhead costs. This, in turn, has resulted in a rise in the number of abandoned mall spaces. The only malls still getting any visitors are the ones that have curated unique experiences for consumers.
Ghost kitchens, also known as virtual kitchens, are putting a spin on this trend by utilizing empty shopping malls. They are also a great way of monetizing underutilized spaces such as parking lots and vacant stores. Moreover, the introduction of ghost kitchens further enhances the customer experience by letting them control how they wish to dine. You can even apply the concept to other aspects such as experiential retail and further enhance visitor’s experience.
The advent of ghost kitchens is changing the landscape of the shopping mall and dining industries. Before we dig deeper into the possibilities, let us take a closer look at the concept of ghost kitchens.
Decoding Ghost Kitchens
Simply put, a ghost kitchen is a restaurant without a shop front or a dining area. It only exists to prepare food for delivery and appear on food delivery apps. Additionally, a ghost kitchen is often perceived as a coworking space for different restaurants. Many restaurants can either share the same kitchen or divide the space into individual kitchens. Most ghost kitchens are cloud-based and partner with third-party food delivery apps such as UberEats and Grubhub.
DoorDash, a food delivery service, launched a shared ghost kitchen in Redwood City, California, in October 2019. It features an array of local and national brands, including The Halal Guys, Rooster & Rice, Humphry Slocombe, etc. Customers can include items from different restaurants in the same order and specify how they want the food to be prepared.
The most obvious advantage of ghost kitchens is that restaurant owners can save on various operational costs. They don’t have to hire staff to serve customers, set up tables, and wash serving dishes. Instead, they can focus all their resources on improving the quality of their food and experimenting with the menu. The popularity of ghost kitchens is evident from the fact that popular brands like Starbucks and Chick-fil-A are jumping on the bandwagon.
It is also worth mentioning that ghost kitchens are creating an enhanced dining experience for customers. They can control what they eat and from where they get their food. Customers also get an opportunity to try new restaurants and brands without traveling to far-off places. Moreover, it is often more pocket-friendly than a traditional dine-in experience.
Now that we have a better understanding of ghost kitchens, let us see how shopping malls can benefit from them.
Ghost Kitchens and Shopping Malls
The demand for food delivery services is on the rise. According to Statista, the online delivery segment of the food industry will generate revenue of $2.3 billion in 2020 and is expected to reach $2.9 billion by 2024. It goes to show that shopping mall center operators will only benefit from opening their doors to ghost kitchens.
In addition to utilizing abandoned spaces, ghost kitchens are also a great source of revenue generation. Even if you can’t collaborate with popular restaurant chains, you can include various newer establishments. Aspiring restaurateurs are more likely to opt for ghost kitchens given the low initial setup cost. Consequently, you can offer new culinary options at affordable prices, thus improving the customer experience further.
Ghost kitchens are also an effective way of targeting new audience segments. This is exactly the strategy that is being used by Blue Island Oyster Bar. The Denver-based upscale restaurant has launched Denver Lobster Shop, a delivery-only sub-brand that caters to millennials. The sub-brand operates from the main kitchen without an actual dining area and offers premium seafood at an affordable price.
You can use this technique to connect with an audience that wouldn’t venture outside their living space to visit your mall. It will also help start a conversation about your mall and encourage more people to order from the ghost kitchen. You can even use an SMS marketing system to notify your existing customers about any new entry in the ghost kitchen.
Many real-estate developers have already realized the benefits of ghost kitchens and are using them to redeem abandoned retail spaces. According to Wall Street Journal, Simon Property Group and Accor have partnered with SBE Entertainment Group to build 200 ghost kitchens across the U.S. This venture is targeting shopping malls and hotels in important cities, including New York, Miami, San Francisco, Los Angeles, and Chicago.
This further reaffirms the belief that ghost kitchens are here to stay. Moreover, you can apply the concept of ghost kitchens to other areas of your shopping mall. For instance, you can partner with e-commerce businesses to build a showroom that offers trial and pickup services. Likewise, you can collaborate with various smaller brands to create experiential retail outlets instead of a physical storefront that sells products.
Shopping malls are fighting to survive amidst the advent of customer-friendly technology. With everything at their fingertips, consumers will be less likely to step out of their homes to buy items they regularly use. The rise of food delivery services is making it difficult even to lure customers with swanky food courts and fine-dining restaurants. An effective way of keeping your mall operational is to use the space for a ghost kitchen.
While ghost kitchens may not attract foot traffic, they can breathe new life into abandoned retail establishments. They help you generate increased revenue by utilizing vacant shops and empty parking lots. The best part is that you can offer a mix of different cuisines, brands, and price ranges to your customers. Moreover, you don’t have to maintain a dedicated seating area or assign staff for waiting on tables.
Ghost kitchens might be the only way of saving shopping malls from extinction. Do you agree? Share your views in the comments section below.