How Much Does It Cost to Start a Ghost Kitchen: Complete Breakdown

The restaurant business is one of the most trendy businesses of this century. The restaurant business is doing really great nowadays as people like to have food from the restaurant more than preparing food at home. Moreover what people are really fond of is home delivery services provided by restaurants. Most restaurants now have their own online ordering system or third-party platforms where customers can place food orders and get food delivery. That's why in recent days a new type of restaurant business is raising. It’s called ghost kitchen or dark kitchen or cloud kitchen or virtual kitchen. If you are also trying to lunch a ghost kitchen and don’t have any idea how much does it cost to start a ghost kitchen, then stick together. Because this article is for you. As we will be discussing all the sectors that fluctuate the expense of starting a ghost kitchen. And also how much does it cost to start a ghost kitchen.

What is a Ghost Kitchen?

Ghost kitchen is also known as the shadow kitchen or dark kitchen or cloud kitchen or virtual kitchen. It is a type of restaurant business with no dining facilities. In a ghost kitchen customers only places orders through the online ordering system and food is prepared by chefs and then food is delivered to the doorstep of customers.

If you are wondering how much does it cost to start a ghost kitchen, then you should know ghost kitchen is a cost-effective restaurant type. Because this type of restaurant only cooks food according to customer demand from their menu. Then delivers the food to the customer's asked or preferred location. Ghost kitchen doesn’t offer any dining facility. So the cost of buying or renting a space to arrange seating, decoration cost, furniture cost, the labor cost of wait table staff, etc is not required. Basically, most of the ghost kitchen doesn’t even have a storefront but a digital storefront. Customers don’t require to visit the physical location of the ghost kitchen to place orders or to receive food. 

Ghost kitchen usually has its own digital storefront. Customers can browse that on the internet. Customers will also find its menu in its digital storefront. And select one or multiple items according to the customer's requirements. Customers only need to place orders through the online ordering facility which can be found on their digital storefront. After placing an order customers can pay the bill online or by cash on delivery. When an order is placed staff members of the ghost kitchen prepare the food and hand it over to the delivery man. And the delivery man delivers the food to the customers.        

In one word, a ghost kitchen is just a commercial kitchen where online food orders are received and prepared and then handed over to the delivery man to deliver the food on time to the customer's doorstep.

How Much Does It Cost to Start a Ghost Kitchen?

If you are trying to sum up how much does it cost to start a ghost kitchen then you should know that starting a ghost kitchen is far less expensive than starting an ordinary restaurant. Because it doesn’t have a dining facility. That’s the reason almost a big percentage of start-up costs is reduced. Also like other businesses you don’t need to arrange a storefront for your ghost kitchen. But you are required to arrange a digital storefront. Creating a storefront doesn’t come without expense. At the same time, you need a space to set up the kitchen. Other expenses like kitchen space buying or renting cost, setup and interior cost, utensils and equipment cost, staff cost, food ingredients and raw materials, an online ordering system, delivery cost, etc require a good amount of money which will certainly not come from the ghost but your have to bear them. In order to successfully open a ghost kitchen you must be aware of every expense area of your ghost kitchen. Let’s look at the complete breakdown of how much does it cost to start a ghost kitchen below.        

1. Location

Location is one of the big factors when you are trying to sum up how much does it cost to start a ghost kitchen. When you are starting up a ghost kitchen you don’t require a storefront. But you need a space to set up a kitchen where you and your chefs or kitchen staff will prepare food for the customers. You should very precisely select the location of your ghost kitchen. It is true that you will not serve your customers inside your premise but you have to keep in mind that you need to deliver food to the customer's doorstep.

After selecting a location, you need to decide whether you should buy or rent the space. If you chose to rent a space your expense will firstly depend on the rental area. Secondly, it will depend on the advance payment. And lastly refundable money. The rental cost will differ depending on these 3 main sectors. 

If you chose to buy a space for your ghost kitchen then you must know that it will be more costly to buy a space. And if you are new to this business, then renting a space will be better than buying a space. Because you are not certain you will be successful in the near future. So spending a big amount will not be a good idea. Instead of renting a space then starting your ghost kitchen business and testing how much progress you are making will be a good option.       

2. Utilities

Utilities are another main factor to consider when you are determining how much does it cost to start a ghost kitchen. Utilities include electricity cost, water cost, gas cost, internet cost, etc. Most people make the mistake of not adding utilities cost to the startup cost of the ghost kitchen. The utility cost will vary depending on the vastness of the space of the ghost kitchen. Because it requires more lighting cost and heating costs for a large space than for a small space. 

Also, the amount of water required will also vary depending on how big or how small your ghost kitchen is. As if your kitchen is large then you might need more staff and more staff means more water. Also, you need water to prepare food and wash dishes. Another important aspect is the internet connection cost. As your kitchen entirely depends on receiving online orders. So you need an uninterrupted internet connection. That will add some more cost to your expense list. 

Not to mention, safety check-up costs, pest control service costs, equipment maintenance costs, etc are also some unavoidable costs that you should keep in mind while calculating how much does it cost to start a ghost kitchen.           

3. Equipment

The number of equipment required for your ghost kitchen will entirely depend on the menu and the type of your business. It is very important to reduce the start-up cost of any new business to ensure success in the long run but it is also important to spend enough to pursue daily work smoothly. So you must understand the importance of not spending too much and also not being too miser especially when you are making the budget for purchasing equipment. Let’s look at the list of equipment you might need to run your ghost kitchen smoothly.

1. Workspace Equipment:

• Kitchen Cabinets
• Kitchen Counters
• Sink
• Ventilation

2. Kitchen Equipment:

• Stoves
• Ovens
• Kitchen Chimney
• Dishwasher
• Fridges or Freezers

3. Cooking Equipment:

• Pots and Pans
• Spoons and Spatulas
• Different Kinds of Knives
• Cuttings Boards
• Cookers and Grills
• Mixers

These are just some examples of some basic kitchen equipment. Depending on the type of food you sell and the menu of your ghost kitchen you might need to add many other pieces of equipment.

4. Marketing and Branding

Marketing and branding are very important for every business. But when you are planning to start a ghost kitchen, you have to take marketing seriously. Because, unlike traditional restaurants, a ghost kitchen cannot survive without marketing. As ghost kitchen has no dining area or storefront. So not just to make a good profit but also to survive in the challenging industry you must do marketing. Generally, restaurants spent 3 to 6 percent of their total cost on marketing. Let’s look at some marketing techniques that will bring customers into your ghost kitchen like wildfire.

1. Website

Nowadays every business must have an online presence on the internet. Like other businesses, ghost kitchen should also have a strong online presence. A website is one of the best and most strong way of creating an online presence. Moreover, unlike other businesses, a ghost kitchen doesn’t have any storefront. So as a ghost kitchen owner, you have to create a digital storefront. 

Although you can create a digital storefront using many social media platforms, but the website can be a great storefront for your ghost kitchen business. In recent days creating a food ordering website is easier than ever. So if you want your ghost kitchen to be successful then consider creating a dynamic website for your ghost kitchen.     

2. SEO

SEO or search engine optimization is another fantastic way of branding your ghost kitchen business. Especially if you chose to create a digital storefront by creating a website. SEO can help you get many customers and grow your business in a really short amount of time. SEO will precisely help you reach your potential customers and turn your visitors into permanent customers.  

3. Social Media

In recent times there are very few people who don’t use the internet. And most internet users are found active on social media. So branding your ghost kitchen where you can find a huge number of active customers is a good idea and the best investment at the same time. We all know the importance of social media for restaurant business promotion. So as a ghost kitchen business owner, you should take the opportunity. And create a continuous online presence with social media. Both to grab the attention of people and to keep them engaged.   

4. Digital Paid Promotions

As maximum people are on the internet in present times you should run ads on digital platforms. Both different social media platforms like Facebook, Instagram, Pinterest, Tik Tok, etc, and search engines like Google have their own paid promotion running platforms. You can precisely target the audience and choose a location while running your paid promotions to get the best return on investment.  

5. Email Marketing

Email marketing is a simple way of marketing but it is very effective. Using email marketing you can spread the knowledge of your existence among your customers really fast. Also, it is a relatively inexpensive method of marketing.

Before choosing any specific marketing technique you must need to do enough research to identify which marketing technique will be cost-effective and brings the most return on the invention for your ghost kitchen business. And also remember marketing cost is a big part of the start-up expense of a ghost kitchen business like every other business.

5. Technology

Ghost kitchens are a very unique type of restaurant business. So it requires advanced types of technology. To run a ghost kitchen effectively you must have a proactive restaurant management system. Usually, restaurants spend 2.5 percent of total expenses on technology. You will be lagging behind if you decide to run your ghost kitchen business with just any ordinary POS system. In present times there is a lot of restaurant management software or POS software available in the market that is specially designed for ghost kitchens. You should add the cost of technology to your startup cost of opening a ghost kitchen. And you should do good research and choose the best cloud kitchen software for your ghost kitchen business.

6. Labour Cost

Labor cost is another expense you need to add to your start-up cost when you are making the budget for your ghost kitchen. Usually hiring employees and staffing costs 30 percent of the total expense of a restaurant. You need fewer employees than the traditional restaurant in a ghost kitchen but still, you need enough manpower to run your ghost kitchen business effectively. Types of employees that are a must for your ghost kitchen are mentioned below.

1. Chef and Cooking Staff
2. Kitchen Manager
3. Deliveryman

7. Food Cost

The restaurant business is all about selling food. So food cost is another most important expense on the budget list of ghost kitchens. Food ingredients and raw materials purchasing expenses usually cost 28 to 30 percent of the total expense of a restaurant. Also storing food properly is very important.

Is It Profitable to Open a Ghost Kitchen?

Opening a ghost kitchen and establishing it is far more easier than an ordinary restaurant. Because the start-up expense of a normal restaurant is huge. It is also difficult to create a customer base and establish a normal restaurant. On the other hand, starting a ghost kitchen is far less expensive than a normal restaurant. And now people love to order food and enjoy it laying on the couch of their house. So the concept of a ghost kitchen is more acceptable and liked by people of this century, especially by the new generation. Let’s look at some statistics below to better understand this concept. 

1. According to a study, 60 percent of people order food online at least once every week.
2. An average person spends 15 percent more money on online food orders than dining in.
3. Another research shows 40 percent of total revenue comes from online food orders.
4. In the last decade online food ordering has increased 300 percent more than dine-in.
5. In the last 5 years, the revenue of the food delivery industry increased by 204 percent. [Source]  

Conclusion

Starting a ghost kitchen is a very good idea as it is a trendy business. If you are planning to start a ghost kitchen and worried about how much does it cost to start a ghost kitchen then this article will definitely help you sum up the cost amount. Every business has its own challenges, especially when you are new in the industry and just starting or launching the business. At the same time with the right strategy, you can turn your ghost kitchen into a great revenue-generating source in the long run.