As Dining Returns, Restaurants Rethink Ghost Kitchen Strategy

“As delivery stabilizes and consumers return to a post-pandemic lifestyle, C3 believes diners will return to in-person dining, but delivery is not going away,” Vincenzo Rossy, senior director of openings for restaurant and ghost kitchen group C3, told PYMNTS in a recent interview. He went on to say that the company is establishing brick-and-mortar locations, which “are a natural continuation of these brands, and a way to diversify the real estate developments C3 will continue investing in.”

As many restaurant businesses are just starting to get into ghost kitchens — virtual restaurant brands that fulfill digital orders without a consumer-facing physical presence — C3 is doing the converse, parlaying its ghost kitchen success into brick-and-mortar locations, calling attention to the question of what role ghost kitchens will play in the restaurant industry’s post-pandemic future. During the height of the pandemic, ghost kitchens seemed like a no-brainer. As consumers looked for ways to enjoy professionally cooked meals without the contagion concerns associated with in-restaurant dining, these virtual brands proved a cost-effective solution for restaurants to drive sales without expanding their real estate footprint. Now, however, as new cases are on the decline and vaccinations are on the rise, the circumstances that contributed to the proliferation of ghost kitchens are no longer as relevant.

Restaurant giant Brinker International, which owns Chili’s Grill & Bar and Maggiano’s Little Italy, is banking on ghost kitchens’ continued success after the mid-pandemic launch of virtual brand It’s Just Wings.

“We believe takeout holds a lot of potential for us, and now that we’ve invested in the technology and infrastructure to support it, we’re working to increase awareness levels outside the delivery channel,” the company’s CEO and President Wyman Roberts said on a recent call with analysts. “We’ve learned a lot this year with the launch of It’s Just Wings that we’ll leverage when we’re ready for our next virtual brand.”

Others, however, are starting to come up against the limitations of the model. Fast-casual restaurant platform Modern Restaurant Concepts, for instance, tested out ghost kitchens and found that the model was not the magic bullet that some ghost kitchen leaders would have us believe.

“Driving awareness without having an actual physical location in a trade area just proved to be more challenging than we expected, and actual staffing and operations in a small format again proved to be more challenging than we were expecting,” the company’s CEO Rob McColgan told Restaurant Dive. “That’s why you test things.”

“Since [C3 brand] Krispy Rice first launched as a delivery-only concept, we’re excited for customers to build a stronger connection with the brand in person at physical locations later this year,” said Rossy. “Ultimately our goal is to be fun, innovative, and inspiring … We want to provide the masses with delicious food … that creates an emotional connection with our guests.”

This is becoming a popular strategy for leading brands. Many digital-native companies, while continuing to lean heavily on their online presences, have  begun establishing physical locations, much like C3, to offer consumers an omnichannel brand identity. These brick-and-mortar spaces can create an emotional connection and provide consumers a more comprehensible access point to a brand, bolstering that brand’s digital offerings in areas without a physical storefront. As consumers look to re-engage with their in-person routines while maintaining a significant share of their digital ordering behavior, these restaurants that can captivate consumers digitally and physically are poised for post-pandemic success.

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