How Much Does It Cost To Start A Ghost Kitchen?
According to Statista, the global ghost kitchen market will reach 71.4 billion US Dollars by 2027. As the name implies, Ghost kitchens don’t have any physical presence and operate or accept orders via a website or mobile app.
Ghost kitchen, cloud kitchen, virtual restaurant…. And so on, the names may differ, but in reality, their business model is the same. It takes advantage of the customer ordering behavior from dine-in to ordering online and combines it with technology. These virtual restaurants are customers’ first preference for having an off-premise dining experience and enjoying their favorite dishes.
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Since you have landed on this post, let us assume that you are planning or already planned to start a ghost kitchen. The only factor missing for giving the green signal to your business idea is the “Cost to start a ghost kitchen.” So allow us to take you to the conclusion and answer “How much does it cost to start a ghost kitchen?” in the first segment of the post. The lump-sum amount you need to start a ghost kitchen is USD 5000-USD 10,000 depending upon the market and other overhead costs listed below.
For many, a Ghost kitchen or cloud kitchen seems a profitable business idea and an easy way to enter the food industry. And with low setup cost (compared to traditional brick and mortar restaurants), huge profits, and low running up cost, it all makes sense.
So, now you know the lump sum cost of setting up a ghost kitchen. Next in the blog, you are going to read the step-wise distribution of setting up cost, checklist cost, and advanced tech solutions.
Let’s start with the factors that impact the setup cost.
Various Factors That Directly Impact The Setup Cost Of A Cloud Kitchen
While selecting a premise for the ghost kitchen, the restaurant owner has two options – Rent or Buy. Buying a premise in the initial stages is not a good idea, especially if you are planning to manage everything in a predefined budget.
So the only logical option is renting premises for your ghost kitchen and signing the lease documents. The starting cost will vary depending on the rental location, advancement payment, and refundable deposit.
Kitchen Equipment Cost
Whether you plan to rent or buy a space for the cloud kitchen, you have to bear kitchen equipment expenses. You are likely to save more if you rent a restaurant space with pre-fit equipment than filling out an empty premise. Your ghost kitchen will likely need equipment –
- Kitchen Equipment: Ovens, stoves, Ranges and ventilation, fridges and freezers, dishwashers, etc.
- Cooking equipment: Pots, pans, gas & electric grill, cutting boards, knives, pasta cookers, filters, spoons, etc.
- Workspaces: Counters, prep tables, washing equipment, steam tables, cold food tables, etc.
- Bar equipment: Mixers, shakers, ice cube machines, cocktail shakers, etc.
While on the hunt for the make sure you invest in multi-purpose kitchen equipment to save space and money as well. One added advantage with ghost kitchens is that you don’t have to invest in fancy lighting for customers. Put your money where it matters the most, and you can keep a check on the overall starting cost.
Like a restaurant business, you need to hire chefs and train them on your menu. Hiring too few can put your business reputation at risk, while too many working staff adds up the business running cost. The quality of your food will determine the success of your ghost kitchen, so remember quality over quantity.
One positive aspect of ghost kitchens on the overall cost is that there is no need for front desk staff. All you have to focus on is hiring a chef, cleaner, or dishwasher and helping staff workers.
The cost of maintaining inventory changes all the time depending upon the season and time of the produce. If you have visited the local supermarket in the past few years, then you must be well aware of price fluctuations. These factors are not in your control but will surely impact the running of your cloud kitchen in the initial stages.
As a restaurant owner, you can choose a seasonal menu to keep a check on the overall inventory cost. Remember to keep popular dishes on the menu to engage with the existing customers and serve them throughout the year.
Just as every other normal business, you are likely going to need insurance covers such as public liability and employers insurance. If you compare ghost kitchens with other businesses, there are relatively fewer risks involved as you are only serving people virtually and not on your premises.
Working space, cooking equipment, chefs, and working staff are your only liability. Thus it is best to be prepared and ensure every aspect of cloud kitchen with the right business insurance plan.
While running a ghost kitchen, newbies often underestimate how important it is to add utility bills to the setup cost. The size of the premise adds up the lighting and heating cost in a large space, but on the other hand, a small premise will cost less. Internet connection, pest control services, safety checkups, and equipment maintenance will add up to the overall cost. And from the day of opening, it is vital to keep money aside specifically for these utilities.
Building a strong virtual presence is a must for any business, and the same goes for cloud kitchens as well. A ghost kitchen business owner needs to invest in both online and offline marketing to reach their target audience. According to a recent Restaurant Success Report:
- Digital channel sales are on pace to reach 30% of total sales for US restaurants by 2025.
- Digital ordering and delivery have grown 300% faster than dine-in traffic since 2014.
- 45% of consumers say that offering mobile ordering or loyalty programs would encourage them to use online ordering services more often.
- 60% of restaurant operators say that offering delivery has generated incremental sales.
Marketing digitally is vital for a ghost kitchen owner as they aren’t expecting any footfalls and are dependent on online orders alone. A strong social media presence, third-party services, and own restaurant apps are some of the ways to build a strong virtual presence and drive sales. However, social media platforms like Facebook and Instagram are great marketing tools to reach their target audience in the initial stages.
License & Permit Cost
Whether physical or virtual, every restaurant business needs certain types of licenses and permits to start its operations. These legal requirements vary from one place to another; thus, restaurant owners need to check the same with their local regulatory authorities. A normal restaurant business needs licenses such as food service license, liquor license, food handler permit, certificate of occupancy, building health permit, live entertainment license, music license, and others.
This is where ghost kitchen owners have the edge over other restaurant businesses. As you are only servicing customers virtually, there is no need for most licenses and permits. However, it is a great idea to get in touch with your local licensing authorities and complete all legal formalities.
Cost Checklist To Start A Ghost Kitchen
Opening a new ghost kitchen is an exciting business venture that is getting massively popular among restaurant chains and entrepreneurs worldwide. To keep the setting within your budget, we have created this cost checklist to plan everything in advance and have a clear idea of total investment.
Each of these is a key investment to your cloud kitchen setup –
- Premise Cost – Budget $________
- Kitchen Equipment Cost – Budget $________
- Staffing Cost – Budget $________
- Inventory Cost – Budget $________
- Insurance Cost – Budget $________
- Utility Cost – Budget $________
- Marketing Cost – Budget $________
- Licenses and Permit Costs – Budget $________
This checklist will help you during the planning stages and give you an idea about ‘How much it costs to start a ghost kitchen.’ Now you know every aspect related to the cost to start a ghost kitchen, let’s explore how RisingMax is helping or can help your ghost kitchen grow with advanced software solutions.
So, before things start going down South, get in touch with our expert team.
Take advantage of our technology and find the exact Cost Estimation for developing a mobile app for your ghost kitchen. It’s super easy to use our App cost calculator tool.
Also read: How To Start A Food Delivery Business?
How RisingMax Software Solutions Can Help Your Ghost Kitchen Grow?
The technology boom in the food sector paved the way for the cloud kitchen. The restaurant chains and entrepreneurs have adapted to the changing customer behavior from dine-in to delivery and takeout. Running a ghost kitchen is a relatively more profitable and low investment business idea than a traditional brick-and-mortar business. This, combined with the powerful online software solutions offered by RisingMax, is helping many cloud kitchens grow. Here’s what we have to offer for your cloud kitchen business:
We are helping restaurants worldwide to manage their multiple front-of-house and virtual kitchens from a single software. Integrated cloud-based POS makes it easy to manage orders and track every single channel.
Effective Analytics & Reporting
Our customized software solution helps restaurant owners to track and analyze the critical data on their PC, laptop, or mobile app. Keep track of the changing trends, forecasts and seize opportunities to take your business to the next level. View reporting based on location, type, sales, on others from any device.
Efficient Inventory Management
Without a doubt, inventory management is the toughest task whether you are running a restaurant or a virtual kitchen. For the smooth running of the restaurant business, it is vital to keep track of existing stock, forecast ideal stock levels, share shortage alerts, and more. With our integrated software solution, you can manage everything all in one place without any hassle.
Online food ordering apps allow ghost kitchens to reach their target audience and provide them with an efficient way of ordering food. Restaurant business owners can accept orders, improve engagement, and provide an estimated delivery time to customers. These apps effectively boost sales with in-app promotions, offers, ads, and coupons. Develop customized software mobile applications specifically as per your business needs.
Kitchen Display System (KDS)
Cloud kitchen owners can streamline the ordering and food preparation process with an integrated kitchen display system. As soon as the order gets placed with an online food ordering application, KDS will display the same, thus ensuring on-time delivery.
There is no doubt that ghost kitchens or cloud kitchens are an intriguing business idea. This is a great business to enter the food industry from low set up to running cost. Not only start-ups but also restaurant chains invest in this new concept and extend their market reach. Like every other business, these too have their share of challenges while being an excellent source of revenue for the long term.
Need assistance in choosing the right tech for your ghost kitchen or any other customized software solution? Get in touch with our experts today!!
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Ans – Ghost kitchens or cloud kitchens are the newest profitable trend in the food industry. With so many advantages over the traditional brick and mortar businesses, these are becoming investors’ preferred option to enter the food industry and earn profits. Here are some of the advantages of a ghost kitchen:
1. Lower infrastructure cost
3. Low Overhead Cost
4. One-time Investment
5. Capturing a Wider Audience
According to Statista, the global ghost kitchen market will reach 71.4 billion US Dollars by 2027. This alone is enough to emphasize the fact that the ghost kitchen business model is a profitable investment idea. The fact that these exist only virtually lowers the setup and operational cost, meaning more saving and revenue from each sale.