These days, we store our photos, stream our movies, and even run our businesses in the cloud. And more and more often, whether we realize it or not, it’s also where we’re ordering our food.
Introducing cloud kitchens, commercial facilities purpose-built to produce food specifically for delivery.
These commissary kitchens are sometimes also known as ghost kitchens, shared kitchens, or virtual kitchens with the delivery-only food brands operating within them called virtual restaurants.
Food delivery is nothing new, of course. But moving to a delivery-only model has been made possible recently by advances in technology and changes in consumer habits. It offers certain advantages over offering delivery from a traditional brick-and-mortar restaurant.
In this guide, we’ll cover:
- What is a ghost kitchen (aka cloud kitchen)?
- How The Food Corridor powers cloud kitchens with booking and management tools
- How does a cloud kitchen work?
- Ghost kitchen business models
- What are the benefits of cloud kitchens?
- What are the potential challenges with ghost kitchens?
- What’s behind the cloud kitchen trend?
- Who are the biggest players in the cloud kitchen world?
- Cloud kitchen controversies
- Do they work?
- How do get your slice of the cloud kitchen pie
What is a ghost kitchen, or cloud kitchen?
Ghost kitchens are delivery-only restaurants without dining areas for customers and have no physical storefront. Therefore, they operate behind the scenes and out of sight.
Customers order online on food delivery apps (such as Grubhub, Doordash, etc.) or directly from the virtual restaurant via their own app, website, or telephone number. The food is prepared in production kitchens (aka “ghost kitchen”) from which it is collected by drivers and taken to customers. The model allows one or more virtual restaurants to operate from a delivery-optimized kitchen without the overheads of a dining room or front-of-house staff.
Cloud kitchens were getting more hype and garnering huge investments before the pandemic. With restrictions benefiting the model, the concept has become more established with an annual growth rate of 13.78%.
The latest forecast from Statista predicts the total market size to double from 2021 to reach $112.53 billion by 2027. Even more bullish, Euromonitor suggests the market could reach $1 trillion by 2030, benefiting from cheaper, more reliable delivery and taking large chunks out of drive-thru and other takeaway food segments.
It’s certainly a model with extraordinary potential as evidenced by virtual restaurant brand MrBeast Burger which generated $100 million in revenue in 2022.
Before we get into how a cloud kitchen differs from a normal restaurant offering delivery, let’s take a look at where The Food Corridor fits in.
How The Food Corridor powers cloud kitchens with booking and management tools
There are increasing opportunities for food entrepreneurs either looking to start a virtual restaurant or start a commissary kitchen.
At The Food Corridor, we know shared commercial kitchens and the food businesses that operate within them. By observing this trend first-hand, we have been able to help more than 450 clients optimize their shared kitchens to take advantage of this changing market.
This article is a good starting point to learn the cloud kitchen basics. First, we’ll take a look at how a cloud kitchen or ghost kitchen actually works. Then, we will look at the most common delivery-only business models, followed by the pros and cons of running a cloud kitchen.
Finally, we’ll explore the industry trends surrounding shared kitchens and what the future looks like for this new era of food delivery, before pointing out further resources for those looking to set up their own cloud kitchen business.
How does a cloud kitchen work?
Cloud kitchens (often used interchangeably with “ghost kitchens”) are centralized licensed commercial food production facilities where one or two to dozens of restaurants rent space to prepare food for delivery-optimized menu items.
One restaurant may run multiple brands, or virtual restaurants, all operating under one roof, or the kitchen may be run like an incubator, shared by different purveyors.
Picture a large warehouse with numerous stations (mini-restaurants) of stainless steel prep tables, hood vents, stoves, ovens, and sinks, each with its own orders coming in direct from customers.
Cloud kitchen menu items are optimized for ease of production and reliability of food quality upon delivery. Often physically located in out-of-town industrial complexes, ghost kitchens may offer driver parking, driver waiting areas (often with screens to monitor order times) and check-in stations for seamless driver pick-up. All designed to get food out the door and into the customer’s hands as fast as possible.
Cloud kitchens are uniquely tech-enabled. They take advantage of the now ubiquitous food delivery apps on your smartphone, such as UberEats, Grubhub, and DoorDash. In doing so, they use large amounts of data to determine what types of foods to produce for specific neighborhoods and when the demand is likely to be greatest.
For example, hot wings tend to be really popular between 11pm-2am near college campuses. This data is fueling rapid adaptation and optimization, almost in real-time.
As the technology has matured, additional services have emerged to aggregate the various delivery apps into one portal, for easier production of multiple orders and delivery coordination as well as smart food purchasing and production software for decreased food waste and increased per meal unit economics. We have only seen the tip of the iceberg of innovation in this space.
Ghost kitchen business models
There are distinct approaches to running a cloud kitchen, ranging from adding an opportunistic delivery-only brand to an existing restaurant kitchen all the way to running a purpose-built commissary kitchen housing multiple brands.
Let’s take a closer look at how the current cloud kitchen business models differ.
Adding a delivery brand to your existing brick-and-mortar restaurant kitchen
Restaurants that have seen much of their business go online with the rise of delivery apps and many are taking advantage of their existing kitchens by adding delivery-only brands to their in-house offering.
This approach allows them to squeeze the most out of their existing staff, storage, ingredients and kitchen space for extra profit. They are also able to offer orders for pick-up from their physical location.
The delivery-only menu items could be similar to what the restaurant currently offers, or it could be completely different. An Italian restaurant, for example, might offer a delivery-only pizza brand out of the same kitchen, or it could diversify and offer takeaway gyros for delivery or pick-up.
There are potential downsides to this model. First, the kitchen is not purpose-built for delivery, so the delivery orders may be bumped down the list of priorities when the restaurant is busy. It may also impact the experience for diners, having delivery drivers from multiple providers coming in and out and waiting for orders in the restaurant. And things can get messy trying to juggle multiple orders with two sides of the business getting in the way of each other.
Figuring out this work-flow is a real challenge. This can be seen as cloud kitchen version 1.0. There is a step-up to what we really mean by a cloud kitchen…
Running a virtual restaurant (or “ghost restaurant”)
When the consumer-facing side of a kitchen is exclusively in the cloud (ie. when it doesn’t have any physical storefront, food truck, or pick-up location), it is a true cloud kitchen. Dedicated cloud kitchens are able to solve some of the pain points mentioned above by prepping a number of different brands while targeting each brand according to consumer demand.
Each of these brands is known as a virtual restaurant and one business model is to run a delivery-only kitchen housing one or more of these. The virtual concepts look independent to a consumer making an order, but in reality, the food production is happening in an off-the-beaten path warehouse or food factory alongside other virtual restaurants.
To run a virtual restaurant, one needs a licensed brand or concept, commercial kitchen space to rent during operational times, visibility on a delivery app or chef-to-consumer marketplace, and coordinated labor, delivery supplies, and ordering of ingredients. A cloud kitchen provides all of the operational needs of a virtual restaurant.
Running a shared cloud kitchen
Another way to turn a profit from the boom in food delivery services is to operate a cloud kitchen as a business in itself. More and more entrepreneurs are renting kitchen space to multiple third-party brands, acting like a coworking space and incubator for food producers. At The Food Corridor we’ve developed a turn-key shared kitchen management software to help these entrepreneurs.
This model involves acting more like a landlord rather than as a food producer. Although, you may need to become more hands-on in helping to promote and provide services for the brands who rent your kitchen space if you want them to succeed.
Oftentimes this model includes maintaining the property by providing pest control, equipment maintenance, and security services. Others provide additional resources like chemicals, cleaning supplies, smallwares, paper towels, and other services like dishwashing and laundry.
What are the benefits of cloud kitchens for businesses?
Let’s take a look at the benefits compared to the traditional restaurant business model.
Low overheads
One of the biggest challenges for restaurant operators is staffing costs and compliance with ever-stricter labor laws. Cloud kitchens can more easily take advantage of on-demand labor and don’t have to worry about service staff at all.
The barrier for entry is far lower for ghost kitchens compared with traditional restaurants. Ghost kitchens theoretically incur lower costs by eliminating the need for any front-of-house operations, floor space for seating, or high rents for storefronts with high foot traffic in prime locations.
It’s also possible to save on ingredient costs by taking advantage of economies of scale. For example, making larger orders for a number of different delivery-only brands operating from the same kitchen. These savings can be passed onto the consumer to give virtual restaurants a competitive edge over traditional restaurants.
Better efficiency
Using custom-built spaces and optimizing their processes specifically for delivery, ghost kitchens can run very efficiently. If you are operating several brands from one kitchen, you can batch prep ingredients for several different menus and design the kitchen to prioritize the speed of preparation and the process of handing over meals to delivery drivers.
Access to user data and real-time adaptability
Because they are designed with tech in mind, cloud kitchens can optimize processes, ordering, and staff scheduling based on consumer behavior. The menu can also be adapted to suit demand and increase margins, optimizing the model over time.
Not being tied to a brick and mortar location means you can change the menu or operating times to suit business needs without as much of an impact on customer satisfaction. This can also help to decrease food waste, as you can be smarter with ordering and prep decisions.
In fact, virtual restaurants are so adaptable, you can even launch a brand just for a season. For instance, you could launch a healthy salad brand for the summer and a hearty poutine concept for the winter months, allowing you to take advantage of the seasonal demand for each type of food without enduring any downturn.
Digital brand awareness without high marketing spend
Virtual restaurant brands can gain quick exposure through delivery apps, rather than having to market themselves. Although a new virtual restaurant concept will have to pay for visibility, which is part of the delivery app business model, this can still work out cheaper overall, especially if you are creative about building your brand.
What are the potential challenges with ghost kitchens?
With any new technology, there are going to be certain drawbacks along with the benefits. Here are some of the potential challenges that come with running a ghost kitchen.
Limited brand visibility
With no brick and mortar presence, it can be tough for virtual restaurants to get their brand noticed. Regular restaurants get noticed as people walk past them every day, but a virtual brand has to work harder to be seen and get visibility online.
It’s challenging to build loyalty without a recognized brand so virtual restaurants must do everything they can to build a digital brand. Online advertising and social media marketing are two ways you can build your brand and get visibility online.
No direct customer interaction
WIthout a brick and mortar restaurant, restaurants operating from ghost kitchens lack the human interaction that so many people love about restaurants.
Being a restaurant regular and getting a warm welcome is a big reason why people come back time and again to their favorite spots.
Virtual restaurants also miss out on the direct feedback from customers which helps them grow and improve their food and service. Virtual brands must rely on online reviews which don’t always offer the most constructive criticism.
Working with on-demand staff
Running a cloud kitchen, you may be more inclined to hire on-demand staff to control margins. While this can save on your wage bill, it comes with some caveats. Since staff won’t be interacting with guests or getting tips, it could feel more like working in a factory than a hospitality job. Of course, you can try to boost morale and motivate staff in other ways, but it may be more difficult to build a brand culture if you are not attracting the top foodservice talent.
Hiring on-demand staff also carries risks in terms of food safety and consistency, both vital to successful food businesses. Can you be sure these workers have adequate training? If you want to invest in training, it makes more sense to hire permanent staff members. There is a trade-off here that you will have to work on to try to figure out the best balance between on-demand workers and permanent staff.
Reliance on third-party delivery apps
For all the benefits of using delivery apps, it’s never a good business decision to rely on one source of customers. The high fees can also eat into your margins and you have little control over last-mile delivery which can affect the quality of the food and put your reputation at risk.
One way to counter this is to offer your own delivery service, but this comes with higher marketing costs and logistical complications. It may make sense for large shared kitchens where multiple brands can share the burden.
Competing in a crowded digital marketplace
With no physical location, cloud kitchens don’t benefit from walk-in traffic. You are competing exclusively in a crowded online marketplace. The good news is, if your product is good enough, it should rise to the top thanks to social proof like good reviews and word-of-mouth referrals.
But you may find yourself having to pay for visibility on these platforms. That is, after all, how they make their money. You should be aware of this potential added cost, especially at the beginning, before you’re able to develop your own loyal following.
As the popularity of ghost kitchens continues to grow, the market may become oversaturated with competition, making it even harder for new businesses to stand out and succeed.
Food quality and food safety
With a delivery-only brand, your reputation relies on the food getting to the customer in perfect condition. Getting this right is the only way to get repeat orders. There are significant challenges in keeping the product at proper temperatures so it arrives as intended to the customer. Not just at the right temperature for them to best enjoy it but also to ensure it is safe to eat.
This means testing out different types of packaging and potentially investing in containers that are more expensive and harder to source. This is a cost that can quickly add up when you are pumping out a high volume of orders, but it is a vital consideration. Soggy, luke warm food will guarantee failure. And one food-borne illness or outbreak and your brand is toast.
Local regulatory and licensing challenges
Food production is largely regulated at the local level by your health department. Since cloud kitchens are so new, regulators may be unfamiliar with the concept. They may start hitting you with unexpected requirements, or start treating you like a full-service restaurant.
Agents will want to see that food is being safely stored, produced, packaged and delivered, which may require the production of HACCP and other production plans for review. Also, having multiple tenants producing under one roof increases complexity of who is licensed to produce and distribute food. You must be prepared to go the extra mile in showing them that your operation is safe and responsible.
On top of this, some cities and municipalities may have zoning or licensing regulations that could limit the expansion of ghost kitchens, which could pose a risk to businesses operating and looking to expand in these areas.
What’s behind the cloud kitchen trend?
Cloud kitchens started popping up in the early 2010s in response to increased demand for high-quality meal delivery and rising rents in city center locations. Green Summit Group opened one of the first cloud kitchens in New York City in 2013. Many more start-ups have followed suit and cloud kitchens are becoming big business, with venture capital pouring into start-ups specifically aiming to take advantage of this new market.
The trend is driven by the coming of age of millennials with disposable income demanding digital, mobile-friendly solutions. And this will only get more pronounced as the next generation, who have grown-up with the internet and smartphones, enters the marketplace (sorry boomers). Looking further forward, advances in kitchen automation, drone delivery, and the continued growth of the gig economy look to give cloud kitchens more of an advantage by lowering their costs even further.
Let’s take a closer look at the factors affecting the trend.
Real estate prices in urban areas
As urban real estate prices continue their upward trend, delivery-only kitchens are able to take advantage of their ‘virtual’ nature. The only restriction on their location is that they must be within a realistic delivery distance of enough hungry customers.
Companies like Kitchen United are focussing on light industrial areas outside dense urban centers but near enough to satisfy the demand of residential areas. Large warehouses at low rents are the perfect venues to house expansive shared kitchens, if you have the capital to outfit them. Using demand data collected from delivery apps, they are able to determine the best locations to serve particular neighborhoods.
Increase in demand for delivery
Food delivery is set to grow to a $350 billion industry in 2023, due to shifting changes in behavior, with nearly half of consumers preferring to eat at home. With 81 million monthly users, Uber Eats is currently the most popular food delivery app. Consumers are increasingly willing to pay a significant amount for the convenience of having their food delivered.
Increase in on-demand contract workers
With the gig or sharing economy in full swing and expected to hit $335 billion by 2025, we’ve seen an increase in on-demand contract workers. The number of people working as ride-share drivers, delivery drivers, and remote workers is on the rise, offering low-cost labor with no strings attached from an employer’s point of view.
Covid-19 pandemic restrictions
The pandemic restrictions in place on and off throughout 2020 and 2021 gave a boost to food delivery and ghost kitchens. In fact, many restaurants essentially transformed into ghost kitchens and transitioned to offer delivery in order to stay in business and get food to people stuck in their homes.
This led to more technology being created to solve the problems ghost kitchens face and for the public to become more comfortable ordering food online without being able to see the physical restaurant.
After restrictions were lifted, there was certainly an appetite for returning to dining out and getting the full restaurant experience. But equally, many people continued to be wary of crowds and the infrastructure and desire for food delivery and online ordering established, people continue to be happy to order from delivery-only ghost kitchens online.
Emerging technologies decrease the cost of delivery
Looking further forward, drone delivery and kitchen automation are set to disrupt the standard restaurant model further. Robot kitchens are on the rise and drone delivery is poised to break through, with only regional regulations standing in its way.
Tech-minded shared kitchens are perfectly positioned to take advantage of these advances. They are much more able and likely to adapt quickly to new technology, giving them a further edge over storefront restaurants.
Who are the biggest players in the cloud kitchen world?
As cloud kitchens have gained momentum in the collective consciousness, money has started to flow in through early-stage investment. Cloud kitchen start-ups are seeing the potential and investors are jumping on board. A number of high-profile venture capitalists have emerged as the key players in the market. These investors have high hopes of making serious returns by getting in early.
An initial flurry of investment in delivery-only brands proved unprofitable in many cases. Munchery, ($125.4 million) Sprig, ($56.7 million) and SpoonRocket ($13 million) all went under after raising substantial VC money due to issues of unit economics and strains on managing the supply chain. However, investment in shared kitchen models is proving to be more sustainable in the longer term.
Renting to independent operators who manage and optimize their own methods of production could be key, Momofuku founder David Changs’s Ando brand was acquired by UberEats after raising $7 million.
Cloud kitchens are not immune to controversy. We’ll also explore the darker side of ghost kitchens and look at the brands making news for the wrong reasons.
CloudKitchens
Uber founder and former chief executive Travis Kalanick, who resigned from the company in June 2017 amid controversy, has returned to the food delivery market through his new investment fund, 10100, or ’ten one hundred’.
Well aware of the potential of food delivery and cloud kitchens, 10100 has invested $150 million into City Storage Systems, which will focus on undervalued real estate. The holding company has two businesses, CloudKitchens and CloudRetail, the former opening large-scale shared kitchens with the aim of taking advantage of the delivery-only boom.
With Microsoft backing CloudKitchens and Kalanick’s experience and connections at Uber, things look promising for the start-up. But it has run into some issues and accusations along the way.
Eater reports that CloudKitchens sold itself as a low-cost, low-risk way to start a restaurant but failed to live up to the hype in a number of ways, from a lack of basic facilities like bathrooms and working sinks, to problems taking orders to safety and security issues.
With rents as high as $10,000 per month plus commissions on each order, many budding restaurateurs felt they were misled and mistreated by the company they had trusted and relied on to get started.
Kitchen United
In a major industry shift in November 2023, Kitchen United has shut down all its physical locations, including eight in-store ghost kitchens operated in partnership with Kroger. This move marks a significant departure from the company’s previous strategy, which had emphasized retail partnerships as a core growth driver. Despite securing $100 million in Series C funding in 2022 and setting ambitious expansion goals of reaching 500 locations, the company has decided to pivot entirely toward its proprietary software platform instead.
The closures follow months of transition, during which Kitchen United transferred some of its locations to other operators, such as Nimbus Kitchens in New York and ChefSuite in Austin. This shift reflects broader market challenges faced by the ghost kitchen industry, as companies navigate the complexities of real estate, operational efficiency, and shifting consumer demand for food delivery.
By moving away from operating physical locations, Kitchen United is betting on the long-term viability of its technology solutions, positioning itself as a software provider rather than a ghost kitchen operator. Whether this pivot will allow Kitchen United to maintain a competitive edge in the evolving foodservice landscape remains to be seen.
All Day Kitchens (formerly Virtual Kitchen Co)
As of February 2025, All Day Kitchens continues to operate as a food technology and logistics platform, partnering with small and independent restaurants to expand their reach through a network of satellite kitchens. These facilities enable restaurants to offer delivery and pickup services with minimal upfront investment, distinguishing All Day Kitchens from traditional ghost kitchen models that focus solely on delivery.
Founded in 2018 by former Uber executives Ken Chong and Matt Sawchuck, the company has raised over $102 million in funding to date. This includes a $65 million Series C round in October 2021, led by Lightspeed Venture Partners, with participation from existing investors such as Andreessen Horowitz and Founders Fund. The funds have been utilized for research and development, staffing, and market expansion.
All Day Kitchens operates over 15 locations across the San Francisco Bay Area and Chicago, with plans to expand into Texas and Southern California. The platform provides culinary consulting, menu customization for delivery, and operational support, allowing customers to order from multiple restaurants in a single transaction. This approach has led to a fourfold increase in restaurant partners over a 12-month period and an 18-fold revenue growth over 18 months.
DoorDash Kitchens
DoorDash was the first delivery platform to make a physical move in the cloud kitchen market. The San Francisco-based company has opened a kitchen in nearby Redwood City, aimed at helping restaurant brands, including Chick-fil-A, scale the delivery side of their businesses.
DoorDash Kitchens has continued evolving its shared kitchen model, expanding its offerings beyond delivery-only operations. In 2022, the company opened a Brooklyn location with a dine-in option—its first move toward hybrid kitchen models. Additionally, DoorDash introduced “DoorDash Kitchens Full Service,“ a model where the company manages kitchen operations, staffing, and ingredient sourcing on behalf of restaurant partners.
Despite its success, DoorDash faces challenges, including a recent lawsuit from Uber Technologies, which alleges anticompetitive practices. DoorDash has denied these claims.
As the food delivery and ghost kitchen landscape continues to shift, DoorDash Kitchens is positioning itself as a leader through hybrid models, operational support for restaurant brands, and continued market expansion.
MrBeast Burger and Virtual Dining Concepts
MrBeast Burger, launched in 2020 by YouTube star Jimmy Donaldson (MrBeast) in partnership with Virtual Dining Concepts (VDC), quickly became one of the most successful virtual restaurant brands. However, by mid-2023, serious quality control issues and legal disputes overshadowed its initial success.
Donaldson sued VDC in 2023, alleging that the company prioritized rapid expansion over food quality, damaging his brand. VDC countered with a $100 million lawsuit, accusing MrBeast of breaching their contract. The case is still ongoing in U.S. District Court, and its resolution could set a major precedent for influencer-led business ventures in the virtual dining space.
Despite these challenges, Donaldson remains a dominant entrepreneur. He is currently exploring a multi-billion-dollar investment round to fund his growing portfolio, including his snack brand Feastables and other media projects.
The fallout from MrBeast Burger highlights the risks of scaling too quickly in the ghost kitchen industry and the potential pitfalls of celebrity-backed restaurant brands when operational control is lacking.
NextBite
Founded in 2017, Nextbite creates and manages virtual brands that can run out of existing kitchens and ghost kitchens. The company was originally a product of the order management platform Ordermark, but as it pivoted to focus on cloud kitchens and virtual brands, Nextbite took over as the trading name for both companies.
In June 2023, Nextbite sold its online order management platform, Ordermark, to Indian software company UrbanPiper. Shortly thereafter, entrepreneur Sam Nazarian acquired Nextbite’s virtual restaurant business, integrating it into his SBE hospitality group. This acquisition resulted in the relocation of Nextbite’s operations to Miami and the rebranding of the company as “Nextbite by SBE.”
WowBao
Chicago-based WowBao grew from a handful of brick-and-mortar locations to being served from over 600 locations as a virtual brand. The success story of the multi-award-winning bao bun and dumpling restaurant shows the immense scalability of a virtual brand that can be operated out of existing kitchens or purpose-built cloud kitchens anywhere.
After making a move into Canada, WowBao is now eyeing opportunities for an NFT-based loyalty program as it continues to innovate and grow.
Franklin Junction
Franklin Junction continues to position itself as a leader in the virtual restaurant space, leveraging its Host Kitchen® model to help restaurants maximize underutilized kitchen space and expand their brands.
In January 2024, Franklin Junction announced an exclusive partnership with Denny’s, bringing its virtual restaurant concepts to at least 250 Denny’s locations across the U.S. This strategic move enhances Denny’s off-premise sales, allowing the brand to generate new revenue streams without adding physical locations.
The company has also gained industry recognition, being named to Fast Company’s list of the World’s Most Innovative Companies for 2023. This honor highlights Franklin Junction’s commitment to cutting-edge technology, including its AI-powered digital food hall, which allows customers to order from multiple restaurant brands in a single transaction.
Cloud kitchen controversies
If you have made it this far, you probably learned that cloud kitchens are not without controversies. Not everyone thinks the model is good for the restaurant industry for a number of reasons.
Restaurant displacement
Some traditional restaurant owners argue that ghost kitchens are taking away customers and revenue from brick-and-mortar establishments, leading to potential job losses and business closures.
Quality control and transparency
Since ghost kitchens primarily focus on delivery-only meals, there are concerns that the food quality may suffer as there is no opportunity for customers to see how the food is prepared or cooked. As brands are easy to quickly launch, they can just as quickly disappear to avoid scrutiny if there is a problem.
Food safety
With multiple restaurants and dozens of staff operating within a shared kitchen space, there are concerns about cross-contamination and food safety. This issue is especially prevalent post-pandemic when maintaining a clean and safe environment is top of mind.
Real estate implications
Ghost kitchens require large industrial spaces, which can drive up the price of real estate in certain areas. This can lead to gentrification and displacement of low-income communities.
Questionable labor practices
There have been concerns about labor practices within ghost kitchens, including low wages and lack of benefits for workers. Some workers have also reported poor working conditions and long hours.
The controversies surrounding ghost kitchens are not too surprising given how new the model is. What they really highlight is the need for regulation and oversight to ensure that ghost kitchens operate safely and ethically.
The Challenges of the Ghost Kitchen Model
While ghost kitchens have been hailed as the future of food delivery, the reality is more complex. The success of a shared kitchen space often depends on the diversity of its renters, with different types of food businesses utilizing the space at different times. Traditional shared kitchens thrive on this balance—bakers working early mornings, CPG brands using standard business hours, and caterers and food trucks utilizing the weekends and evenings. This variety maximizes kitchen utilization, ensuring space is rented out at all hours. Ghost kitchens, on the other hand, often cater to a narrower segment of food entrepreneurs—those focused solely on delivery. Without a diverse set of users, kitchen utilization can drop outside peak delivery times, leading to inefficiencies and higher costs.
Beyond operational challenges, food quality can be a significant concern. With delivery-focused brands prioritizing efficiency over experience, the end product can suffer. Many ghost kitchen operators rely on pre-made or frozen ingredients to streamline production, raising questions about freshness and authenticity. Unlike a traditional restaurant where a chef’s reputation is built on in-person dining experiences, virtual brands can lack accountability. Consumers may find themselves questioning where their food is actually coming from—especially when one kitchen is producing multiple brands under different names. This lack of transparency can erode trust, particularly when a single ghost kitchen is running several low-effort, unproven concepts.
Additionally, customer skepticism remains a major hurdle. While some consumers have embraced ghost kitchens, others are wary of ordering from brands that have no physical presence. The absence of a storefront or a visible kitchen makes it difficult to establish loyalty, and without in-person interactions, restaurants lose out on the valuable customer relationships that drive repeat business.
Ultimately, while the ghost kitchen model has potential, it is far from a guaranteed success. It requires careful execution, strong brand-building, and a clear value proposition to win over both consumers and kitchen operators. Without these, the model risks becoming a revolving door of short-lived brands struggling to stand out in an increasingly crowded marketplace.
How to get your slice of the cloud kitchen pie
If all this talk of cloud kitchens has inspired you (not sure why it would?) to start searching for industrial warehouses for sale in your local light industrial zone, you’re in the right place. But you may want to rethink your model.
Run your own shared kitchen
As we’ve seen, there are many advantages to running your own shared kitchen. The Food Corridor (TFC) offers software specifically designed to help entrepreneurs with the day-to-day running of their shared kitchen, making scheduling, billing, and member management easy and stress-free.
Trusted by an engaged community of entrepreneurs, TFC offers step-by-step guides on how to start your business and resources for every stage of the journey. Join the community today and make your dream of running a shared kitchen a reality.
Start a delivery-only brand out of a ghost kitchen
If you’re thinking of setting up a delivery-only food brand, head over to The Kitchen Door and type in your city or zip code. You will be given a list of rentable shared kitchens in your area, with all the details you need to find out more and get in touch.
The Kitchen Door, has facilitated thousands of new connections between food entrepreneurs looking for a commercial kitchen to expand their business and existing commercial kitchens looking to rent out unused space. And we’re seeing increased interest on both sides.
We’ve also noticed that food entrepreneurs are increasingly seeking commercial kitchen space to launch their own virtual restaurant concepts and shared kitchens in our network are responding to the demand by offering additional services to maximize the efficiency and success of virtual restaurant tenants.
Our mission is to nurture this community and continue to connect supply with demand while also helping shared kitchens run their businesses more efficiently by providing them with software purpose-built for them.
Whether you’re thinking of starting a virtual restaurant or starting a commissary kitchen, we’ve laid out all the steps to get you going in this blog along with plenty of industry resources and free listings on The Kitchen Door to connect food businesses with commercial kitchen space for rent.
