The points the article make come close to my gripe with ghost kitchens but don't quite cover it:
they feel like scams and when I've accidentally ordered from a ghost kitchen it was by design a terrible experience.
I'm talking like, you order a 15$ main that is called "creamy pasta with prosicutto" and when it shows up its buttered spaghetti with a couple stamp-sized bits of ham. Ordering from actual restaurants come with some of the downsides the article assigns to ghost kitchens, like cold food and weird presentation, but ghost kitchens never seemed to reach the bar of "food someone would actually order, even if it was teleported to them instantly".
It's interesting to contrast to food trucks that are another method for more profitable places by reducing costs.
Food trucks seem to be pretty popular and work well.
Perhaps the difference is that food trucks are all about establishing a reputation for good cheap food that you can verify where as ghost kitchens wind up being the opposite.
Food trucks are also usually founded by a person with a vision and passion. Someone who wants to do something completely different with their life, a cook who thinks they have what it takes to go out on their own, etc, and that can be something that goes beyond even the reputational incentives.
Certainly not always, but I'd wager far more commonly than a generic ghost kitchen out of a shared kitchen with an Applebee's or out of the back of a cheap warehouse district.
A ghost kitchen is like an LLM or an ephemeral container, or any stateless instance. Even if you could impart some feedback, it would be gone by the next time you place an order.
Food trucks seem like they would involve more cost than a "ghost kitchen" and the branding on the truck especially will follow you around. If a ghost kitchen sucks, there is no cost in changing their name and maybe even their menu and continuing their bullshit. But there are real costs in re-branding and vinyling your food truck and food trucks deal with face to face business.
I mean they basically are drive by scams. They just flood the market with a million listings for the same kitchen, use some stock photos (AI generated now). And if you get bad reviews or food poisoning complaints you delete the business and list up 5 more.
They also scammed the operators. It was an Uber-esque ploy.
What actually got sold was an uber-esque scam: these kitchens were rented to tiny operators who, instead of opening their own restaurants, opened in a ghost kitchen facility. I read an in-depth article that showcased the extremely high failure rate of the operators. They were sold indiscriminately to anyone who could be suckered into doing it, with no thought of whether the "restaurant" was likely to succeed. The parallels to driving for Uber are obvious.
I actually suspect that ghost kitchens would work fine, but it would be one company operating them and carefully selecting products that sell and controlling for quality.
It always felt like a weird business model to me. If you lack a physical presence, the only thing you have over a decent prepared section at the grocery store is variety (and freshness, at least in theory). You don't even have convenience on your side since Instacart exists, and because the lower rent was predicated on leasing in more remote areas, the food is even less likely to be warm by the time it arrives than if you got groceries delivered.
And for the providers of the ghost kitchens, while they are selling a shovel of sorts, their bet was there would be a continuing market for their shovels. That space isn't likely to be used for any other restaurants because of the lack of foot traffic, but it also isn't likely to be used in large-scale food production because the facilities usually aren't large enough to be re-tooled for anything beyond catering companies. Commercial kitchen build-outs are not cheap, so investing in large scale small kitchen spaces is a risky bet.
I mean,they could get better bags that keep the food warm,or a "heating spot" downtown to heat the food,but it's prepared in the kitchen? I don't see how it's impossible,just nobody willing to invest in the Business model that's not a scam
I think inequality is part of the story here too, even with restaurants generally. 60 years ago, it was reasonable to save some money at your union factory job to open a restaurant. If it didn't work out, you could go back to the plant and finish out your 30 years and retire with a full pension.
Now, I'm a top decile professional and would basically have to bet my whole net worth, including my retirement money, if I wanted to open a real restaurant. No wonder chain restaurants rule the day and the only thing interesting happening in food in most of the country are in food trucks. Ghost kitchens, at least a few years ago, seemed like a logical next step after the food truck: an even less capital-intensive way to get into the food service business.
The same forces will push someone who has this ambition to go the ghost kitchen route. Hopefully failing this way instead of with a fully staffed restaurant has saved at least one family from total ruin (downgraded instead to partial ruin).
Yup, this is a crucial detail that the article sort of assumes the reader already knows: the companies being discussed are not actually cooking the food. They are ghost kitchen facility providers. Like WeWork for takeout/delivery cooks. And, surprise: they don’t print money any better than WeWork did.
>>"food someone would actually order, even if it was teleported to them instantly".
The article states
>>Quality control became impossible. Shared kitchen facilities meant that one staff member prepared food for multiple brands simultaneously. No ownership. No accountability. Just assembly-line cooking with zero connection to customers.
I'm not sure if it was impossible or if management never actually prioritized it, not bothering to understand what an actual customer would want. How much of it is the stupid management assumption that they can "just make a dish generally meeting description X on the menu" and deliver that and it'll be ok? «— Real question, did mgt fail at the product specification level, or was QC just as a practical matter, impossible?
On the economics, it really seems 30% for delivery is insane. It seems that same 30% might exceed the cost of the physical restaurant. And when it adds a 15-45min delay while homogenizing and cooling the meal, it seems an impossible problem. Maybe if the 30% transported it instantly and losslessly...
Probably good this soulless idea will die. Too bad so much perfectly good capital was squandered on it instead of better ideas
It really seems like it should be possible, but you have to put in the effort to develop recipes, buy minimum quality ingredients, and train the staff. Old school diners, especially Greek diners in the NYC area, used to be famous for their wide-ranging menus—burgers, spaghetti, spanakopita, chopped liver, etc.—and the food was generally pretty good. Cheesecake Factory has built something similar on a national level, and workplace cafeterias often aren't bad either, certainly not at the level of a ghost kitchen.
I think tech founders often underestimate what it takes to build a food business and what the margins are like and then start to cut corners to make the business viable.
Greek diners in NYC are a miracle to me. The food isn't the greatest, but it's good enough, and the huge diversity of menu items (usually made by one guy in the back), served for decades, is enough to make me wonder if there's something I'm not understanding about the business -- like secretly they're running 50% gross margins, or the meat is all rat.
Land and rent used to be cheaper, and a lot of people come through the door. The margins on a lot of diner food, like eggs, ground beef, and coffee and fried potatoes, were at least historically fairly high. People in NYC also historically ate out a lot.
I think longtime NYC restaurant owners often love being a community hub, particularly if they’re first generation Americans, so they’re not thinking of how to squeeze the customers or follow the latest fads.
A lot of stereotypical “ethnically owned” businesses in NYC also have their own supply chains. It’s very possible they are or were buying from Greek-American wholesalers who are effectively buying in bulk for diners across the city.
My impression in general is also that people who’ve worked in the NYC food business for a while in general know their preferred vendors to call for any particular thing, from whole chickens to pest control, and that if you tried to compete with them by finding vendors on Yelp or whatever without those relationships you would be at a complete disadvantage.
> I think tech founders often underestimate what it takes to build a food business and what the margins are like and then start to cut corners to make the business viable.
Is that just tech founders, or American business culture, generally? Seems like everything's getting corners cut to the maximum extent possible.
> Just assembly-line cooking with zero connection to customers.
And this is how it works in many (not all) American airports. Local restaurants put their brands on the signs, but the food is prepared by probationary employees of Acme Baggage Displacement And Cafeteria Management Corp.
I like airport newsstands because they remind me a tiny bit of my rare trips downtown as a kid, when there were one or two places still open that sold magazines like The Atlantic and The Economist. Such a delight at the time.
Shops that run 100 different brand names usually do a spectrum of quality and pricing ranging from great quality and great prices to high prices with terrible quality. You might for example put a very similar item (if not exactly the same) on two different menu cards where customer B gets twice as much for half the price. B is the stability of the project while A is a disposable brand. If you can corner the market A conditions the customer to think B is a great deal.
A business trading on a name without some kind of sunk cost that incentivizes them to protect that name should be a red flag for consumers. It's the same thing that's made Amazon a surreal morass of brands like DYBOOP and BIPLOZA. If a ghost kitchen can shut down and reopen with a different name just by clicking a few buttons and not actually have to move their kitchen or anything, the whole concept is totally untrustworthy.
There was an interesting local example of a place that started out trying to be more or less a ghost kitchen but wound up being forced by success to become a real eatery. It had the endearingly utilitarian name "Pizza Online Company". They had no phone nor any in-house delivery system. You could order online or in-person to pick up, or via GrubHub/Doordash/etc., and that was it. Initially they had no eating area, just a tiny space big enough for three or four people to stand and wait for their orders.
But the pizza wasn't bad and it was (at least at first) remarkably cheap. It undercut Domino's prices by at least 25% while being much better quality. The place became popular. And sure enough when a place becomes popular people start wanting to go there. They added a small counter with stools to the waiting area. They didn't have space for more than that inside, but when it wasn't enough they took over some of the strip-mall walkway outside the front door and made it into a patio with seating for 8-10 people.
Unfortunately it closed abruptly a couple years ago, apparently due to some kind of family emergency.
I completely agree with your point about food quality being borne from the economic incentive of protecting an initial investment.
However, I always thought the DYBOOPs and BIPLOZAs of this world existed on Amazon because of a glut of Chinese manufacturing expertise outpacing any ability to do proper branding and marketing. My QSMYYUYE grill stove, CYEER steel plates, and SUNYAY telescopic bug sprayer are all well made and reasonably priced commodity objects.
It's certainly possible that some of those weird brands are of decent quality. My point is just that, if they're not, they'll just change the name from DYBOOP to CYEER and keep selling the same thing. There's no reputation to uphold.
> However, I always thought the DYBOOPs and BIPLOZAs of this world existed on Amazon because of a glut of Chinese manufacturing expertise outpacing any ability to do proper branding and marketing.
IIRC, if you have a "brand name" it unlocks some desirable features in the Amazon Seller experience.
The DYBOOPs and BIPLOZAs are almost always just heavily marked-up items you can buy on AliExpress much cheaper if you're willing to wait a week or two.
something like 63% of sellers on Amazon are Chinese front companies. They often use random strings of letters for brand names to easily register trademarks. This practice allows them to bypass stricter naming regulations and flood the market with products that can be difficult to distinguish from one another.
to be clear, much of this is an Amazon rule, and branding is meaningless if you sponsor items to be searched; most people DGAF about things like plastic containers or cellphone cases and are happy to buy whatever
We had a very similar story in chicago. Someone started making pizza out of a ghost kitchen and eventually got so popular they opened a storefront location. I think they might have 2 now. millys pizza in the pan
I don't know if "ghost kitchens are dying" means much. The commercial model of a ghost kitchen as an assembly line for low quality low price high throughput food delivered by expensive couriers on demand is dying, yes, and good riddance.
However, when you think about it, a big chunk of the catering industry operates as a ghost kitchen. It's well known that caterers go bankrupt at lower rates than restaurants. We had a local success story called 1800 LASAGNA where a man cooked and delivered exactly one item to customers and met with a lot of success. He then opened a restaurant, which is now in voluntary administration because it was losing so much money. Catering works.
I can't help but feel this is one of those "tech industry reinvents the bus" stories, where ghost kitchens lost because catering (and low-seating restaurants like pizza joints) already existed and had a massive head start. It's not that the core idea was bad: the core idea was great, it was just already out there.
I suspect that the problem is the tech industry itself; the companies that were supposed to cut out the expensive, bloated middleman became expensive bloated middlemen themselves, which is why when you order a Starbucks Frappe and a lemon cake on Uber Eats you pay $8 to Starbucks, $7 to Uber, and $3 to the driver. Meanwhile, all that caterer has to do is answer the phone; substantially more lean.
> Meanwhile, all that caterer has to do is answer the phone; substantially more lean.
Real innovation will come when it becomes genuinely feasible for the caterer to run their own server, with some FOSS ordering system, such that there is no middle-man anymore who can jack up prices, only utility companies.
I don't mean this cynically; but basically what you are suggesting is that some group of volunteers spend their time and effort to build out a substantial part of the business's infrastructure for free.
So basically, as long as they can get the critical business software part for free, the business becomes feasible.
The short answer is "this probably won't happen". FOSS isn't some magic wand that makes software appear.
And if there was someone determined to make this their pet project, they would need to work closely with a kitchen to understand their requirements. It would likely work well for that kitchen (until the free labor went off and got a real job) but would need a lot more work to become "generic" to the point where a second kitchen could use it. And more work for a third.
Building business systems, and keeping them maintained as the world changes, is a huge amount of work. (I've been building them for 35 years.) It's really not feasible to do it in "spare time".
I think you'd be surprised. Especially for restaurants - there are mom-and-pop operations with smart kids who want to put together a project to make their parents' lives easier. Money isn't the only motivator in life and I'm not convinced you couldn't find someone to donate the capex needed to get an MVP off the ground. https://github.com/topics/food-ordering-system has 537 repositories, I don't have the time deep dive into them and whether any of them are any good, but I think it's evidence enough that FOSS can provide an MVP at least.
Yes, that's a different question from whether the opex is sustainable without a business selling support. And I think the question there is how much can be offloaded to utility-style SaaS like Stripe (i.e. handle changes in taxes) and serverless infrastructure to keep the opex of the FOSS solution itself low. I get the impression that it's hypothetically doable, but the proverbial kids of mom-and-pop store parents don't have the experience or guidance to know how to set that up.
You got it backwards. You're assuming that what is needed is the perfect ordering system that needs to accommodate any theoretical restaurant, when in reality a janky email and WhatsApp based ordering system with payment links where the restaurant and customers adapt to the standardized software is more than good enough.
> basically what you are suggesting is that some group of volunteers spend their time and effort to build out a substantial part of the business's infrastructure for free.
I don't buy this. How many businesses are we talking about? Ten thousand? Twenty thousand? So each business commits $200 to $400 and you have a multi-million dollar OSS enterprise solution. For a few million, a small team could easily build a much better ordering system than the utter garbage that's out there now, including setting menus and prices, handling payment, route planning, etc. Ordering online is often completely broken. A bit of collective action solves lots of problems. Yes, each business still has to cover some infra costs, unless that's also collectivized.
Or -- and I know this is absolute blasphemy to say -- the government could create this software. We could call it, I don't know, say, the "U.S. Digital Service" and it could use a tiny amount of tax money to make software that benefits entire industries or huge swaths of people and give it out for free. We could be greasing the wheels of commerce across the entire United States with just a little investment in "greater good" software, but the fucking billionaire psychopath asshole caste wouldn't be able to get their rent from it, so we have to burn it to the fucking ground.
This doesn't have to be an actual problem. We could easily solve it, but we have to have the balls to tell billionaires they're no longer allowed to loot the entire country. Everyone -- yes, you too, reader -- everyone vastly under-estimates how good society could be if it weren't for those fucking little parasites that have to loot and extract rent from everything.
>> I don't buy this. How many businesses are we talking about? Ten thousand? Twenty thousand? So each business commits $200 to $400 and you have a multi-million dollar OSS enterprise
You're describing commercial software, not FOSS. and yes if you have 10000 customers paying $200 a year, you have a very successful business.
Of course it may take you a few minutes to convince 10000 businesses to pony up the cash, but that's the easy part right?
Asimov was fond of the trope that the future was starved of protein, and even america had become a land where people had to eat communally, and eat significant amounts of manufactured "zymoveal" protein, because real meat was scarce under population/land pressure. It was clear that "people didn't like it"
Oddly, "cafeteria" cooking has sometimes been the best food I've eaten at the time. It very much depends on the circumstances and budget and your expectations. I've eaten like this in Leeds, London, Rome, France, Beijing. And not always in universities, the experience extends to factories, railways and even just the streetscape.
The FSU had a preference for ground meat and sausages at a state level because it was easier to ensure as much as possible of the meat inputs became food outputs. [This is wrong: they didn't] The Khrushchev flats had communal kitchens. They were universally hated I believe.
Ghost kitchens failed on lack of regulation and motivation to be the best they could be. There was never an intention to be "Jamie Oliver's ghost kitchen"
Re-intermediating consumers away from direct food carries on. Uber eats and Panda are delivering food from restaurants all around me, and one of them is a chinese take-away eponymously called "A Chinese Take Away" -I think it's a hack on the search engine carried forward. I've eaten their floating market soup in the shop, it's fine. Most of their trade is carry-out.
> Oddly, "cafeteria" cooking has sometimes been the best food I've eaten at the time.
Sometimes the lack of choice and lack of responsibility are relieving. It may not be the best meal, but you didn't really have much choice and you didn't have to get ingredients and make it yourself. That can go a long way.
It would be really nice to have a tag on HN to filter out LLM-generated, or at least partly AI-generated content like this.
If an article makes it to the front page despite being AI-generated it probably has some interesting points or ideas, but it's unfortunate that people seeem to choose the speed and style of LLM writing over the individual style and choice that made the writing of yesteryear more interesting and unique.
I was thinking about commenting the same thing. It had an awful lot of paragraphs that ended in a list of three sentence fragments, usually noun phrases, sometimes negated ones. Was that what tipped you off?
If you believe that, it’s best to flag the submission and move on rather than pollute the comments. This is the equivalent of posting “this is a badly written article”. It doesn’t add any value.
If an article is badly written or AI-generated, there's value in that being pointed out in the comments. It can save people wasting time, and ideally, discourage people from posting low quality content. That's a large part of the point of a site like this.
If the community upvotes AI-genraated content to the front page, I don't see why it should automatically be penalized. (I respect your own opinion, which is why I suggest flagging the submission).
But clearly there's a reason it was upvoted if it's on the front page. Why ignore that fact... clearly the community thinks these articles have value if they're upvoted.
(Also, "it's AI, bad article" is just a weak complaint that can't be proven right or wrong - if you dislike it, share why you dislike it, e.g. lacking specific information, shallow depth, something other than "don't like it because AI")
You don't speak for us. If you are going to demand supporting evidence for obvious statements, then you can present supporting evidence for your spurious claims about value.
> No dining room. No servers. No storefront. No customers walking through the door. Just a kitchen.
> No ownership. No accountability. Just assembly-line cooking with zero connection to customers.
> No loyal regulars. No servers to smooth over problems. Just angry reviews that destroyed virtual brands forever.
Pretty common pattern these days.
That, plus the hashtags at the end (unless Substack uses those and I was unaware of it), plus the fact that we know he's using AI in some capacity because of the feature images - it's a reasonable conclusion to draw.
Food that travels well requires different recipes, different ingredients, different packaging.
This doesn't ring true, given the popularity of DoorDash and the fact that most of those restaurant menus are in no way optimized for delivery.
Having lower-quality multitasking staff serving multiple restaurants from the same prep and equipment seems like an obvious way to lose quality. But simply streamlining the process of getting a menu onto delivery? That seems like a solved problem.
> This doesn't ring true, given the popularity of DoorDash and the fact that most of those restaurant menus are in no way optimized for delivery.
People have really funny ideas about restaurants. Somebody once left an online review of my family's establishment complaining that the hot chicken that was supposed to be on their cold to-go salad was in a separate container. They asserted that it was a "trick" to keep the chicken warm and moist, as though it would have been better to let the hot poultry heat their salad in the same container until it was lukewarm meat on top of wilted greens. Every day I wake up and mourn the IQ point that I lost reading it.
So some places are optimizing their fries for delivery.
I've also noticed some restaurants are better at adapting the packaging, like punching out ventilation so fried products don't steam themselves in transit. Lawrence Seafood (which rules) did that for a side of tempura we got this weekend.
But I agree in large part. I wouldn't order fried chicken delivered via door dash in any event. People doing that are optimizing for something other than quality.
Ten years ago (I moved since), there was a ghost kitchen in the Bay Area that was great. I wish I could remember the name. But it produced meals that were extremely well packaged, but designed to be reheated at home (it took like 15 min max). It was great because the meals could be pre-ordered and delivered by the time you got home. You could tell the recipes were all tweaked to fit the specifics of delivery and reheating.
This was an example of a well functioning ghost kitchen. I don’t know how profitable they were, but it was very convenient. There are a lot of downsides to this approach, like pre ordering, reheating, and limited menu, but it was a very different approach to current ghost kitchens around me now or DoorDash from a local restaurant.
The ghost kitchen model can work if the meal recipes are optimized for being microwave heated at destination before consumption. So pre-cooked, but not hot during transport. This allows a more reliable quality for the customer.
This allows the kitchen to prepare in advance, also reducing waste.
Yes, I am sure about this claim that I am making. Are there restaurants that do optimize for delivery? Certainly. But DoorDash covers most restaurants in my area (and it's a big area --- Chicagoland) and most of those menus are identical to the in-person menu.
Every greasy spoon I frequent now has all sorts of packaging/to-go options, they're self-branding the cups and boxes, they have separate queues for pick-up/delivery orders, they have cubbies for quick pick-up, whatever -- they're all seemingly optimizing for pick-up/online stuff.
> This doesn't ring true, given the popularity of DoorDash and the fact that most of those restaurant menus are in no way optimized for delivery.
People are dumb.... but only for so long. I've been burnt so many times by delivery I've gone back to mostly ordering pizza and picking it up in person.
Eating out in US or any developed western civilization is so expensive that everyone in those civilizations think cooking is a basic skill.
I don't understand why there is no good cheap option. In Japan, I could go to a low-tier shop. It would cost $1-3; the food is decent with taste, and it fills my stomach. In US, $1-3 would be the min amount of tips.
Restaurants / cafes in Japan have less fixed cost overhead than in the US. Zoning, licensing, insuring, etc. in Japan are more conductive to small shops being able to stay afloat with only moderate business. There’s other factors of course, but those are biggest ones I found when exploring potential for small side project. With that said, I have yet to run a bar/cafe in either country, so my experience is limited to my research.
I think cooking is a basic skill for self sufficiency, if things go wrong in society.
Living in dense cities it can be easy to forget how many dependencies you rely on, it's a complex chain of logistics.
But I sure do miss the convenience and cost of Japan. Cities in Japan feel like they are made for people to live mostly outside of their house. Whereas it is so expensive to do normal city stuff in many western cities, it costs too much to participate every day.
I suspect it is to do with the amount of pedestrian traffic passing through an area. When you have a high population density there is an increased amount of foot traffic in the area you can charge less per individual serving because you have a higher overall volume of traffic.
Where I live in Australia the cheapest food tends to be Kebabs which congregate around pubs. There is a high amount of students walking (stumbling) home after a night out etc so they can afford to be cheap since they get so much foot traffic coming through.
My uneducated guess would be that rent and labor are much cheaper (in relative terms) in Japan than in the US, perhaps so extremely that it dominates compared to the marginal cost of producing food.
I think rent and zoning make a huge fucking difference here. You cannot really have a tiny noodle shop under a home in the US where that's incredibly common in Japan due in large part to national permissive zoning. You've got to maintain a separate home and business property and have the means to acquire or rent both. That necessarily drives up cost of small retail business and tilts the economics far more in favor of very large companies like Walmart or chains like Panda Express.
The only place with cheap restaurants in the US is ironically NYC. The second most expensive metro in the country is able to sustain the dollar slice because of massive foot traffic. When you serve 100+ people an hour you can lower margins, and labor is a lower percentage of costs. Restaurants outside new york either have much lower sales volume or are corporatized and make massive profit.
When I worked for Dominos in the late 80s, it was a lot like this sounds. No dining room, though customers could walk in and order in a small vestibule. The place was as efficient as possible, just ringing phones, an assembly line, cooler and ovens, storage and cleaners in the back, and delivery drivers running in and out.
There seems to be something special about pizza that sets it apart from everything else, that made it seem reasonable to order it delivered from a non-restaurant even back then.
I think pizza is just virtually indestructible in terms of traveling. Sometimes I see americanized chinese food or those caribbean rotis being sold out of no-seating places likewise. The thing about a non-ghost no-seating establishment is you know they would go out of business eventually if they were truly awful. The ghost kitchens though can spin up new virtual brands endlessly.
It worked because Dominos was a brand name, people knew what to expect before ordering, and they picked up their own food instead of letting a overworked disinterested gig driver deliver it.
Plenty of Chinese takeaways, and a good few “Indian” establishments (takeaway/delivery only, no restaurant) have operated in the same way, without chains or brand names, for decades, at least all over the UK. Many great quality, many poor, but that was part of the fun of moving to a new area, figuring out the good ones from all the menus that got shoved through the letterbox.
Before that, of course, the fish and chip shop is an ancient institution, though they rarely delivered.
Most Domino’s were/are almost always delivery. Yes you can go pick up your pizza but most people don’t.
When I worked there they sold pizza and Coke. That was it. No breadsticks, no wings, no salads. One kind of crust, two size options. And by Coke I mean Coca Cola Classic in 16oz glass bottles. No Diet Coke, no sprite, nothing else. It was pure efficiency by elimination.
The drivers were all employees then, too. Not gig workers. No idea if that’s still the case.
Same here. We added Diet Coke and pan pizzas right at the end of my Domino's career, and that was a big honking deal. I can't imagine what it's like to work at one now.
Giving in to the nostalgia for a moment: there also wasn't a computer in the place. Everything was done on paper order slips and paper bookkeeping. No online ordering, so everyone paid with cash or check. No cell phones, so you couldn't call out to tell a driver he had the wrong address or the wrong pizza; you just had to wait for him to get back. And we still had the 30-minute guarantee, so we raced around like a bunch of maniacs even though the company kept telling us not to. Good times.
Yep, same. The only technology in the store was the desk calculator on the manager's desk.
And no GPS navigation of course. There was a big map of the delivery area on the wall in the back room. If you didn't recognize the address you'd look at that before you left the store and just had to remember the details.
The pizza was delivered by an actual employee of the pizza place, and there might be a small delivery fee and a tip. Now the gig companies add a delivery fee on top of the inflated menu prices, then ask for a tip before the order will even be picked up. The fees can be 80% or even higher than the in-store price.
I remember in the early 2000s there was a big push to deshittify delivery pizza. Companies were all advertising how they were now sending out their pizza in insulated bags. Dominos went particularly heavy, advertising a purpose built delivery vehicle with a built in warming oven (not sure if this was ever real or just for advertising) and a big emphasis on how they reformulated the entire menu to taste better.
When I worked there they had hot boxes drivers would carry in their car. There was an alcohol burner in it that somewhat kept it warm. They switched to insulated bags about a year after I started.
The stores usually had one or two company cars, a hatchback like a Ford Escort, painted up with the Domino’s logo. It was not equipped with any special pizza warmer. But most drivers used their own car. They got an hourly wage, a percentage of the order total if they used their own car, and tips.
Maybe Domino's had another delivery vehicle in the 2000s, but one of the 10 Tritan Domino's delivery vehicles from the '80s sold at auction a few weeks ago for US $45,000.
The vehicle was real. There is (or was) a series on YouTube about someone who bought one that had been salvaged and wanted to repair it for his own use but ended up getting various legal threats from Domino's, claiming he obtained the vehicle illegally or planned to misuse their branding.
The emergence of ghost kitchens, more than anything else, is what got me to stop using food delivery services. They made it impossible for me to have enough trust, so I switched back to ordering from real restaurants that I physically go to.
You end up standing in line with a bunch of delivery drivers who all know the drill and are on the clock, and you quickly learn you cannot be polite if you want to get your food.
I live a short bike ride from a CloudKitchen location and pick up from it often. Hard to beat birria and bao buns in the same stop even if they're nothing to write home about.
Could be a few years stale. Some of the ghost kitchens even operated out of real restaurants by another name. E.g. higher quality sitdown place shoveling out burgers and fries out the back door.
I live near a CloudKitchen location and I use it often. I always pick up on my bike, so I'm skipping a lot of the expense of delivery. The pickup is locker-based which is easier to deal with than a restaurant where you have to get someone's attention.
The variety is great because my partner and I can get wildly different things and I need only make one stop. Ours is stocked with the standard set of generic "restaurants" plus serves as a "location" for several real local restaurant chains and even a food truck. The generic stuff is passable but uses cheap ingredients, the partnered restaurants seem to have fine quality control and use the same stuff they use elsewhere, so I find them to be quite good. Picking up myself I don't experience the cold food issue others complain about.
It does such brisk business every time I'm there I have a hard time believing this specific one is dying. I hope it's not.
Anecdotal: Due to lifestyle factors, in my family we use Ubereats often, probably 4-5 orders per week on average.
I have never placed an order from a restaurant that I don't actually know beforehand. Maybe I haven't been there in person, but I know the name of the restaurant and I remember where is it and maybe someone I know ate there.
The only time I go completely blind is if I'm traveling. But that's like 1-2% of my total orders. And, in that case I usually stick to known chains or maybe I ask what's a good restaurant around here, then find it in the app.
I suspect it's not so uncommon to order from restaurants one already knows, rather than taking risks?
If that's the case, then ghost kitchens are going to have a very hard time getting their slice of the market
> Maybe I haven't been there in person, but I know the name of the restaurant and I remember where is it and maybe someone I know ate there.
A big part of the problem is that just because it has the name of a real and known restaurant doesn't mean that the food you order through delivery apps was made there.
good point, at the time I wrote this comment I was halfway through the OP article, later I finished reading it and realised the same kitchen can actually work for a range of restaurants and chains. Initially I thought it would just be some made up name on the delivery app, as opposed to a recognised brand.
The main issue was that they relied on food delivery to sustain its model. I’m not going to pay $50 in food and $20 in tips and fees. Like anyone sane, I call in my order and pick it up myself. This idea died because of this missing link. I would entertain it if you have a pickup booth in a lobby.
And you just re-invented Chinese takeout as experienced in major cities!
One of my favorite dumpling shops in Brooklyn just had 2 tables... everyone just carried it out and back to home / work. And I think it worked well for them.
I feel the author could do more to separate “restaurants” from “takeout”. These are surely two very different market sectors. Johnny’s Pizza might have a couple of bar stools and chilli flake shakers but they’ve always been 90% focused on delivery. Chez Johnny on the other hand has always been about an in-house bistro dining experience. Ghost kitchens were always about the former.
The author touches on margins being eaten up by the delivery hegemony which feels like a much more important point. The handful of online ordering marketplaces are the app/play stores of this part of the economy and I can believe that they are far too greedy and powerful. Yet would the economy tolerate a much more diverse marketplace for connecting cooks, drivers, and customers? One of the only things holding the whole system together is shitty drivers and crappy kitchens being weeded out by the major marketplaces. If drivers could just hop between apps there would be no way to filter out the rogues?
They also bring up quality issues with packaging and delivery. To that extent, food delivery feels like healthcare where one cannot reasonably be expected to shop around for a surgeon to see your legs back on. When you order a meal you can’t just hope for the best knowing that if the food arrives cold and demolished then you’ll be able to get a refund and try somewhere else! Regulation here would help: your municipal certificate could not only rate food hygiene but also your ability to hit a reasonable p99 turnaround from order to order-up!.
> would the economy tolerate a much more diverse marketplace for connecting cooks, drivers, and customers?
I envision some kind of government-run or mandated exchange where drivers can certify/onboard at any number of uber/lyft clones, and customers can sign up for any number of uber/lyft clones. Any request placed will be sent to the exchange and the cheapest price from a service that the passenger is willing to use is selected.
This would primarily squeeze the margin of uber/lyft. That margin is what competitors can offer up to drivers for higher wages and passengers for lower prices. It's pretty wild to me that Uber/Lyft still manage to capture 25-60% of the "value" of each ride, when the overwhelmingly largest value they provide is derived from network-effect lock-in (essentially rent-seeking).
Maybe drivers could set their minimum wages per mile/estimated time, and passengers could avoid companies with business practices they don't like (inadequate background checks, paying wages too low, sponsors the wrong sports team).
This exchange would have to be enforced with anti-trust or just statute/regulation.
It drives me insane that the VC industry threw so much money towards delivery in so many ways (restaurant delivery, meal kits, ghost kitchens, etc), when that’s the part that matters the least.
If I were to do a startup, it would be a food company that leverages drive thru. Optimize everything to maximize throughput on the drive thru by only accepting orders ahead of time (maybe even days ahead of time so that the establishment knows exactly how much food to order and prepare). The food is ready and can be dropped right into the person’s car as soon as they pull up.
People are fine with driving around, especially if it’s on the way home from work or close to where they live. What they don’t like is going to the grocery story, cooking the same three basic meals they know how to cook, cleaning, and eating the same leftovers for five nights in a row.
I can’t believe VCs and startup founders failed to realize the driving part was not the thing people were willing to pay a premium for at scale. They want cheap, tasty, diverse, that’s more convenient than cooking, but doesn’t need to be dropped off at their doorstep.
It makes more sense if you see it as emerging from a meta-strategy of: Create a national middleman platform; become monopolistic by operating at a loss; trap both sides while raising fees to extract rents.
The other options you're talking about aren't mustache-twirlingly exploitative enough to appeal to those investors.
It would be too easy for Local Hungry Dude and Local Eatery to have a friendly chat when picking up the food, and then cut-out the (unnecessary, unproductive) middleman for future meals.
Menu presentation, ordering, payment is also a service those companies provide. That part definitely scales. But they wanted a larger share of restaurant business.
>What they don’t like is going to the grocery story, cooking the same three basic meals they know how to cook...
I personally am not fine being force-fed excess salt, sugar, low-quality oils, and other ingredients over which I have no control, ultimately leading to my risk of death increasing by 50%.
For traditional restaurants, what percentage of orders are for delivery (using Doordash, etc)? Excluding pickups where the customer comes and picks it up himself.
I can't imagine it's even close to 50%.
I don't know the patterns of regular folks, but for me the prices in general have crept up enough that's it rare I want to try some new place - unless I get multiple strong personal recommendations for it. You can forget about paying extra for delivery to home!
Gohst kitchens just sound like a big corporate version of the usual story where someone without much knowledge decides that they're going to open a restaurant ... and discover that the restaurant business is REALLY HARD.
They seemed to think they cut out a lot of costs, they were mistaken ... and then they partner with delivery companies who jack up the costs.
>Ghost kitchens promised lower costs. The math never worked. Delivery apps charge restaurants up to 30% commission fees5. Ghost kitchen operators add rent plus percentage fees on top. Equipment repairs and maintenance create constant expenses. Marketing costs multiply when you have no storefront presence.
Meanwhile there's no loyalty from customers because what is there to be loyal to? Nobody in the chain here cares about quality ... I get the wrong order or bad food, there's nobody to fix it, and I probably never do it again.
It would be interesting to know what these companies had for a business plan / where they thought the numbers were going to pan out.
> Shared kitchen facilities meant that one staff member prepared food for multiple brands simultaneously. No ownership. No accountability. Just assembly-line cooking with zero connection to customers.
It's funny because it's not like (normal) restaurants don't exist where they have crazy-big menus with a wide range of choices and cuisines. Certainly some of them are kinda mediocre, but many are actually pretty great, and you can get a solid dish regardless of what you pick. Some pride themselves on their ability to make basically anything, and make it well.
A ghost kitchen where the same staff works for several different "restaurants" simultaneously can work just fine, assuming actual training, and an effort to create quality recipes and use quality ingredients.
But I can easily see how a lack of a sense of ownership among the assembly-line-style staff could make this dicey. If you're making random dishes for a random set of "brands" (a brand among many that was plucked out of a hat, complete with AI-generated food images and descriptions), you're probably not going to take much pride in the quality of your work. And I do think the author has a point about connection; certainly a connection to customers is no guarantee of quality, but I think it's a much harder sell to inspire that quality without it.
> Ghost kitchens promised lower costs. The math never worked. Delivery apps charge restaurants up to 30% commission fees5. Ghost kitchen operators add rent plus percentage fees on top. Equipment repairs and maintenance create constant expenses. Marketing costs multiply when you have no storefront presence.
> Layering these costs together, restaurants discovered a devastating truth: there wasn't enough money left for anyone to make a profit.
So is that true of working with delivery apps, generally? All of those points are also are true of regular restaurants with a storefront, except the last one about marketing expenses. Are the delivery apps just surviving parasitically on restaurants that would be better off without them?
I think the food trucks fulfill the idea behind ghost kitchens of an easy, low-risk way to start a food business. They also share some of the flexibility, because you do have the option to move locations.
But they have the additional benefit of a physical location so you can get profitable orders that you don't pay the UberEats tax on as well as build brand recognition.
> Approximately 7,606 ghost kitchen operations remain active across the United States5. This sounds substantial until you realize how many have closed, pivoted, or failed in the past two years.
The article says this but never actually says how many have closed or failed. The only evidence it provides is that some operators have shut down. But that could be industry shakeout. So, are ghost kitchens actually doing?
A buddy of mine is an executive at one of the successful ghost kitchen companies. I asked him about this article. His comments:
- They aren’t dying. Most of them are just not run well, and there isn’t a widely-known “playbook” to use to spin one up.
- Demand is high. Supply of what people want does not meet this demand.
- Lots of people use ghost kitchens to chase fads or to try to get rich quick. These rarely work long term.
- Profitable ghost kitchens are well-run kitchens (or restaurants without a front of house).
- His abbreviated playbook for ghost kitchens that work: prep everything (nothing cooked to order), finishing and assembly should be the only thing done when the order comes in, every order should be done within 5 minutes (this blew my mind) so that it will get to the customer within 20 minutes, make sure your images look exactly like the food you will deliver, get packaging that makes it so that food can be delivered and still look good, advertise (promote) in the apps when you open, and cut back as organic sales and reorders start rolling in, master one location first and then scale out with a provable system, add additional compatible brands (e.g., cakes expanding to cupcakes or cookies) later in the life cycle with a similar development process (but in the same kitchen).
- There is a truckload of restaurant kitchen workers who love good ghost kitchen work — high pace, limited menu (relatively speaking), no front of house staff to deal with, etc.
- When a ghost kitchen hits product-market fit, labor and food costs can be sub-20% of revenue each (this is insane, imho). Marketing starts at 25% of revenue and rapidly drops to sub-5%. Note that this is based on what they receive from the delivery companies, so percentage of sales is higher.
- My friend can spin up a new location in 20 days and $10k from getting the go ahead to delivering food. That includes setting up the kitchen, hiring, training, and initial inventory.
> Quality control became impossible. Shared kitchen facilities meant that one staff member prepared food for multiple brands simultaneously. No ownership. No accountability. Just assembly-line cooking with zero connection to customers. When food arrived cold or wrong, customers had no relationship with the brand to forgive mistakes. No loyal regulars. No servers to smooth over problems. Just angry reviews that destroyed virtual brands forever. No reason for repeat business.
That's a straight quality control problem. It ought to be solveable.
But that's hard to do.
The trouble is, the whole food app industry is based on someone else dealing with the hard problems. The drivers aren't employees, and the restaurants aren't employees. If an app company gets into ghost kitchens, they are now in a business where they are clueless. Some try to avoid being responsible for the food by just being landlords for people who buy a station in the kitchen
Bulk food prep is a solved problem. Every major hotel has it solved. There will be some senior people who went to a serious culinary academy. They look at food prep as a manufacturing problem, with batch quantity optimization, holding time limits, error tolerances on temperatures and quantities, and quality control points. It's factory planning.
The first "Doordash Kitchen", in Silicon Valley, is near me. It's still operating, but I don't see many drivers there.
> When food travels twenty minutes in a bag, quality suffers.
You'd think that would be a solved problem in packaging and prep by now. Insulated containers are not rocket science.
You often want the opposite of insulation. Food continues to cook in the container, things get soggy, etc. Each dish and even ingredient can have different ideal packaging requirements. It's not something that really scales well. It's part of why menus like McDonalds' remained stable and relatively small over a period of decades. Notice how their fries are served in a specialty designed container that's open, which avoids them becoming soggy.
A lot of folks took the bet on CloudKitchens because of Travis. Even after raising $850m, CloudKitchens has never ran liquidation event for employees afaik. I wonder how they attract/retain talent in that scenario.
Ironically, some (if not all) of the biggest companies in that market force their employees to work from offices, so they lose that potential consumer base right away.
> Approximately 7,606 ghost kitchen operations remain active across the United States5. This sounds substantial until you realize how many have closed, pivoted, or failed in the past two years.
The article says this but never actually says how many have closed or failed. The only evidence it provides is that some operators have shut down. But that could be industry shakeout.
CloudKitchen was holding plenty of software hiring events near me few years ago. All these companies developed software to streamline the process of listing thousands of stores on all delivery apps, receiving orders, organize and manage kitchens assembly lines like how the orders are received, and dispatched to cooks, etc. Also they integrate analytics, cost tracking, supply chain management, and other random things like that. Basically for any PE or a billionaire who wants to larp as the next McDonalds or Starbucks, they don’t want to build everything from scratch.
The kinda thing a regular restaurant is probably managing using a spreadsheet and a notebook.
Isn't the main problem that the kitchens are shared and the restaurants are just popup brands with no loyalty built up?
I don't think you need an actual sit-down location to succeed, but you do need full control over what you produce and to spend time building trust and loyalty.
1. Did any of them insource their own delivery? This seems like where they lost most of their money.
2. Did they adopt checklists and double-checking supervision to ensure food-safety, uniformity, and correctness?
3. Did they use quality ingredients rather than the cheapest shit Sysco sold that day?
4. Did they right-hire enough competent, sufficiently-paid staff so that churn wasn't 100% per 4 months?
5. Did anyone there ever run a successful restaurant storefront to multiple-location chain before? (Restaurants of any sort are the hardest, most grueling, tending to be risky businesses around. My grandfather became a mechanic rather than take over his father's French restaurant after going through the trouble of training to become a chef.)
I'm going to make a giant leap and assume most of these were "no" and they failed horribly on execution by focusing on the wrong things.
the basis of ghost kitchens started with one restaurant being cloned by the same restaurant to serve as a preparation nexus for their own menu to get local coverage and gain economies as the restaurant ramped up. Later pirate restaurants that were clones that copied the menu and snapped up the order - often assisted by delivery companies that had the stats. Later these grew larger, multi menu clones, often with 3-6 restaurant clones in one spot.
Then someone got greedy, and the rents for these spaces destroyed their economic basis, and the city got greedy, rubbing their oily hands together to get taxes, levy code shit etc. The original restaurants lawyered up and the ghost kitchens became anonymous - and Oh yes, COVID was over
I know capitalism and I don't always get along, but it's so good to see its desire for profitability and the need to protect investors actually kill a business that needs killing. Nice.
In which countries are ghost kitchens thriving? How do they avoid the failure modes described in this article? Is it possible they are simply behind the curve?
Low quality food is eventually going to catch up to you. People have to want to re-order. I think this article does a bad job of explaining why ghost kitchens are failing - to me it sounds more like a scam where they barely made the effort to actually make a good product and tried to make a quick buck - take some of that investor money. The concept, I feel, can work.
> How do they avoid the failure modes described in this article?
My suggestion was that this is exactly what a meaningful article on this topic would mention, as clearly the failure modes aren't universal. I'm not the one writing articles about it.
> Is it possible they are simply behind the curve?
Au contraire, ghost kitchens were already more of a thing here before COVID.
@dang can we please stop changing titles that are originally informative and match the original post? I understand for cases where the submission titles are substantially different than the original. But it doesn't make sense when the original title is more informative than the altered one that mysteriously gets moderated into existence some time after the link is submitted.
The submitted title was "Ghost Kitchens Are Dying. Here's the $15B Lesson Every Restaurateur Must Learn."
Since "Here's the $15B Lesson Every Restaurateur Must Learn" is obvious linkbait—I would even say shameless linkbait—this seems like a perfectly standard title edit to me.
The points the article make come close to my gripe with ghost kitchens but don't quite cover it:
they feel like scams and when I've accidentally ordered from a ghost kitchen it was by design a terrible experience.
I'm talking like, you order a 15$ main that is called "creamy pasta with prosicutto" and when it shows up its buttered spaghetti with a couple stamp-sized bits of ham. Ordering from actual restaurants come with some of the downsides the article assigns to ghost kitchens, like cold food and weird presentation, but ghost kitchens never seemed to reach the bar of "food someone would actually order, even if it was teleported to them instantly".
It's interesting to contrast to food trucks that are another method for more profitable places by reducing costs.
Food trucks seem to be pretty popular and work well.
Perhaps the difference is that food trucks are all about establishing a reputation for good cheap food that you can verify where as ghost kitchens wind up being the opposite.
Food trucks are also usually founded by a person with a vision and passion. Someone who wants to do something completely different with their life, a cook who thinks they have what it takes to go out on their own, etc, and that can be something that goes beyond even the reputational incentives.
Certainly not always, but I'd wager far more commonly than a generic ghost kitchen out of a shared kitchen with an Applebee's or out of the back of a cheap warehouse district.
In a food truck I can usually see the person cooking the food as well as the person giving it to me.
I will also eat the food close to the truck, meaning it's very little effort for me to go back and say "oi, this is shit, mate".
In a ghost kitchen you have zero way to actually give feedback to the kitchen itself.
A ghost kitchen is like an LLM or an ephemeral container, or any stateless instance. Even if you could impart some feedback, it would be gone by the next time you place an order.
Food trucks seem like they would involve more cost than a "ghost kitchen" and the branding on the truck especially will follow you around. If a ghost kitchen sucks, there is no cost in changing their name and maybe even their menu and continuing their bullshit. But there are real costs in re-branding and vinyling your food truck and food trucks deal with face to face business.
I mean they basically are drive by scams. They just flood the market with a million listings for the same kitchen, use some stock photos (AI generated now). And if you get bad reviews or food poisoning complaints you delete the business and list up 5 more.
Don't forget the fake reviews (AI or not) and the soulless marketing campaign!
They also scammed the operators. It was an Uber-esque ploy.
What actually got sold was an uber-esque scam: these kitchens were rented to tiny operators who, instead of opening their own restaurants, opened in a ghost kitchen facility. I read an in-depth article that showcased the extremely high failure rate of the operators. They were sold indiscriminately to anyone who could be suckered into doing it, with no thought of whether the "restaurant" was likely to succeed. The parallels to driving for Uber are obvious.
I actually suspect that ghost kitchens would work fine, but it would be one company operating them and carefully selecting products that sell and controlling for quality.
It always felt like a weird business model to me. If you lack a physical presence, the only thing you have over a decent prepared section at the grocery store is variety (and freshness, at least in theory). You don't even have convenience on your side since Instacart exists, and because the lower rent was predicated on leasing in more remote areas, the food is even less likely to be warm by the time it arrives than if you got groceries delivered.
And for the providers of the ghost kitchens, while they are selling a shovel of sorts, their bet was there would be a continuing market for their shovels. That space isn't likely to be used for any other restaurants because of the lack of foot traffic, but it also isn't likely to be used in large-scale food production because the facilities usually aren't large enough to be re-tooled for anything beyond catering companies. Commercial kitchen build-outs are not cheap, so investing in large scale small kitchen spaces is a risky bet.
I mean,they could get better bags that keep the food warm,or a "heating spot" downtown to heat the food,but it's prepared in the kitchen? I don't see how it's impossible,just nobody willing to invest in the Business model that's not a scam
I think inequality is part of the story here too, even with restaurants generally. 60 years ago, it was reasonable to save some money at your union factory job to open a restaurant. If it didn't work out, you could go back to the plant and finish out your 30 years and retire with a full pension.
Now, I'm a top decile professional and would basically have to bet my whole net worth, including my retirement money, if I wanted to open a real restaurant. No wonder chain restaurants rule the day and the only thing interesting happening in food in most of the country are in food trucks. Ghost kitchens, at least a few years ago, seemed like a logical next step after the food truck: an even less capital-intensive way to get into the food service business.
The same forces will push someone who has this ambition to go the ghost kitchen route. Hopefully failing this way instead of with a fully staffed restaurant has saved at least one family from total ruin (downgraded instead to partial ruin).
Yup, this is a crucial detail that the article sort of assumes the reader already knows: the companies being discussed are not actually cooking the food. They are ghost kitchen facility providers. Like WeWork for takeout/delivery cooks. And, surprise: they don’t print money any better than WeWork did.
> They also scammed the operators. It was an Uber-esque ploy.
Should be no surprise. CloudKitchens, even, was founded by none other than Travis Kalanick.
THIS:
>>"food someone would actually order, even if it was teleported to them instantly".
The article states >>Quality control became impossible. Shared kitchen facilities meant that one staff member prepared food for multiple brands simultaneously. No ownership. No accountability. Just assembly-line cooking with zero connection to customers.
I'm not sure if it was impossible or if management never actually prioritized it, not bothering to understand what an actual customer would want. How much of it is the stupid management assumption that they can "just make a dish generally meeting description X on the menu" and deliver that and it'll be ok? «— Real question, did mgt fail at the product specification level, or was QC just as a practical matter, impossible?
On the economics, it really seems 30% for delivery is insane. It seems that same 30% might exceed the cost of the physical restaurant. And when it adds a 15-45min delay while homogenizing and cooling the meal, it seems an impossible problem. Maybe if the 30% transported it instantly and losslessly...
Probably good this soulless idea will die. Too bad so much perfectly good capital was squandered on it instead of better ideas
It really seems like it should be possible, but you have to put in the effort to develop recipes, buy minimum quality ingredients, and train the staff. Old school diners, especially Greek diners in the NYC area, used to be famous for their wide-ranging menus—burgers, spaghetti, spanakopita, chopped liver, etc.—and the food was generally pretty good. Cheesecake Factory has built something similar on a national level, and workplace cafeterias often aren't bad either, certainly not at the level of a ghost kitchen.
I think tech founders often underestimate what it takes to build a food business and what the margins are like and then start to cut corners to make the business viable.
Greek diners in NYC are a miracle to me. The food isn't the greatest, but it's good enough, and the huge diversity of menu items (usually made by one guy in the back), served for decades, is enough to make me wonder if there's something I'm not understanding about the business -- like secretly they're running 50% gross margins, or the meat is all rat.
Land and rent used to be cheaper, and a lot of people come through the door. The margins on a lot of diner food, like eggs, ground beef, and coffee and fried potatoes, were at least historically fairly high. People in NYC also historically ate out a lot.
I think longtime NYC restaurant owners often love being a community hub, particularly if they’re first generation Americans, so they’re not thinking of how to squeeze the customers or follow the latest fads.
A lot of stereotypical “ethnically owned” businesses in NYC also have their own supply chains. It’s very possible they are or were buying from Greek-American wholesalers who are effectively buying in bulk for diners across the city.
My impression in general is also that people who’ve worked in the NYC food business for a while in general know their preferred vendors to call for any particular thing, from whole chickens to pest control, and that if you tried to compete with them by finding vendors on Yelp or whatever without those relationships you would be at a complete disadvantage.
The pre-MBA enshitified world was an amazing place.
Oh, they're still here. They just close earlier since 2020.
> I think tech founders often underestimate what it takes to build a food business and what the margins are like and then start to cut corners to make the business viable.
Is that just tech founders, or American business culture, generally? Seems like everything's getting corners cut to the maximum extent possible.
The selling point was efficiency, not quality. It follows that the result wasn't quality.
> Just assembly-line cooking with zero connection to customers.
And this is how it works in many (not all) American airports. Local restaurants put their brands on the signs, but the food is prepared by probationary employees of Acme Baggage Displacement And Cafeteria Management Corp.
I don't feel like I've ever been let down by an airport restaurant or Starbucks (not that I think about it much).
But the airport newsstands that are just someone selling candy in a room with the name of a random local newspaper are an interesting local sight.
I like airport newsstands because they remind me a tiny bit of my rare trips downtown as a kid, when there were one or two places still open that sold magazines like The Atlantic and The Economist. Such a delight at the time.
True, which may be a large factor in why restaurants in airports tend to serve overpriced crap.
Airports have a captive audience.
Shops that run 100 different brand names usually do a spectrum of quality and pricing ranging from great quality and great prices to high prices with terrible quality. You might for example put a very similar item (if not exactly the same) on two different menu cards where customer B gets twice as much for half the price. B is the stability of the project while A is a disposable brand. If you can corner the market A conditions the customer to think B is a great deal.
> “I'm talking like…buttered spaghetti with a couple stamp-sized bits of ham.”
And? It’s not enough that someone makes crap food. The matter is when there is no market force to penalize crap food.
I thought platform feedback was a solved issue. Online sellers are (across the board in general) very focused on avoiding negative feedback.
A business trading on a name without some kind of sunk cost that incentivizes them to protect that name should be a red flag for consumers. It's the same thing that's made Amazon a surreal morass of brands like DYBOOP and BIPLOZA. If a ghost kitchen can shut down and reopen with a different name just by clicking a few buttons and not actually have to move their kitchen or anything, the whole concept is totally untrustworthy.
There was an interesting local example of a place that started out trying to be more or less a ghost kitchen but wound up being forced by success to become a real eatery. It had the endearingly utilitarian name "Pizza Online Company". They had no phone nor any in-house delivery system. You could order online or in-person to pick up, or via GrubHub/Doordash/etc., and that was it. Initially they had no eating area, just a tiny space big enough for three or four people to stand and wait for their orders.
But the pizza wasn't bad and it was (at least at first) remarkably cheap. It undercut Domino's prices by at least 25% while being much better quality. The place became popular. And sure enough when a place becomes popular people start wanting to go there. They added a small counter with stools to the waiting area. They didn't have space for more than that inside, but when it wasn't enough they took over some of the strip-mall walkway outside the front door and made it into a patio with seating for 8-10 people.
Unfortunately it closed abruptly a couple years ago, apparently due to some kind of family emergency.
I completely agree with your point about food quality being borne from the economic incentive of protecting an initial investment.
However, I always thought the DYBOOPs and BIPLOZAs of this world existed on Amazon because of a glut of Chinese manufacturing expertise outpacing any ability to do proper branding and marketing. My QSMYYUYE grill stove, CYEER steel plates, and SUNYAY telescopic bug sprayer are all well made and reasonably priced commodity objects.
It's certainly possible that some of those weird brands are of decent quality. My point is just that, if they're not, they'll just change the name from DYBOOP to CYEER and keep selling the same thing. There's no reputation to uphold.
> However, I always thought the DYBOOPs and BIPLOZAs of this world existed on Amazon because of a glut of Chinese manufacturing expertise outpacing any ability to do proper branding and marketing.
IIRC, if you have a "brand name" it unlocks some desirable features in the Amazon Seller experience.
The DYBOOPs and BIPLOZAs are almost always just heavily marked-up items you can buy on AliExpress much cheaper if you're willing to wait a week or two.
something like 63% of sellers on Amazon are Chinese front companies. They often use random strings of letters for brand names to easily register trademarks. This practice allows them to bypass stricter naming regulations and flood the market with products that can be difficult to distinguish from one another.
to be clear, much of this is an Amazon rule, and branding is meaningless if you sponsor items to be searched; most people DGAF about things like plastic containers or cellphone cases and are happy to buy whatever
The modern version of "mob's money laundering Pizzeria becomes wildly popular legit Pizzeria" is boring.
We had a very similar story in chicago. Someone started making pizza out of a ghost kitchen and eventually got so popular they opened a storefront location. I think they might have 2 now. millys pizza in the pan
I don't know if "ghost kitchens are dying" means much. The commercial model of a ghost kitchen as an assembly line for low quality low price high throughput food delivered by expensive couriers on demand is dying, yes, and good riddance.
However, when you think about it, a big chunk of the catering industry operates as a ghost kitchen. It's well known that caterers go bankrupt at lower rates than restaurants. We had a local success story called 1800 LASAGNA where a man cooked and delivered exactly one item to customers and met with a lot of success. He then opened a restaurant, which is now in voluntary administration because it was losing so much money. Catering works.
I can't help but feel this is one of those "tech industry reinvents the bus" stories, where ghost kitchens lost because catering (and low-seating restaurants like pizza joints) already existed and had a massive head start. It's not that the core idea was bad: the core idea was great, it was just already out there.
I suspect that the problem is the tech industry itself; the companies that were supposed to cut out the expensive, bloated middleman became expensive bloated middlemen themselves, which is why when you order a Starbucks Frappe and a lemon cake on Uber Eats you pay $8 to Starbucks, $7 to Uber, and $3 to the driver. Meanwhile, all that caterer has to do is answer the phone; substantially more lean.
> Meanwhile, all that caterer has to do is answer the phone; substantially more lean.
Real innovation will come when it becomes genuinely feasible for the caterer to run their own server, with some FOSS ordering system, such that there is no middle-man anymore who can jack up prices, only utility companies.
>> some FOSS ordering system
I don't mean this cynically; but basically what you are suggesting is that some group of volunteers spend their time and effort to build out a substantial part of the business's infrastructure for free.
So basically, as long as they can get the critical business software part for free, the business becomes feasible.
The short answer is "this probably won't happen". FOSS isn't some magic wand that makes software appear.
And if there was someone determined to make this their pet project, they would need to work closely with a kitchen to understand their requirements. It would likely work well for that kitchen (until the free labor went off and got a real job) but would need a lot more work to become "generic" to the point where a second kitchen could use it. And more work for a third.
Building business systems, and keeping them maintained as the world changes, is a huge amount of work. (I've been building them for 35 years.) It's really not feasible to do it in "spare time".
I think you'd be surprised. Especially for restaurants - there are mom-and-pop operations with smart kids who want to put together a project to make their parents' lives easier. Money isn't the only motivator in life and I'm not convinced you couldn't find someone to donate the capex needed to get an MVP off the ground. https://github.com/topics/food-ordering-system has 537 repositories, I don't have the time deep dive into them and whether any of them are any good, but I think it's evidence enough that FOSS can provide an MVP at least.
Yes, that's a different question from whether the opex is sustainable without a business selling support. And I think the question there is how much can be offloaded to utility-style SaaS like Stripe (i.e. handle changes in taxes) and serverless infrastructure to keep the opex of the FOSS solution itself low. I get the impression that it's hypothetically doable, but the proverbial kids of mom-and-pop store parents don't have the experience or guidance to know how to set that up.
You got it backwards. You're assuming that what is needed is the perfect ordering system that needs to accommodate any theoretical restaurant, when in reality a janky email and WhatsApp based ordering system with payment links where the restaurant and customers adapt to the standardized software is more than good enough.
> basically what you are suggesting is that some group of volunteers spend their time and effort to build out a substantial part of the business's infrastructure for free.
I don't buy this. How many businesses are we talking about? Ten thousand? Twenty thousand? So each business commits $200 to $400 and you have a multi-million dollar OSS enterprise solution. For a few million, a small team could easily build a much better ordering system than the utter garbage that's out there now, including setting menus and prices, handling payment, route planning, etc. Ordering online is often completely broken. A bit of collective action solves lots of problems. Yes, each business still has to cover some infra costs, unless that's also collectivized.
Or -- and I know this is absolute blasphemy to say -- the government could create this software. We could call it, I don't know, say, the "U.S. Digital Service" and it could use a tiny amount of tax money to make software that benefits entire industries or huge swaths of people and give it out for free. We could be greasing the wheels of commerce across the entire United States with just a little investment in "greater good" software, but the fucking billionaire psychopath asshole caste wouldn't be able to get their rent from it, so we have to burn it to the fucking ground.
This doesn't have to be an actual problem. We could easily solve it, but we have to have the balls to tell billionaires they're no longer allowed to loot the entire country. Everyone -- yes, you too, reader -- everyone vastly under-estimates how good society could be if it weren't for those fucking little parasites that have to loot and extract rent from everything.
>> I don't buy this. How many businesses are we talking about? Ten thousand? Twenty thousand? So each business commits $200 to $400 and you have a multi-million dollar OSS enterprise
You're describing commercial software, not FOSS. and yes if you have 10000 customers paying $200 a year, you have a very successful business.
Of course it may take you a few minutes to convince 10000 businesses to pony up the cash, but that's the easy part right?
Asimov was fond of the trope that the future was starved of protein, and even america had become a land where people had to eat communally, and eat significant amounts of manufactured "zymoveal" protein, because real meat was scarce under population/land pressure. It was clear that "people didn't like it"
Oddly, "cafeteria" cooking has sometimes been the best food I've eaten at the time. It very much depends on the circumstances and budget and your expectations. I've eaten like this in Leeds, London, Rome, France, Beijing. And not always in universities, the experience extends to factories, railways and even just the streetscape.
The FSU had a preference for ground meat and sausages at a state level because it was easier to ensure as much as possible of the meat inputs became food outputs. [This is wrong: they didn't] The Khrushchev flats had communal kitchens. They were universally hated I believe.
Ghost kitchens failed on lack of regulation and motivation to be the best they could be. There was never an intention to be "Jamie Oliver's ghost kitchen"
Re-intermediating consumers away from direct food carries on. Uber eats and Panda are delivering food from restaurants all around me, and one of them is a chinese take-away eponymously called "A Chinese Take Away" -I think it's a hack on the search engine carried forward. I've eaten their floating market soup in the shop, it's fine. Most of their trade is carry-out.
> The Khrushchev flats had communal kitchens
Khrushchyovkas did not have communal kitchens; I grew up in one [0]. Perhaps you are thinking about kommunalkas [1]?
[0] https://news.ycombinator.com/item?id=7935844
[1] https://en.wikipedia.org/wiki/Communal_apartment
yes. I was completely wrong, thanks for the correction.
> Oddly, "cafeteria" cooking has sometimes been the best food I've eaten at the time.
Sometimes the lack of choice and lack of responsibility are relieving. It may not be the best meal, but you didn't really have much choice and you didn't have to get ingredients and make it yourself. That can go a long way.
It would be really nice to have a tag on HN to filter out LLM-generated, or at least partly AI-generated content like this.
If an article makes it to the front page despite being AI-generated it probably has some interesting points or ideas, but it's unfortunate that people seeem to choose the speed and style of LLM writing over the individual style and choice that made the writing of yesteryear more interesting and unique.
I was thinking about commenting the same thing. It had an awful lot of paragraphs that ended in a list of three sentence fragments, usually noun phrases, sometimes negated ones. Was that what tipped you off?
Now I wonder whether any of it is even true.
It didn't strike me that this was written by a machine, not a person. Some bloggers prefer a punchy writing style. How can you be sure?
It would be nice if you shared some supporting evidence rather than turning a guess into a definitive statement.
It's clearly AI, both from the image (look at the text) and the vacuous nothingness of the ChatGPT-speak.
If you believe that, it’s best to flag the submission and move on rather than pollute the comments. This is the equivalent of posting “this is a badly written article”. It doesn’t add any value.
If an article is badly written or AI-generated, there's value in that being pointed out in the comments. It can save people wasting time, and ideally, discourage people from posting low quality content. That's a large part of the point of a site like this.
If the community upvotes AI-genraated content to the front page, I don't see why it should automatically be penalized. (I respect your own opinion, which is why I suggest flagging the submission).
But clearly there's a reason it was upvoted if it's on the front page. Why ignore that fact... clearly the community thinks these articles have value if they're upvoted.
(Also, "it's AI, bad article" is just a weak complaint that can't be proven right or wrong - if you dislike it, share why you dislike it, e.g. lacking specific information, shallow depth, something other than "don't like it because AI")
> It doesn’t add any value.
You don't speak for us. If you are going to demand supporting evidence for obvious statements, then you can present supporting evidence for your spurious claims about value.
So you can talk shit with zero consequences? How wonderful for you, and how terrible for everyone around you.
I don't think you meant to reply to me.
> No dining room. No servers. No storefront. No customers walking through the door. Just a kitchen.
> No ownership. No accountability. Just assembly-line cooking with zero connection to customers.
> No loyal regulars. No servers to smooth over problems. Just angry reviews that destroyed virtual brands forever.
Pretty common pattern these days.
That, plus the hashtags at the end (unless Substack uses those and I was unaware of it), plus the fact that we know he's using AI in some capacity because of the feature images - it's a reasonable conclusion to draw.
I believe all of this but:
Food that travels well requires different recipes, different ingredients, different packaging.
This doesn't ring true, given the popularity of DoorDash and the fact that most of those restaurant menus are in no way optimized for delivery.
Having lower-quality multitasking staff serving multiple restaurants from the same prep and equipment seems like an obvious way to lose quality. But simply streamlining the process of getting a menu onto delivery? That seems like a solved problem.
> This doesn't ring true, given the popularity of DoorDash and the fact that most of those restaurant menus are in no way optimized for delivery.
People have really funny ideas about restaurants. Somebody once left an online review of my family's establishment complaining that the hot chicken that was supposed to be on their cold to-go salad was in a separate container. They asserted that it was a "trick" to keep the chicken warm and moist, as though it would have been better to let the hot poultry heat their salad in the same container until it was lukewarm meat on top of wilted greens. Every day I wake up and mourn the IQ point that I lost reading it.
But it is a trick, it's just that it's a good trick.
"Wilted soggy salad lovers hate this one simple trick!"
I saw this the other day: https://www.reddit.com/r/chicagofood/comments/1na3fer/commen...
So some places are optimizing their fries for delivery.
I've also noticed some restaurants are better at adapting the packaging, like punching out ventilation so fried products don't steam themselves in transit. Lawrence Seafood (which rules) did that for a side of tempura we got this weekend.
But I agree in large part. I wouldn't order fried chicken delivered via door dash in any event. People doing that are optimizing for something other than quality.
The increasing prevalence of battered fries as a consequence of DoorDash is such a cursed thing.
Ten years ago (I moved since), there was a ghost kitchen in the Bay Area that was great. I wish I could remember the name. But it produced meals that were extremely well packaged, but designed to be reheated at home (it took like 15 min max). It was great because the meals could be pre-ordered and delivered by the time you got home. You could tell the recipes were all tweaked to fit the specifics of delivery and reheating.
This was an example of a well functioning ghost kitchen. I don’t know how profitable they were, but it was very convenient. There are a lot of downsides to this approach, like pre ordering, reheating, and limited menu, but it was a very different approach to current ghost kitchens around me now or DoorDash from a local restaurant.
The ghost kitchen model can work if the meal recipes are optimized for being microwave heated at destination before consumption. So pre-cooked, but not hot during transport. This allows a more reliable quality for the customer. This allows the kitchen to prepare in advance, also reducing waste.
I think Lazy Dog does that and calls them TV dinners.
> the fact that most of those restaurant menus are in no way optimized for delivery.
Are you sure they're not?
Yes, I am sure about this claim that I am making. Are there restaurants that do optimize for delivery? Certainly. But DoorDash covers most restaurants in my area (and it's a big area --- Chicagoland) and most of those menus are identical to the in-person menu.
The elephant in the room is people who rely on doordash are not passionate cooks or very discerning customers.
Yeah. Or they didn't have the luxury of being discerning and just need cooked food delivered.
I can't remember when I last used a service like that. The convenience isn't worth the disappointment and aggravation.
Every greasy spoon I frequent now has all sorts of packaging/to-go options, they're self-branding the cups and boxes, they have separate queues for pick-up/delivery orders, they have cubbies for quick pick-up, whatever -- they're all seemingly optimizing for pick-up/online stuff.
> This doesn't ring true, given the popularity of DoorDash and the fact that most of those restaurant menus are in no way optimized for delivery.
People are dumb.... but only for so long. I've been burnt so many times by delivery I've gone back to mostly ordering pizza and picking it up in person.
Eating out in US or any developed western civilization is so expensive that everyone in those civilizations think cooking is a basic skill.
I don't understand why there is no good cheap option. In Japan, I could go to a low-tier shop. It would cost $1-3; the food is decent with taste, and it fills my stomach. In US, $1-3 would be the min amount of tips.
Restaurants / cafes in Japan have less fixed cost overhead than in the US. Zoning, licensing, insuring, etc. in Japan are more conductive to small shops being able to stay afloat with only moderate business. There’s other factors of course, but those are biggest ones I found when exploring potential for small side project. With that said, I have yet to run a bar/cafe in either country, so my experience is limited to my research.
I think cooking is a basic skill for self sufficiency, if things go wrong in society.
Living in dense cities it can be easy to forget how many dependencies you rely on, it's a complex chain of logistics.
But I sure do miss the convenience and cost of Japan. Cities in Japan feel like they are made for people to live mostly outside of their house. Whereas it is so expensive to do normal city stuff in many western cities, it costs too much to participate every day.
I suspect it is to do with the amount of pedestrian traffic passing through an area. When you have a high population density there is an increased amount of foot traffic in the area you can charge less per individual serving because you have a higher overall volume of traffic.
Where I live in Australia the cheapest food tends to be Kebabs which congregate around pubs. There is a high amount of students walking (stumbling) home after a night out etc so they can afford to be cheap since they get so much foot traffic coming through.
My uneducated guess would be that rent and labor are much cheaper (in relative terms) in Japan than in the US, perhaps so extremely that it dominates compared to the marginal cost of producing food.
I think rent and zoning make a huge fucking difference here. You cannot really have a tiny noodle shop under a home in the US where that's incredibly common in Japan due in large part to national permissive zoning. You've got to maintain a separate home and business property and have the means to acquire or rent both. That necessarily drives up cost of small retail business and tilts the economics far more in favor of very large companies like Walmart or chains like Panda Express.
For starters, $1–$3 probably wouldn't cover the ingredients for most dishes. A single bell pepper, for example, is ≈$2. Ground beef for 1 is ≈$4.
… I, and everyone I know, can cook? Do cook. There's no way to eat out every night…?
The only place with cheap restaurants in the US is ironically NYC. The second most expensive metro in the country is able to sustain the dollar slice because of massive foot traffic. When you serve 100+ people an hour you can lower margins, and labor is a lower percentage of costs. Restaurants outside new york either have much lower sales volume or are corporatized and make massive profit.
When I worked for Dominos in the late 80s, it was a lot like this sounds. No dining room, though customers could walk in and order in a small vestibule. The place was as efficient as possible, just ringing phones, an assembly line, cooler and ovens, storage and cleaners in the back, and delivery drivers running in and out.
There seems to be something special about pizza that sets it apart from everything else, that made it seem reasonable to order it delivered from a non-restaurant even back then.
I think pizza is just virtually indestructible in terms of traveling. Sometimes I see americanized chinese food or those caribbean rotis being sold out of no-seating places likewise. The thing about a non-ghost no-seating establishment is you know they would go out of business eventually if they were truly awful. The ghost kitchens though can spin up new virtual brands endlessly.
It worked because Dominos was a brand name, people knew what to expect before ordering, and they picked up their own food instead of letting a overworked disinterested gig driver deliver it.
Plenty of Chinese takeaways, and a good few “Indian” establishments (takeaway/delivery only, no restaurant) have operated in the same way, without chains or brand names, for decades, at least all over the UK. Many great quality, many poor, but that was part of the fun of moving to a new area, figuring out the good ones from all the menus that got shoved through the letterbox.
Before that, of course, the fish and chip shop is an ancient institution, though they rarely delivered.
Most Domino’s were/are almost always delivery. Yes you can go pick up your pizza but most people don’t.
When I worked there they sold pizza and Coke. That was it. No breadsticks, no wings, no salads. One kind of crust, two size options. And by Coke I mean Coca Cola Classic in 16oz glass bottles. No Diet Coke, no sprite, nothing else. It was pure efficiency by elimination.
The drivers were all employees then, too. Not gig workers. No idea if that’s still the case.
Same here. We added Diet Coke and pan pizzas right at the end of my Domino's career, and that was a big honking deal. I can't imagine what it's like to work at one now.
Giving in to the nostalgia for a moment: there also wasn't a computer in the place. Everything was done on paper order slips and paper bookkeeping. No online ordering, so everyone paid with cash or check. No cell phones, so you couldn't call out to tell a driver he had the wrong address or the wrong pizza; you just had to wait for him to get back. And we still had the 30-minute guarantee, so we raced around like a bunch of maniacs even though the company kept telling us not to. Good times.
Yep, same. The only technology in the store was the desk calculator on the manager's desk.
And no GPS navigation of course. There was a big map of the delivery area on the wall in the back room. If you didn't recognize the address you'd look at that before you left the store and just had to remember the details.
Dominos delivered. Pizza has been delivered since the dawn of time.
The pizza was delivered by an actual employee of the pizza place, and there might be a small delivery fee and a tip. Now the gig companies add a delivery fee on top of the inflated menu prices, then ask for a tip before the order will even be picked up. The fees can be 80% or even higher than the in-store price.
I remember in the early 2000s there was a big push to deshittify delivery pizza. Companies were all advertising how they were now sending out their pizza in insulated bags. Dominos went particularly heavy, advertising a purpose built delivery vehicle with a built in warming oven (not sure if this was ever real or just for advertising) and a big emphasis on how they reformulated the entire menu to taste better.
When I worked there they had hot boxes drivers would carry in their car. There was an alcohol burner in it that somewhat kept it warm. They switched to insulated bags about a year after I started.
The stores usually had one or two company cars, a hatchback like a Ford Escort, painted up with the Domino’s logo. It was not equipped with any special pizza warmer. But most drivers used their own car. They got an hourly wage, a percentage of the order total if they used their own car, and tips.
Maybe Domino's had another delivery vehicle in the 2000s, but one of the 10 Tritan Domino's delivery vehicles from the '80s sold at auction a few weeks ago for US $45,000.
https://bringatrailer.com/listing/1984-tritan-a2-3/
The vehicle was real. There is (or was) a series on YouTube about someone who bought one that had been salvaged and wanted to repair it for his own use but ended up getting various legal threats from Domino's, claiming he obtained the vehicle illegally or planned to misuse their branding.
The emergence of ghost kitchens, more than anything else, is what got me to stop using food delivery services. They made it impossible for me to have enough trust, so I switched back to ordering from real restaurants that I physically go to.
> made it impossible for me to have enough trust
Copy the address into your maps app and look it up on street view.
I don't see why I should bother. It's easier and better just to order from real restaurants that people go to to eat.
What happens if you change to "pickup"? Does the place just disappear?
You end up standing in line with a bunch of delivery drivers who all know the drill and are on the clock, and you quickly learn you cannot be polite if you want to get your food.
No, you just go pick it up and save some money.
I live a short bike ride from a CloudKitchen location and pick up from it often. Hard to beat birria and bao buns in the same stop even if they're nothing to write home about.
Could be a few years stale. Some of the ghost kitchens even operated out of real restaurants by another name. E.g. higher quality sitdown place shoveling out burgers and fries out the back door.
> Some of the ghost kitchens even operated out of real restaurants by another name.
Yes, that also blew my trust in the whole thing.
I live near a CloudKitchen location and I use it often. I always pick up on my bike, so I'm skipping a lot of the expense of delivery. The pickup is locker-based which is easier to deal with than a restaurant where you have to get someone's attention.
The variety is great because my partner and I can get wildly different things and I need only make one stop. Ours is stocked with the standard set of generic "restaurants" plus serves as a "location" for several real local restaurant chains and even a food truck. The generic stuff is passable but uses cheap ingredients, the partnered restaurants seem to have fine quality control and use the same stuff they use elsewhere, so I find them to be quite good. Picking up myself I don't experience the cold food issue others complain about.
It does such brisk business every time I'm there I have a hard time believing this specific one is dying. I hope it's not.
Anecdotal: Due to lifestyle factors, in my family we use Ubereats often, probably 4-5 orders per week on average.
I have never placed an order from a restaurant that I don't actually know beforehand. Maybe I haven't been there in person, but I know the name of the restaurant and I remember where is it and maybe someone I know ate there.
The only time I go completely blind is if I'm traveling. But that's like 1-2% of my total orders. And, in that case I usually stick to known chains or maybe I ask what's a good restaurant around here, then find it in the app.
I suspect it's not so uncommon to order from restaurants one already knows, rather than taking risks?
If that's the case, then ghost kitchens are going to have a very hard time getting their slice of the market
> Maybe I haven't been there in person, but I know the name of the restaurant and I remember where is it and maybe someone I know ate there.
A big part of the problem is that just because it has the name of a real and known restaurant doesn't mean that the food you order through delivery apps was made there.
good point, at the time I wrote this comment I was halfway through the OP article, later I finished reading it and realised the same kitchen can actually work for a range of restaurants and chains. Initially I thought it would just be some made up name on the delivery app, as opposed to a recognised brand.
The main issue was that they relied on food delivery to sustain its model. I’m not going to pay $50 in food and $20 in tips and fees. Like anyone sane, I call in my order and pick it up myself. This idea died because of this missing link. I would entertain it if you have a pickup booth in a lobby.
And you just re-invented Chinese takeout as experienced in major cities!
One of my favorite dumpling shops in Brooklyn just had 2 tables... everyone just carried it out and back to home / work. And I think it worked well for them.
I feel the author could do more to separate “restaurants” from “takeout”. These are surely two very different market sectors. Johnny’s Pizza might have a couple of bar stools and chilli flake shakers but they’ve always been 90% focused on delivery. Chez Johnny on the other hand has always been about an in-house bistro dining experience. Ghost kitchens were always about the former.
The author touches on margins being eaten up by the delivery hegemony which feels like a much more important point. The handful of online ordering marketplaces are the app/play stores of this part of the economy and I can believe that they are far too greedy and powerful. Yet would the economy tolerate a much more diverse marketplace for connecting cooks, drivers, and customers? One of the only things holding the whole system together is shitty drivers and crappy kitchens being weeded out by the major marketplaces. If drivers could just hop between apps there would be no way to filter out the rogues?
They also bring up quality issues with packaging and delivery. To that extent, food delivery feels like healthcare where one cannot reasonably be expected to shop around for a surgeon to see your legs back on. When you order a meal you can’t just hope for the best knowing that if the food arrives cold and demolished then you’ll be able to get a refund and try somewhere else! Regulation here would help: your municipal certificate could not only rate food hygiene but also your ability to hit a reasonable p99 turnaround from order to order-up!.
> would the economy tolerate a much more diverse marketplace for connecting cooks, drivers, and customers?
I envision some kind of government-run or mandated exchange where drivers can certify/onboard at any number of uber/lyft clones, and customers can sign up for any number of uber/lyft clones. Any request placed will be sent to the exchange and the cheapest price from a service that the passenger is willing to use is selected.
This would primarily squeeze the margin of uber/lyft. That margin is what competitors can offer up to drivers for higher wages and passengers for lower prices. It's pretty wild to me that Uber/Lyft still manage to capture 25-60% of the "value" of each ride, when the overwhelmingly largest value they provide is derived from network-effect lock-in (essentially rent-seeking).
Maybe drivers could set their minimum wages per mile/estimated time, and passengers could avoid companies with business practices they don't like (inadequate background checks, paying wages too low, sponsors the wrong sports team).
This exchange would have to be enforced with anti-trust or just statute/regulation.
It drives me insane that the VC industry threw so much money towards delivery in so many ways (restaurant delivery, meal kits, ghost kitchens, etc), when that’s the part that matters the least.
If I were to do a startup, it would be a food company that leverages drive thru. Optimize everything to maximize throughput on the drive thru by only accepting orders ahead of time (maybe even days ahead of time so that the establishment knows exactly how much food to order and prepare). The food is ready and can be dropped right into the person’s car as soon as they pull up.
People are fine with driving around, especially if it’s on the way home from work or close to where they live. What they don’t like is going to the grocery story, cooking the same three basic meals they know how to cook, cleaning, and eating the same leftovers for five nights in a row.
I can’t believe VCs and startup founders failed to realize the driving part was not the thing people were willing to pay a premium for at scale. They want cheap, tasty, diverse, that’s more convenient than cooking, but doesn’t need to be dropped off at their doorstep.
> so much money towards delivery in so many ways
It makes more sense if you see it as emerging from a meta-strategy of: Create a national middleman platform; become monopolistic by operating at a loss; trap both sides while raising fees to extract rents.
The other options you're talking about aren't mustache-twirlingly exploitative enough to appeal to those investors.
It would be too easy for Local Hungry Dude and Local Eatery to have a friendly chat when picking up the food, and then cut-out the (unnecessary, unproductive) middleman for future meals.
Menu presentation, ordering, payment is also a service those companies provide. That part definitely scales. But they wanted a larger share of restaurant business.
leverages drive thru = real estate is expensive
>What they don’t like is going to the grocery story, cooking the same three basic meals they know how to cook...
I personally am not fine being force-fed excess salt, sugar, low-quality oils, and other ingredients over which I have no control, ultimately leading to my risk of death increasing by 50%.
https://pubmed.ncbi.nlm.nih.gov/33775622/
For traditional restaurants, what percentage of orders are for delivery (using Doordash, etc)? Excluding pickups where the customer comes and picks it up himself.
I can't imagine it's even close to 50%.
I don't know the patterns of regular folks, but for me the prices in general have crept up enough that's it rare I want to try some new place - unless I get multiple strong personal recommendations for it. You can forget about paying extra for delivery to home!
Gohst kitchens just sound like a big corporate version of the usual story where someone without much knowledge decides that they're going to open a restaurant ... and discover that the restaurant business is REALLY HARD.
They seemed to think they cut out a lot of costs, they were mistaken ... and then they partner with delivery companies who jack up the costs.
>Ghost kitchens promised lower costs. The math never worked. Delivery apps charge restaurants up to 30% commission fees5. Ghost kitchen operators add rent plus percentage fees on top. Equipment repairs and maintenance create constant expenses. Marketing costs multiply when you have no storefront presence.
Meanwhile there's no loyalty from customers because what is there to be loyal to? Nobody in the chain here cares about quality ... I get the wrong order or bad food, there's nobody to fix it, and I probably never do it again.
It would be interesting to know what these companies had for a business plan / where they thought the numbers were going to pan out.
They grew during the pandemic, for obvious reasons. Now that that's over, it's no surprise that they're dying off.
> Shared kitchen facilities meant that one staff member prepared food for multiple brands simultaneously. No ownership. No accountability. Just assembly-line cooking with zero connection to customers.
It's funny because it's not like (normal) restaurants don't exist where they have crazy-big menus with a wide range of choices and cuisines. Certainly some of them are kinda mediocre, but many are actually pretty great, and you can get a solid dish regardless of what you pick. Some pride themselves on their ability to make basically anything, and make it well.
A ghost kitchen where the same staff works for several different "restaurants" simultaneously can work just fine, assuming actual training, and an effort to create quality recipes and use quality ingredients.
But I can easily see how a lack of a sense of ownership among the assembly-line-style staff could make this dicey. If you're making random dishes for a random set of "brands" (a brand among many that was plucked out of a hat, complete with AI-generated food images and descriptions), you're probably not going to take much pride in the quality of your work. And I do think the author has a point about connection; certainly a connection to customers is no guarantee of quality, but I think it's a much harder sell to inspire that quality without it.
> Ghost kitchens promised lower costs. The math never worked. Delivery apps charge restaurants up to 30% commission fees5. Ghost kitchen operators add rent plus percentage fees on top. Equipment repairs and maintenance create constant expenses. Marketing costs multiply when you have no storefront presence.
> Layering these costs together, restaurants discovered a devastating truth: there wasn't enough money left for anyone to make a profit.
So is that true of working with delivery apps, generally? All of those points are also are true of regular restaurants with a storefront, except the last one about marketing expenses. Are the delivery apps just surviving parasitically on restaurants that would be better off without them?
> Are the delivery apps just surviving parasitically on restaurants that would be better off without them?
Yes. At least according to the restaurants themselves.
Did anybody actually open a ghost kitchen that served great food or are they just trying to scam?
The problem seems to be the product,so it's essentially a scam. If the product was good,I don't see a problem with a place that's just a kitchen.
The restaurants in north america seems to be all in parking lots anyway,might as well be home instead
I think the food trucks fulfill the idea behind ghost kitchens of an easy, low-risk way to start a food business. They also share some of the flexibility, because you do have the option to move locations.
But they have the additional benefit of a physical location so you can get profitable orders that you don't pay the UberEats tax on as well as build brand recognition.
> Approximately 7,606 ghost kitchen operations remain active across the United States5. This sounds substantial until you realize how many have closed, pivoted, or failed in the past two years.
The article says this but never actually says how many have closed or failed. The only evidence it provides is that some operators have shut down. But that could be industry shakeout. So, are ghost kitchens actually doing?
A buddy of mine is an executive at one of the successful ghost kitchen companies. I asked him about this article. His comments:
- They aren’t dying. Most of them are just not run well, and there isn’t a widely-known “playbook” to use to spin one up.
- Demand is high. Supply of what people want does not meet this demand.
- Lots of people use ghost kitchens to chase fads or to try to get rich quick. These rarely work long term.
- Profitable ghost kitchens are well-run kitchens (or restaurants without a front of house).
- His abbreviated playbook for ghost kitchens that work: prep everything (nothing cooked to order), finishing and assembly should be the only thing done when the order comes in, every order should be done within 5 minutes (this blew my mind) so that it will get to the customer within 20 minutes, make sure your images look exactly like the food you will deliver, get packaging that makes it so that food can be delivered and still look good, advertise (promote) in the apps when you open, and cut back as organic sales and reorders start rolling in, master one location first and then scale out with a provable system, add additional compatible brands (e.g., cakes expanding to cupcakes or cookies) later in the life cycle with a similar development process (but in the same kitchen).
- There is a truckload of restaurant kitchen workers who love good ghost kitchen work — high pace, limited menu (relatively speaking), no front of house staff to deal with, etc.
- When a ghost kitchen hits product-market fit, labor and food costs can be sub-20% of revenue each (this is insane, imho). Marketing starts at 25% of revenue and rapidly drops to sub-5%. Note that this is based on what they receive from the delivery companies, so percentage of sales is higher.
- My friend can spin up a new location in 20 days and $10k from getting the go ahead to delivering food. That includes setting up the kitchen, hiring, training, and initial inventory.
> Quality control became impossible. Shared kitchen facilities meant that one staff member prepared food for multiple brands simultaneously. No ownership. No accountability. Just assembly-line cooking with zero connection to customers. When food arrived cold or wrong, customers had no relationship with the brand to forgive mistakes. No loyal regulars. No servers to smooth over problems. Just angry reviews that destroyed virtual brands forever. No reason for repeat business.
That's a straight quality control problem. It ought to be solveable.
But that's hard to do.
The trouble is, the whole food app industry is based on someone else dealing with the hard problems. The drivers aren't employees, and the restaurants aren't employees. If an app company gets into ghost kitchens, they are now in a business where they are clueless. Some try to avoid being responsible for the food by just being landlords for people who buy a station in the kitchen
Bulk food prep is a solved problem. Every major hotel has it solved. There will be some senior people who went to a serious culinary academy. They look at food prep as a manufacturing problem, with batch quantity optimization, holding time limits, error tolerances on temperatures and quantities, and quality control points. It's factory planning.
The first "Doordash Kitchen", in Silicon Valley, is near me. It's still operating, but I don't see many drivers there.
> When food travels twenty minutes in a bag, quality suffers.
You'd think that would be a solved problem in packaging and prep by now. Insulated containers are not rocket science.
> Insulated containers are not rocket science.
You often want the opposite of insulation. Food continues to cook in the container, things get soggy, etc. Each dish and even ingredient can have different ideal packaging requirements. It's not something that really scales well. It's part of why menus like McDonalds' remained stable and relatively small over a period of decades. Notice how their fries are served in a specialty designed container that's open, which avoids them becoming soggy.
McDonalds has a sizable R&D operation in Chicago, called Speedee Labs, to figure out things like that.
Does anybody in the "ghost kitchen" industry?
A lot of folks took the bet on CloudKitchens because of Travis. Even after raising $850m, CloudKitchens has never ran liquidation event for employees afaik. I wonder how they attract/retain talent in that scenario.
Ironically, some (if not all) of the biggest companies in that market force their employees to work from offices, so they lose that potential consumer base right away.
I've always ordered from restaurant I actually walked in before and knew, so I'm not really surprised by this
> Approximately 7,606 ghost kitchen operations remain active across the United States5. This sounds substantial until you realize how many have closed, pivoted, or failed in the past two years.
The article says this but never actually says how many have closed or failed. The only evidence it provides is that some operators have shut down. But that could be industry shakeout.
> The company then announced it would sell or close every remaining physical location and pivot to "software only".
What does that even mean? Sell an NFT image of a burger?
CloudKitchen was holding plenty of software hiring events near me few years ago. All these companies developed software to streamline the process of listing thousands of stores on all delivery apps, receiving orders, organize and manage kitchens assembly lines like how the orders are received, and dispatched to cooks, etc. Also they integrate analytics, cost tracking, supply chain management, and other random things like that. Basically for any PE or a billionaire who wants to larp as the next McDonalds or Starbucks, they don’t want to build everything from scratch.
The kinda thing a regular restaurant is probably managing using a spreadsheet and a notebook.
Drop shipping, but for food - what did we expect?
It doesn't work that badly if your food is good, but I guess the problem is it often isn't.
Delivery certainly isn't unpopular.
Isn't the main problem that the kitchens are shared and the restaurants are just popup brands with no loyalty built up?
I don't think you need an actual sit-down location to succeed, but you do need full control over what you produce and to spend time building trust and loyalty.
Easy come, easy go
1. Did any of them insource their own delivery? This seems like where they lost most of their money.
2. Did they adopt checklists and double-checking supervision to ensure food-safety, uniformity, and correctness?
3. Did they use quality ingredients rather than the cheapest shit Sysco sold that day?
4. Did they right-hire enough competent, sufficiently-paid staff so that churn wasn't 100% per 4 months?
5. Did anyone there ever run a successful restaurant storefront to multiple-location chain before? (Restaurants of any sort are the hardest, most grueling, tending to be risky businesses around. My grandfather became a mechanic rather than take over his father's French restaurant after going through the trouble of training to become a chef.)
I'm going to make a giant leap and assume most of these were "no" and they failed horribly on execution by focusing on the wrong things.
the basis of ghost kitchens started with one restaurant being cloned by the same restaurant to serve as a preparation nexus for their own menu to get local coverage and gain economies as the restaurant ramped up. Later pirate restaurants that were clones that copied the menu and snapped up the order - often assisted by delivery companies that had the stats. Later these grew larger, multi menu clones, often with 3-6 restaurant clones in one spot. Then someone got greedy, and the rents for these spaces destroyed their economic basis, and the city got greedy, rubbing their oily hands together to get taxes, levy code shit etc. The original restaurants lawyered up and the ghost kitchens became anonymous - and Oh yes, COVID was over
I know capitalism and I don't always get along, but it's so good to see its desire for profitability and the need to protect investors actually kill a business that needs killing. Nice.
Pretty low quality article. In plenty of countries ghost kitchens are thriving. Yet it provides no US-specific reasons for why they're dying there.
Don't just sneer. Give some details.
In which countries are ghost kitchens thriving? How do they avoid the failure modes described in this article? Is it possible they are simply behind the curve?
Low quality food is eventually going to catch up to you. People have to want to re-order. I think this article does a bad job of explaining why ghost kitchens are failing - to me it sounds more like a scam where they barely made the effort to actually make a good product and tried to make a quick buck - take some of that investor money. The concept, I feel, can work.
> In which countries are ghost kitchens thriving?
Much of Asia.
> How do they avoid the failure modes described in this article?
My suggestion was that this is exactly what a meaningful article on this topic would mention, as clearly the failure modes aren't universal. I'm not the one writing articles about it.
> Is it possible they are simply behind the curve?
Au contraire, ghost kitchens were already more of a thing here before COVID.
@dang can we please stop changing titles that are originally informative and match the original post? I understand for cases where the submission titles are substantially different than the original. But it doesn't make sense when the original title is more informative than the altered one that mysteriously gets moderated into existence some time after the link is submitted.
The submitted title was "Ghost Kitchens Are Dying. Here's the $15B Lesson Every Restaurateur Must Learn."
Since "Here's the $15B Lesson Every Restaurateur Must Learn" is obvious linkbait—I would even say shameless linkbait—this seems like a perfectly standard title edit to me.
From https://news.ycombinator.com/newsguidelines.html: "Please use the original title, unless it is misleading or linkbait"