Ghost kitchens have become the default way to profitability for many restaurants that faced extinction because of COVID-19 restrictions on in-person dining. They drew in both established restaurants as well as a bevy of startups looking to capture the hot meal delivery market.
On college campuses, many dining halls do not allow students to leave the facility with food. That could be changing as Chartwells, one of the largest operators of college campus dining halls, is rolling out ghost kitchens in its network.
“Our goal is to continuously give students access to a variety of dining options and menus, and ghost kitchens are a great solution since it offers them a completely new and unique dining experience,” said Lisa McEuen, CEO of Chartwells Higher Education, in a press release announcing the effort. “A benefit to the program is that many of our campuses are already well-equipped to implement ghost kitchens at a low cost. They don’t have to replace any meal concepts or shut down a location; all they need is kitchen space and they can have a ghost kitchen up and running very quickly.”
Chartwell said its culinary teams have been working with several schools to create new meal concepts for delivery or contactless pickup, while also taking into account local students’ preferences and hours. Schools must sign up for the program to participate.
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Among the schools where the pilot has been tested are Seattle University, SUNY Buffalo State College, University of Utah, University of Texas at Dallas and San Jose State University.
At Seattle University, where over 90% of students participated in schooling online in the fall 2020 quarter, more than 24,000 orders were placed in the first month the ghost kitchen service, which was launched on Sept. 19, 2020, was available.
“We decided to open our ghost kitchen in response to students and parents looking for increased meal variety and a safe alternative to on-campus dining, particularly on the weekends and for plant-based options. The feedback so far has been phenomenal,” Terry Conaty, resident district manager at Seattle University, said. “Our team was able to get the program up and running quickly, and our costs were minimal as we simply repurposed existing kitchen space. It’s a win-win because we’re providing students with lots of new menu options without having to add additional personnel resources or compromise our social distancing guidelines.”
Ghost kitchens are not just a college fad and not just a reaction to COVID-19. In fact, over the past five years, food delivery has grown more than 300% faster than in-person dining, according to Upserve, which also found that 20% of consumers spend more on off-premise orders compared to dine-in expense, and 60% of U.S. consumers order delivery or takeout at least once a week.
The survey also found that 31% use third-party delivery services at least twice a week.
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Lyft (NASDAQ: LYFT), Uber (NYSE: UBER), DoorDash, Postmates, Grubhub (NYSE: GRUB) and more are doubling down on the food delivery market, which market research firm Euromonitor estimates will top $1 trillion in revenue by 2030.
Lyft co-founder and CEO Logan Green said the company was expanding pilot programs of B2B deliveries and Uber reported Q4 gross bookings in its Delivery segment, which includes Uber Eats, grew 128% year-over-year, reaching a $44 billion run rate in December. Revenue more than tripled to $1.4 billion and adjusted EBITDA margin as a percentage of revenue improved 100 points year-on-year. Delivery was up 66% year-over-year, and Uber now has 675,000 merchants on its platform, up from 450,000 in Q1. Its Uber Eats app has been downloaded 92 million times.
Grubhub is making it even easier to order food, joining forces with Fiat Chrysler Automobile (NYSE: FCAU) to allow food ordering from select FCA models via in-vehicle touchscreens.
Click for more FreightWaves articles by Brian Straight.
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