There are a few pandemic habits we’ve embraced IRL: Zoom meetings, QR codes, hand sanitizer. Not so much the ghost kitchen, an innovation that promised to change the world, but has shaken out to be more a thing of quarantine folklore than a reliable business.
Ghost kitchens, which are restaurant kitchens that only offer delivery, became a popular and affordable way for fledgling restaurants to launch on a shoestring budget and for existing companies to bring in additional revenue during the pandemic. As traffic and sales at major restaurants cratered, they hopped on to the trend. In 2021, Wendy’s Co. announced plans to open 700 ghost kitchens across the US, Canada and the United Kingdom. Rego Restaurant Group said its Quiznos and Taco Del Mar brands were set to open 100 ghost kitchens the following year. Even as investing cooled last year, the trend sparked a startup funding surge with dozens of companies snapping up millions of dollars to run ghost kitchens for some of the biggest names in food. Commercial real estate company CBRE predicted that by 2025, ghost kitchens would account for 21% of the US restaurant industry. Many of those plans have fizzled in a normalizing world. Wendy’s announced last week that it will permanently close the entire US ghost kitchen business it launched with Reef Technology. The closures are expected to delay Wendy’s goal of reaching net unit growth of 2% to 3% until the second half of this year, Chief Executive Officer Todd Penegor told investors last week. Butler Hospitality, which ran ghost kitchens for hotels, quietly shut down last year, leaving clients without food services and vendors without payment. CloudKitchens, which counts Uber Technologies Inc.’s co-founder Travis Kalanick as an early investor, lost a string of restaurant partners last year. Reef Technology itself is pivoting to focus on providing its technology to stadiums and airports including Raleigh-Durham International Airport, where it runs a food hall operating system that lets travelers order ahead from any of its nine restaurants using kiosks or their phones.
