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Ghost Kitchens Vanish as In-Person Dining Returns

The ghost kitchen industry has become a shadow of its former self.

These online-only dining spaces boomed during the pandemic, but as a report Friday (April 12) by The New York Times (NYT) noted, they’ve since begun to fade. 

For example, the report said, commercial real estate company CBRE predicted in 2021 that ghost kitchens would make up a little more than a fifth of all restaurant sales by 2025. But once the pandemic waned and people began dining in person again, restaurants became overburdened and had to rethink their strategies, with brands like Wendy’s and Kroger’s scaling back their ghost kitchen operations.

“Consumers are going out to eat at restaurants again and craving that relationship with the brands themselves,” Dorothy Calba, a senior research analyst for food service at Euromonitor International, told NYT. “Virtual brands just did not have that connection with consumers.”

The report cited the example of Brinker International, owner of Chili’s and Maggiano’s Little Italy. The company launched two virtual brands: It’s Just Wings and Maggiano’s Italian Classics, initially popular with diners tired of home cooking.

But as in-person dining returned, Brinkers found it could not juggle both physical and virtual operations, leading the company to close down Maggiano’s Italian Classics and incorporate It’s Just Wings offerings onto its restaurant menus.

“Everyone thought if you have the labor and the equipment, it would be easy to run virtual brands, but the reality is, most of the delivery times for virtual brands transact during busy times for the regular restaurant,” said Kevin Hochman, Brinker’s chief executive. “It was too much to have a busy dinner rush with an influx of virtual orders coming in, too.”

As noted here last year, research by PYMNTS Intelligence has shown that a majority of consumers “want to know that their food is coming from somewhere with a tangible, brick-and-mortar presence.”

That report – “Connected Dining: The Robot Will Take Your Order Now,” — found that of the 48% of diners who do enjoy ordering from virtual kitchens, 30% said this interest comes at least in part from the fact that these digital restaurants require no interaction with other people.

That report also notes — as did the recent NYT piece — that the rapid proliferation of virtual brands has come with complaints about quality. It led Uber last year to remove 8,000 virtual restaurants from its marketplace, a reduction of 20%.

“With the boom in virtual restaurants over the past several years, we’ve noticed a wide range of approaches to creating virtual restaurant brands,” John Mullenholz, Uber’s head of virtual restaurants and dark kitchens for the U.S. and Canada, said in a statement at the time.