Growth of Ghost Kitchens Threatened by Outdated Digital Payment Tech

With the rise of digital ordering occasioned by the pandemic, ghost kitchens have gone from an enterprising new model to an industry mainstay in a remarkably short period of time. While these delivery-only restaurants have provided restaurants with many opportunities to gain customers and drive conversion without prohibitive spending, the speed with which the trend took hold has posed its own issues, with the infrastructure unable to evolve quickly enough to keep up with the demand. Now, restaurants reliant on digital ordering often have to choose between limiting their availability and supporting a difficult-to-manage tangle of disparate channels.

“The largest mistake [ghost kitchens operators make] is assuming which channels the guest wants to order on. The whole goal of the operation is to drive more orders into the restaurant, and I feel like a lot of the operators are limiting themselves,” Steve Simoni, CEO of contactless ordering and payment technology provider Bbot, told PYMNTS in an interview. “They should be looking more omnichannel than they are right now … as a restaurateur, you want … to put your restaurant out in more digital places, not fewer.”

Simoni specified exclusivity deals as one of the main offenders keeping restaurants from getting in front of the consumers they might otherwise reach, given some consumers’ loyalty to one marketplace or another. Additionally, he highlighted Chipotle’s recent move to open a virtual restaurant in the online game platform Roblox as an example of the wide range of digital availability that leading restaurants will offer going forward.

Bbot announced on Tuesday (Nov. 9) the launch of a new ghost kitchen platform that aims to integrate these ordering channels into a single platform, allowing the brand to accept orders and promote its offerings across marketplaces more easily. The move follows a similar release by online ordering platform ChowNow, its “Order Better Network,” which quickly makes restaurants’ menus available across an expansive suite of digital marketplaces and social networks, though ChowNow’s solution targets independent, consumer-facing restaurants, and Bbot’s is geared toward ghost kitchens.

Related news: ChowNow Joins Tech Providers Aiming to Alleviate Restaurants’ Digital Growing Pains

The Flip Side

Omnichannel availability comes with its own challenges for restaurants that do not have tools to streamline the process.

“Ghost kitchen operators are in a new, growing industry, where a lot of things are changing right now,” Simoni said. “Right now, the biggest barriers for ghost kitchen operators are being able to cleanly and easily get the orders showing up inside the restaurant from all the different channels … especially as they’re all racing to grow their unit count.”

The issue is especially pressing for restaurants, given the continuing stickiness of digital ordering habits adopted during the early months of the pandemic. According to data from PYMNTS’ study The Bring-It-to-Me Economy: How Online Marketplaces And Aggregators Drive Omnichannel Commerce, created in collaboration with Carat from Fiserv, which surveyed more than 5,200 U.S. consumers about how their shopping habits have changed since the start of the pandemic, 58% of consumers are ordering restaurant food online more often than prior to March 2020. Additionally, that figure goes up to around two-thirds for younger consumers including Gen Zers, millennials and bridge millennials.

See also: Bring-It-to-Me Economy Ascends as Consumers Embrace Home-Centric Lifestyles

It’s not just ghost kitchens that struggle with the rise in digital ordering channels — even restaurants with dining rooms have to deal with these challenges. According to data from PYMNTS’ 2021 Restaurant Readiness Index, created in collaboration with Paytronix, 18% of restaurants’ sales now come through third-party aggregators, and 12% come through direct-ordering delivery channels.

Read more: QSRs’ Lagging Loyalty-Reward Investment Hurts Innovation and Sales

From Novelty to Necessity

This rise in restaurant eCommerce has also had an impact on consumers’ expectations for on-premise dining. Simoni recalled that in Bbot’s home city of New York back in 2018, diners were unaccustomed to QR code ordering and were surprised when it worked and their food came to their tables.

“Now, when people look at those QR codes and they can’t order on it, at least in New York, they look at it a little funny,” he said. “Like, oh, it’s just a PDF menu? That’s weird. Why can’t I order or pay on this thing?”

To that point, PYMNTS’ findings from the Index show that about a third of restaurant managers believe that the availability of QR codes enhancing end-to-end experiences will be key to restaurants’ future success. Additionally, top-performing restaurants are more than twice as likely as bottom performers to offer the ability to pay with QR codes.

“The expectation for consumers has completely changed, where they expect their phones to be more powerful than their restaurants …. and I think that trend will only keep growing as people expect more out of their digital tools,” Simoni predicted.

The Contextual Future of Restaurant eCommerce

“Table stakes are fully integrating with all the different point-of-sale systems. The [next] frontier would be embedding this into different experiences seamlessly,” said Simoni.

He highlighted the examples of ordering within Google Maps and of Chipotle’s in-game restaurant, cases of contextual commerce that create sales opportunities in the course of consumers’ daily routines.

Simoni expects that as restaurants become more widely available across digital spaces, major ordering platforms will continue the current trend of offering more of their services piecemeal, making them better able to fit within restaurants’ evolving digital needs. DoorDash, for instance, announced on Wednesday (Nov. 10) a product that allows restaurants to utilize its marketplace for customer acquisition while providing their own delivery drivers to fulfill the order.

“In the next five years, as a restaurateur, you’ll be able to choose the type of currencies you accept … you’ll be able to issue NFTs that represent your brand and create unique membership models … and you’ll be able to choose your logistics provider, whether that’s a local delivery outfit or a national logistics provider,” Simoni predicted. “That choose-your-own-adventure is the trend right now, and that’s why it’s more important than ever for system integrators to get it right.”