The Rise of the Virtual Restaurant

By Randall Orser | Employees

The pandemic has forced millions of people across Canada to stay home no longer eating out, giving rise to "the virtual restaurant". Virtual restaurants are also known as dark, cloud or ghost kitchens and they exist just to take orders from food-delivery apps.  They don't have dining areas or servers and often do not even have a storefront.  The only physical part of them is the kitchen where delivery drivers pick up. 

The first ghost kitchen started in New York in 2013 and the concept has grown from there as have the delivery apps that work with them.  Online food delivery is big business, the global market is currently US$84.6 billion and is projected to nearly double to US$164.5 billion by 2024.  In Canada a third of the $3.3 billion food delivery market goes through third party apps like Skip the Dishes and DoorDash.

There are many incentives for restaurant owners to have a ghost kitchen.  Labour costs account for a third of a restaurant's revenue and ghost kitchens cut these costs as front-of-house staff are eliminated.  Owners are able to offer a variety of food styles all from the same kitchen which can be set up anywhere such as rented spaces inside commissary kitchens, converted warehouses and even parked trailers.  

In 2019 a well known large restaurant conglomerate in BC launched 100 virtual restaurants in repurposed kitchen spaces.  In 2019 a Restaurants Canada survey of 9424 food service establishments found that only 4% of those responding operated ghost kitchens but 17% were planning on launching one in the next two years.  Sixty-two per cent of Canadian quick service restaurants already use a third party delivery service so especially due to Covid-19 it makes sense to create a ghost kitchen to further use these services.

Regulations for virtual restaurants depend on the province but they are generally treated the same as a brick and mortar restaurant.  They are inspected prior to opening and have regular and random inspections.  

From an article by Ali Amad


About the Author

President/CEO Number Crunchers® Accounting Inc. Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.