The Evolution Of Ghost Kitchens: To Succeed, Become More Than A Landlord

Kyle Hollenbeck Forbes Councils Member

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Kyle Hollenbeck Co Founder of Blt Kitchens and Family of Brands.

The ghost kitchen industry has undergone significant changes in the last 12 to 24 months as the world adapts to life beyond the pandemic. At BLT Kitchens, we’ve experienced this transformation firsthand, and we see the future of ghost kitchens not just as temporary spaces for delivery-driven food businesses but as launchpads for entrepreneurs to test, adapt and evolve their concepts. I will be diving into how the ghost kitchen landscape is shifting and how these businesses can adapt in a post-pandemic world.

Learnings From Our Story

We operate strategically placed commissary kitchens in Arizona. We have positioned ourselves as a key player in this industry by offering accessible, flexible kitchen space for entrepreneurs and established businesses alike. We aim to be more than just a ghost kitchen or a space provider. Our mission is to create a full-service resource center where tenants can access the support they need to grow their businesses. This includes food buying programs to help them save on ingredients, marketing services to boost their reach and ongoing business development support to ensure their long-term success.

Additionally, we aren’t just landlords—we are tenants too. Our journey started with a single food truck over a decade ago, and we’ve built everything on that foundation. Today, we operate our own food businesses within BLT Kitchens, so we understand the challenges that come with running a food business and can help our tenants overcome them.

The Evolution Of Ghost Kitchens

The evolution of the ghost kitchen model reminds me of the daily deal trend that swept through the market a decade ago. Back then, I was working for LivingSocial as a sales rep, and I ranked eighth out of 2,000 reps globally. At its peak, LivingSocial had over 4,000 employees, but after being acquired by Groupon, that number dwindled. I believe Groupon survived because it adapted to the changing landscape. That’s exactly what ghost kitchens need to do—adapt to meet the current needs of food entrepreneurs while positioning themselves for long-term success.

The ghost kitchen model boomed during the pandemic when restaurants had no choice but to pivot to delivery and takeout. Now that in-person dining is back, many wonder if ghost kitchens are still necessary. My answer is yes—but they need to be used differently. Rather than simply serving as a permanent solution for delivery-only businesses, ghost kitchens can also be jumping-off points for food businesses to experiment, refine and grow. Whether a business is just getting started or looking to scale, kitchens should ensure they offer low-risk, flexible spaces to do so.

Adapting To The Future Of Ghost Kitchens

One of the key drivers of success in this industry is offering flexibility. Tenants should be able to rent space by the hour, day or month, making it accessible for all types of food businesses, from startups to well-established brands. This model not only helps ensure profitability for the kitchen but also allows a wide variety of tenants to succeed without being burdened by the high costs of a traditional restaurant or brick-and-mortar space.

Flexibility isn’t just about pricing. It’s about creating a space where businesses can experiment and pivot. By providing that opportunity, ghost kitchen operators become partners in innovation.

Supporting Growth

But beyond flexibility, what truly differentiates ghost kitchens is a focus on fostering growth. By offering support services and taking an account management approach, ghost kitchens can help their tenants succeed rather than simply acting as rent collectors.

For us, this approach has proven that success in the ghost kitchen industry requires more than just renting out space. It demands that kitchens become partners in their tenants’ growth, helping them navigate the challenges of running a food business. Whether it’s negotiating better prices for ingredients, offering marketing support or providing operational guidance, ghost kitchen teams should ensure their tenants have the tools to succeed.

As I reflect on our journey and the changes in the ghost kitchen landscape, there’s a clear lesson for anyone in the shared kitchen industry: Be more than a landlord. Entrepreneurs today need support, guidance and access to resources. By adopting an account management approach—working closely with tenants, offering business advice and solving problems—ghost kitchens can create long-term partnerships that benefit both sides.

For example, at BLT Kitchens, we provide tenants with food-buying programs to help keep their costs down. It’s set up similarly to a franchisee-franchisor model where we are not on the hook for their missed payments, but they get the same great savings. For marketing support, consider offering access to a social media manager to post and create content. When you do news segments on your kitchen with your PR company, make sure to include tenants to provide them with coverage.

You can also help facilitate connections within your network for tenants. For example, you could help set up small food companies with larger companies, like cafeteria operations or those that cater corporate events and need that local touch. If a kitchen wants to take it a step further, they can help book their tenants for catering or sell their products online and collect commissions on the product.

Focus on growth, not just occupancy. A revolving door of tenants may fill space in the short term, but it doesn’t create long-term sustainability. Rather than focusing solely on occupancy rates, shift your attention to helping tenants grow their businesses.

In doing so, you’ll retain tenants longer, create a community of success stories, and, ultimately, build a more profitable business. Invest in your tenants’ success, and they’ll invest in you. The number-one reason I hear for why food businesses close is “not enough sales”; the second is food costs, and the third is marketing, a.k.a., “no one knew how to find us.”

In conclusion, the ghost kitchen model is evolving, and those who want to thrive in this space must evolve with it. As a call to action, I encourage others in this industry to rethink their role and shift from being just space providers to becoming partners in their tenants’ success. I think that’s the future of ghost kitchens, and it’s a future that’s exciting to be a part of.

Read the original article here https://www.forbes.com/councils/forbesbusinesscouncil/2024/11/08/the-evolution-of-ghost-kitchens-to-succeed-become-more-than-a-landlord/