CEO and Founder of the Profitable Restaurant Owner Academy, the ultimate resource in starting a profitable restaurant.
Restaurants are notorious for their low-margin business model. After all is said and done, their profitability ranges from 5% to 10%, a number I’ve gathered from a variety of National Restaurant Association articles and surveys. The reason for its low margins is because of the prime cost — food cost and labor — which typically accounts for more than 55% to 65% of the revenue.
As technology rapidly advanced, so did innovation within the food and beverage sector. Third-party apps like Uber Eats, Grubhub and DoorDash have made ordering out easy with just a click of a button — no need to step foot in the restaurant. It is with the advancement of this technology that has allowed new businesses like virtual kitchens, also known as cloud kitchens, ghost kitchens or dark kitchens, to thrive.
The virtual kitchen concept has revolutionized the food and beverage world by taking out one of the major components for any restaurants: the dine-in area. A virtual kitchen is basically a commercial kitchen optimized for food delivery. What that means is that you can have your restaurant ready for takeout orders, without ever needing a dine-in space, which means less investment, lower rent and less labor cost.
After the past five years developing my very own restaurant chain and recently having it acquired, I can see why the majority of my consultation clients are all flocking to this model. Below are four main advantages of why every restauranteur should optimize for this model.
1. Lower Operational Costs
The most direct advantage of operating a virtual kitchen versus a conventional restaurant is the rental cost. Since virtual kitchens do not serve walk-in traffic, they require substantially less