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LHC - THE STORIES OF HOSPITALITY
Lopolito Hospitality Consultants, Corp. (LHC) is a New York based consulting firm that offers Recovery Facilitation, Startup Development, Feasibility Studies, and Forward-Thinking Solutions alongside Operational and Management Practices to businesses in the hospitality industry.
The Consideration of Ghost Kitchens
If you do not know what a Ghost Kitchen is you are paying too much attention to running your hospitality business and not enough time to look at other avenues of revenue to remain solvent. Being tied to operations can cause inaction to other opportunities and can prevent revenue growth, and this year more than ever adjustments to daily developments have consumed management. While a Ghost Kitchen may not be for you, as they can certainly fail if not properly planned, let’s study the possibility of more revenue out of your existing kitchen or perhaps at another location.
The Do’s and Don’ts in Considering a Ghost Kitchen “GK”
While a Ghost Kitchen is not for everyone, if you have the capability for additional output from your existing kitchen this may be something to consider. Even if you do not believe it, the COVID era has brought on opportunity like no other to the restaurant industry. If you plan right, you can gain some of the lost revenue through the closed locations in your area.
Looking past the difficulties, rethink what is going on right now in your kitchen and decide if other possibilities can be realized.
Do You Have?
1) A double line setup?
a. Two sets of kitchens.
b. Two sets of equipment.
c. A section of kitchen and equipment not being used.
2) An unused room that may be adjacent to the wall that occupies the existing hood?
3) Enough prep area, additional space, and storage to accommodate two or more concepts separately?
4) Enough daily downtime to offer alternative cooking preparations, simultaneously or not?
5) A team that has various cuisines experience?
While the GK idea has been around for a while, the COVID era has opened the door as the perfect time for this concept to be further evaluated. Also called the delivery kitchen and other names, and with the numerous restaurants unfortunately closing, this opens the path for new business to be established right away at your location. Look around to notice how many of your neighborhood restaurants are now closed. While this is really unfortunate, it’s also an opportunity.
1) What are some of the successful cuisines in your area that are now gone?
2) How much revenue is now available for you to pick up from these closed locations?
You need to be asking yourself these and other questions right now. Yeah, we all feel bad about our neighbors and this is really unfortunate, but you also need to survive, don’t you? Stop thinking that it is the end and you are unable to compete, and start planning for next year right now.
We can safely assume that your revenue of the past has some time for rebounding, so taking this time to add services might work out just fine. However, be warned, I believe that this is a short-lived concept that only the best will succeed with over time. This must be planned, designed, fully incorporated into current operations, or unless you can provide another location. This is not just a prototype even if you believe you will only do this for a year. You must go full barrel and it must be heavily marketed. You must have significant delivery capacity in your area and the ability to produce great food that travels well to succeed. (Think hamburgers that arrive well done when ordered medium-rare. If only we could consume the fact that food keeps cooking during delivery)
You may even close your dining room and go full out GK if you want, but I would not advise losing current revenue just yet. However, this is just like opening a new business, so the planning is similar and so are the licensing requirements. You can also forgo the dining room. Yes, the dining room and bar do not exist in the GK scenario, just the kitchen, and storage. You could also outsource the portion of the kitchen and charge rent; however, this can become troublesome as a partnership so think this through beforehand, as I am not recommending this strategy. Do it right and do it yourself.
How can you decide if a GK is for you?
1) You need more revenue, or else.
a. If you are contemplating closing and have no other revenue sources.
2) You have the capability to create another one or two concepts internally.
a. Discuss other concepts with your team and create a small delivery menu.
b. Can you offer another cuisine alongside your current offerings, staff, and same equipment, or does this need to be accommodated off-times or from another kitchen?
3) You have the room in the kitchen and the equipment to support additional volume.
a. You have great cooks with multiple cuisine knowledge.
b. You are in a delivery stable location.
c. This is a no brainer. If your equipment is standing still, use it.
4) You have an additional space that may even be adjacent to the wall that occupies the existing hood.
a. Costs to tie-in to an existing hood and the location of gas lines in the adjacent wall can save you renovation money. Make sure the hood can accept the additional capacity, or add a higher capacity fan, and the gas measurements hold up for the additional equipment.
b. You will still have to obtain building permits just like anything else.
c. You will need to register and license the new concept.
5) You have use of your own delivery staff or outsourced services from food delivery organizations.
a. Remember, this is a delivery-only service you are building, although pick-up can be offered.
6) There is a small restaurant next door that closed. Can you revive this as a stand-alone Ghost Kitchen?
You began your first restaurant and you may even have more than one now. Consider this an extension operating simultaneously or at random intervals consistently. If you do not want to encumber your current location but have the funds to open another restaurant, think GK instead. Additionally, consider opening a GK at an offbeat location behind a warehouse, still within delivery opportunities, with low rent, and just build a kitchen operation.
Whatever you go GK or not, don’t sit still. Now is the time to start planning your growth. Whether this is a Ghost Kitchen or another restaurant, get to work. The time to plan could not be better.
Jim Lopolito, President
Lopolito Hospitality Consultants