Food delivery opportunities and challenges – are you ready?

July 23, 2020
Author: Henry Artime

Lessons learned from marketing several Ghost Kitchens over the past 2½ years.

Like most of you, in December of 2017 I had never heard of Ghost Kitchens. But then I received a call from Jim Collins, the new CEO of Kitchen United. He reached out to me to help him brand and market his latest endeavor. Jim and I had successfully worked together five times before.

At first our task involved establishing Kitchen United as a national solution for restaurants looking to expand their delivery and take-out business. This was entirely a B2B exercise. Most recently, our work evolved to also include a B2C play as well. We helped Jim’s marketing team envision, name and launch Kitchen United MIX, which are individual community-based kitchens, offering consumers more food choices. Having successfully opened several MIX locations with Artime Group, Kitchen United has shifted resources away from an AOR relationship to using their own in-house staff.

The ghost kitchen journey has been a challenging and exhilarating learning experience for me and the agency. No matter what they’re called – ghost, virtual or cloud kitchens, we see these invisible-to-the-public kitchens becoming a significant part of how the restaurant industry does business, and a better way for restaurants to reach new off-premise consumers.

Today, many restaurants understand the benefits of using a ghost kitchen to expand their delivery business, including lower operating costs, and a quick ramp-up to start. Despite the benefits that a restaurant may derive by using a ghost kitchen, most kitchens are still figuring out the most efficient operational and marketing models to help restaurants best engage today’s consumer.

As a marketing partner, we have learned that there are several challenges that a ghost kitchen operator faces that precede a marketing or brand launch. Of course, they all run the numbers, they most likely know their build-out costs and the eventual regulatory burdens they will face. But, there are other challenges to think about and overcome.

The first challenge is a reality that a ghost kitchen shares with any restaurant or food provider — “location, location, location.” Yet the ghost kitchen challenge is more nuanced. Several businesses have built or are building kitchens located in seemingly ideal locations due to reduced real estate costs. But the location may not be ideal for take-out or delivery. A ghost kitchen ideal for restaurants needs to be located near densely populated areas, within a 4 or 8-mile / or 10-minute driving radius. You see, eventually marketing analytics will be closely examined, and where there isn’t sufficient demand for delivery or a change in consumer behavior, success will be too costly – changing all the revenue models. It will appear to be a marketing problem, but the problem may have been created long before marketing was engaged.

Over the past couple of years, we have witnessed tremendous disruption in the space, and we think that it may be prudent for operators to not bite off more than they can chew. If the brand has a goal to expand quickly, we have learned that it may be best to test and pivot quickly and generate solid profitability projections before making too many real estate commitments. The ghost kitchen brand and their marketing partners will need to learn from the data, adapt, and stay committed to building brand value at every location. Brutal honesty is essential.

All players in the delivery revolution must discover what their competitive advantages are compared to other kitchens (B2B), and to other dining options in each local market (B2C). A good brand development and digital marketing team is going to be indispensable for forming the brand narrative, creating awareness, incenting engagement, and ultimately generating orders. Every brand must exploit what they do differently than others. Is it location? Is it pricing? Is it better technology or digital interfaces? Another competitive advantage that must be considered is brand affinity; do you actually love the customer, and more importantly, and do they love you?

Finally, there is this hubris, common to many businesses, which says, “if we throw enough money at it, we’ll succeed.” I believe it’s best to run lean; build up the revenue before you build out the head count. Be ruthless in your revenue generating priorities. Outsource talent. Look for outside wisdom to solve internal challenges.

I know that my agency, Artime Group has benefited from our 24/7 learning experience over the past 2½ years, and what we’ve learned benefits each of our clients. Marketing a ghost kitchen is an omni-channel endeavor requiring a full spectrum of expertise. It requires experts in tech/web, storytelling, branding and design, digital media, social media, public relations, event marketing, and more.

I’m extremely proud of how much ghost kitchen business IP now resides in our agency, but I am most proud of how our team went above and beyond to give our client the resources they need to succeed.

To download a PDF of our work for Kitchen United click here.

About Nuts & Bolts

The articles found on our blog are intended to educate, inspire and reconcile sales and marketing professionals. We are all fighting on the same side, ideally working towards the same goals within our organizations. At Artime Group we believe that most brands produce more value than they effectively communicate. That leaves income on the table for both management and sales professionals. We hope our articles spur dialog on collaboration and the value of good marketing.