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Rent is typically only 7% of total restaurant operations costs. See Chipotle's quarterly earnings filings for example, and any restaurant industry analyses. La

Rent is typically only 7% of total restaurant operations costs. See Chipotle's quarterly earnings filings for example, and any restaurant industry analyses. Labor and food costs make up 60% of costs, with them being roughly equally divided. Restaurant margins are around 5-7%. I don't see how CloudKitchens is supposed to fundamentally alter the restaurant industry, making it cheaper. Maybe I'm missing something.

Spivak 6y ago
And if these kinds of kitchens really catch on I can see existing restaurant owners running more than one brand out of their kitchen to try and reduce downtime. Chuck-e-cheese and Chilies are already trying this.
clean_send 6y ago
One of the biggest problems of a kitchen is having food go bad. Nightly we have to throw away food because we don’t have another purpose for it. When serving a singular cuisine it is tough to find ways to create new dishes that fit into the menu. Ghost kitchens become interesting because assuming you’re running 3-10 “restaurants” out of the space, the overlap in ingredients becomes large which allows us to reuse and repurpose ingredients easily. This plus the volume of orders allows us again to reduce overhead costs of purchasing. Often times, it takes the same amount of effort to cook for 50 covers vs 500 but clearly the latter yields more profit.
- ryanchants 6y ago
  I can't find any information on how inventory management works to see that kitchen waste would be improved. I see two options: 1) Common inventory, in which case I risk running out of ingredients I need for my kitchen, or the inventory of the facility still has to overstock. 2) I can have my inventory delivered, which still means I have waste to produced. And if I want to support local farms, is that an option, or is all of my food coming from US Foods/Syscon/etc?
- vidanay 6y ago
  I'd like to see a willingness for restaurants to say "I'm sorry, but we are out of that this evening." This would help eliminate food waste by not having to make a batch of something for only 1-2 customers.
  - rootusrootus 6y ago
    Some restaurants do. I've certainly run into exactly that response on a number of occasions.
troupe 6y ago
I know that in NYC a number of restaurants I liked have gone out of business because they couldn't handle the increasing cost of rent as building owners look at how much place like Apple are willing to pay for prime shopping locations. Extremely dense areas like NYC are places where this seems like it might actually be the most cost effective not only because the high cost of rent but because you could have multiple kitchens to reduce the distance delivery drivers have to travel...and these kitchens wouldn't need to be in the prime shopping locations. But I doubt it is going to be as big of a benefit in places like Oklahoma City, Omaha, Houston, etc.
- raiyu 6y ago
  This is true and has been going for most of the recovery post 2010. However with the pandemic and a significant amount of people moving out of the city, coupled with retail closures and bankruptcies hopefully this rent gouging will come to a natural end. The NYC real estate market is going to shed quite a substantial amount of value over the next 3-5 years and very likely prices will drop considerably. Perhaps 30-50% especially at the high end. The lower end will be a bit insulated because of demand and also because the prices there haven't seen as much of a run-up as the higher end apartments.
nickvutdi 6y ago
CloudKitchens could help reducing labor costs too.

Spivak 6y ago

And if these kinds of kitchens really catch on I can see existing restaurant owners running more than one brand out of their kitchen to try and reduce downtime. Chuck-e-cheese and Chilies are already trying this.

clean_send 6y ago

One of the biggest problems of a kitchen is having food go bad. Nightly we have to throw away food because we don’t have another purpose for it. When serving a singular cuisine it is tough to find ways to create new dishes that fit into the menu. Ghost kitchens become interesting because assuming you’re running 3-10 “restaurants” out of the space, the overlap in ingredients becomes large which allows us to reuse and repurpose ingredients easily. This plus the volume of orders allows us again to reduce overhead costs of purchasing. Often times, it takes the same amount of effort to cook for 50 covers vs 500 but clearly the latter yields more profit.

ryanchants 6y ago
I can't find any information on how inventory management works to see that kitchen waste would be improved. I see two options: 1) Common inventory, in which case I risk running out of ingredients I need for my kitchen, or the inventory of the facility still has to overstock. 2) I can have my inventory delivered, which still means I have waste to produced. And if I want to support local farms, is that an option, or is all of my food coming from US Foods/Syscon/etc?
vidanay 6y ago
I'd like to see a willingness for restaurants to say "I'm sorry, but we are out of that this evening." This would help eliminate food waste by not having to make a batch of something for only 1-2 customers.
- rootusrootus 6y ago
  Some restaurants do. I've certainly run into exactly that response on a number of occasions.

troupe 6y ago

I know that in NYC a number of restaurants I liked have gone out of business because they couldn't handle the increasing cost of rent as building owners look at how much place like Apple are willing to pay for prime shopping locations. Extremely dense areas like NYC are places where this seems like it might actually be the most cost effective not only because the high cost of rent but because you could have multiple kitchens to reduce the distance delivery drivers have to travel...and these kitchens wouldn't need to be in the prime shopping locations. But I doubt it is going to be as big of a benefit in places like Oklahoma City, Omaha, Houston, etc.

raiyu 6y ago
This is true and has been going for most of the recovery post 2010. However with the pandemic and a significant amount of people moving out of the city, coupled with retail closures and bankruptcies hopefully this rent gouging will come to a natural end. The NYC real estate market is going to shed quite a substantial amount of value over the next 3-5 years and very likely prices will drop considerably. Perhaps 30-50% especially at the high end. The lower end will be a bit insulated because of demand and also because the prices there haven't seen as much of a run-up as the higher end apartments.

nickvutdi 6y ago

CloudKitchens could help reducing labor costs too.