Ghost kitchens — commercial cooking facilities that produce food purely for delivery with no dine-in component — have grown significantly in Australia over the last several years. For some operators they represent a smart, low-overhead way to build a food brand. For others they are an expensive lesson in what delivery economics actually look like.
What a ghost kitchen actually is
A ghost kitchen is a commercial kitchen space leased by an operator to produce food for delivery platforms like Uber Eats, DoorDash and Menulog. There is no front of house, no dine-in service and often no street presence at all. Some operators run multiple brands from a single ghost kitchen simultaneously.
The appeal
Lower setup costs compared to a full venue. No front of house labour. The ability to test a concept without committing to a full fit-out. For operators who already have a kitchen and want to add a delivery revenue stream, it can make a lot of sense.
The reality of delivery economics
Delivery platform commissions in Australia typically sit between 25 and 35 percent of the order value. That comes straight off the top before you count food cost, packaging, labour and the platform’s service fees. The maths only works if your menu is priced specifically for delivery, your food cost is very tight and your volume is high enough to justify the overhead.
When it makes sense
Ghost kitchens work well for operators with an existing kitchen and spare production capacity. They can also work as a standalone model if the concept is right and the economics have been properly modelled before launch. They rarely work well for operators who are already struggling with food cost or labour in their main venue.
Before you commit
Model the economics properly. Calculate your effective food cost after packaging. Price your delivery menu to account for the commission. Project your volume realistically. If the numbers only work in the optimistic scenario, do not do it.
If you want help modelling whether a ghost kitchen makes sense for your business, Pestle and Mortar can work through the numbers with you.
About the Author
Wayne Farmer is the founder and chief consultant at Pestle and Mortar, Australia’s hands-on hospitality consultancy. With experience running hotel kitchens, boutique dining venues, and a successful catering business, Wayne has spent his career helping Australian restaurant, cafe, and catering operators build more profitable, better-run businesses. Learn more about Wayne and how Pestle and Mortar works.