‘Ghost kitchens’ grow as dining rooms empty
They’re thriving around Baltimore as people avoid sit-down restaurants
Until a few months ago, concert promoter Evan Weinstein was a wandering foodie, though he loathes the “f” word.
He’d fly to Phoenix just to eat at famed restaurant Pizzeria Bianco: “I didn’t think it was that great.” On the other hand, dinner once at Faviken, the remote Nordic restaurant featured on the Netflix show “Chef’s Table,” was “pretty mind blowing.”
But this March, all that travel, dining out and the concerts he spent his career working on, came to an abrupt halt with the arrival of the coronavirus pandemic.
Out of work with nothing but time on his hands, Weinstein started fooling around in the kitchen of his Annapolis home, making Detroit-style pizza. Sauce on top, shape is rectangular.
“The legend of Detroit-style pizza is someone took old, unused oil pans from the automotive industry,” he said.
He posted photos of his work to Instagram. According to Weinstein, friends began drooling over his posts and requesting samples be sent far and wide.
“I kinda thought, ’Hmmm… let mesee what else I can do,’” Weinstein recalled.
Suddenly, he had a new business, Underground Pizza. Working in the space of local restaurants, he mails partially frozen pizzas directly to customers across the country, or drops it off at locations around the area for people to pick up directly.
Weinstein’s business is what’s known as a ghost or cloud kitchen, a relatively new term that applies to a range of eateries that sell food without maintaining a brick and mortar shop. Operators may lease space in a centralized kitchen, allowing them to forgo the many costs and risks associated with opening a sit-down restaurant.
It’s a model that’s seen “crazy growth” since the beginning of the pandemic,
with traditional restaurants closed and rapidly expanding appetites for delivery food, says Anil K. Gupta of The University of Maryland’s Smith School of Business.
Jasmine Norton, founder of the Urban Oyster, opted to transition her business to a ghost kitchen model during the pandemic. Formerly a stand operator at farmers markets, she opened a fast casual eatery in Locust Point’s McHenry Row in 2019. But that didn’t make sense from a financial perspective after the coronavirus-related shutdowns meant she couldn’t seat customers.
“It’s hard. You have to sit there and look at tables that are empty that could be helping to pay your rent and labor,” she said. “Eighty-two percent of our revenue was from dining in. We had to figure out something quick.”
So she closed her Locust Point eatery this summer. The Hyatt Regency on Light Street, its own restaurant closed by the pandemic, allowed her to use its kitchen rent-free.
Today, Urban Oyster offers a limited delivery menu through Grubhub and Doordash, and serves hotel guests and others who place orders for pick-up. Norton also recently started offering a full menu, including raw and char-grilled oysters, through a courier service that allows her to cater to customers from Rockville to Havre de Grace. Specially insulated bags help keep food cold or warm as needed.
“We’re in the world where we need to be experimental,” says John Kelly, CEO of Zenreach.com, a San Francisco technology company that works with restaurants to measure foot traffic inside businesses. “The traditional channels just aren’t available to us in the same way.”
On average, its clients foot traffic has dropped about 50%.
“The good news,” Kelly said, “is that almost all of them have seen good success in either adopting ghost kitchens or some type of delivery platform.”
Uber Eats saw year-over-year earnings grow 110% across the United States in the second quarter of 2020. The company works with around 3,000 “virtual restaurant concepts” in the U.S. and Canada, though that’s a small fraction of the overall number.
A white trailer parked at 409 S. Amity Street in Pigtown features signs for restaurants that don’t exist in the traditional sense — with names like Wings & Things and Burger Bytes. Drivers with Uber Eats or Grubhub pick up orders from a carryout window.
In addition to new businesses like Underground Pizza, some existing ghost kitchens in the Baltimore area have seen their business grow exponentially.
Prior to the pandemic, Collin Morstein prepared around 100 meals a week to deliver around the Baltimore and Washington area through his company Scratch Made. Now, he and his small team regularly prepare more than 300 in the shared kitchen space they rent in the city’s Govans neighborhood.
The growth came as a welcome surprise to Morstein, who initially wondered if homebound customers would have any interest in ordering pre-made meals. Wouldn’t everyone just cook for themselves?
Scratch Made customer Ally Vitale said she tried that. But, after a few weeks of lockdown, the Fells Point resident quickly became overwhelmed by the demands of work, childcare and preparing meals for her family of three. So she gave Scratch Made a try — and fell in love with the convenience. Each week, the company delivers eight
meals to her home, enough for her, her husband and their young child to share.
“It’s one less thing that I have to think about when I get home,” she said.
Despite the growth in business, Scratch Made is able to maintain the same small staff as always, pointing to some of the key advantages of the model. Morstein works with one other employee, plus contractors who help with delivery. Doing the same number of meals in a traditional restaurant “would require a much larger staff,” he said.
After having worked at area restaurants in the past, he has no interest in opening a brick-and-mortar restaurant, which he sees as being more work for less payoff — “I’ve always seen that as sort of like a broken system.”
But for some restaurant loyalists, the very phrase “ghost kitchen” can smack of a soulless, corporate dystopia.
Restaurateur Steve Chu said he has no plans to branch into ghost kitchens for Ekiben, a fast-casual eatery known for its chicken sandwiches on bao. Chu and his partners got into restaurants because they
love the business; seeing a customer’s smile, the instant gratification of serving someone a good meal. With ghost kitchens, he said, “we can’t really see how the guest reacts to the product. It’s just kind of not our thing.”
Chu called ghost kitchens “a fad,” comparing it to passing trends like frozen yogurt and poke restaurants.
“I don’t know if it’ll be here to stay,” he said, while acknowledging they’re even more popular in parts of Asia and New York City.
Gupta says that’s not necessarily the case. He predicted continued growth in the delivery and ghost kitchen market into 2021, even after the pandemic is over. That could potentially be bad news for brick and mortar restaurants.
“In capitalism,” Gupta said, “whenever you have some winners, you end up having some losers.”
Still, he said, many consumers will choose to dine out, no matter how many ghost kitchens succeed: “Because going to a sit-down restaurant is partly just getting out of the house.”