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Commercial Real Estate

Should Dallas Restaurateurs Fear Ghost Kitchens?

Venture Commercial Real Estate principal John Zikos questions if sit down restaurants will continue to grow and thrive with the increasing presence of virtual kitchens.
By |
Matthew Shelley

Ghost kitchens are growing in popularity in most major metro areas throughout the country, and Dallas-Fort Worth is no exception.

A ghost kitchen, also known as virtual or cloud kitchens, are basic commercial-grade kitchens with no dine-in space. This allows the space to be located in virtually any commercial area with access to high residential and daytime populations. They do not need co-tenancy or expensive finish out. And therefore, they are significantly less costly to operate than a full-service sit-down restaurant.

John Zikos

Google and SoftBank have both made significant investments in this space. Most recently, former Uber CEO Travis Kalanick raised $400 million to enter into the fold.

In 2016, Americans, for the first time, spent more money at sit down restaurants than they did at the grocery store.

This year, $17 billion of food will be ordered online, and it is projected to grow to $24 billion by 2023. These numbers illustrate that Americans have had a growing preference to eat out and are starting to show a desire to have prepared meals delivered to them.

Obviously, we still like to eat, but we do not wish to cook.

Can sit down restaurants continue to grow and thrive with the increasing presence of ghost kitchens?

I believe this argument is very similar to the question we have been pondering for the last 10 years in retail; e-commerce versus bricks and mortar.   We are concluding retail that it is not one or the other; it is both.

Smart retailers operate efficient online sites and operate compelling retail stores. The ability to do both well complement each other and creates healthy retailers.

Having the ability to cook and deliver food out of a much lower-priced space will add significantly to the bottom line.  That will allow restaurants to continue to pay the kind of rents necessary to create a great dine-in experience with vibrant and exciting finishes, excellent service, and fresh, high-quality food.

Restaurants need the dine-in experience to keep their brands relevant and give people a place to gather.

Sit down dining is not going away.

Great restaurants will learn to create a strategy with dine-in restaurants and ghost kitchens as a part of the plan.

Ghost kitchens aren’t scary; they’re just smart!

John Zikos is a partner at Venture Commercial.


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