Photo by bady abbas on Unsplash
How Should the Industry Respond to Ghost Kitchens?
Several restaurants in Las Vegas have found themselves victims of identity theft on a popular food delivery app. Owners discovered their establishments listed on Uber Eats, a service they don’t use, with someone else fulfilling orders under their names.
This isn’t the typical type of theft that’s common in the food industry, rather, it deals with a practice of deception through the use of ghost kitchens, which rose to popularity during the global pandemic and have been evolving into “shared kitchens.”
The owner of Manizza’s Pizza noticed the issue when a customer inquired about an order placed via Uber Eats. She found 15 restaurants falsely listed on the platform, all linked to a single address. Similar complaints came from other local eateries, including Brooklyn’s Best Pizza & Pasta and Gaetano’s Ristorante.
Joseph Gonzales of Brooklyn’s Best Pizza & Pasta reported changes in food quality due to these false listings. Nick Palmeri of Gaetano’s Ristorante voiced concerns about potential liability if customers fall ill from the imposter’s food.
Chef James Trees of Esther’s Kitchen, a James Beard Award nominee, found that someone had slightly altered his restaurant’s name to deceive customers. They added “Italian pasta kitchen” to Esther’s name on the app.
Consumers expressed dissatisfaction with the hidden nature of ghost kitchens, and many food delivery apps have closed numerous virtual kitchens. Uber Eats responded to the situation, stating they regularly review restaurants for authenticity. Upon finding impostors, they issue cease and desist letters and remove the offending listings.
To avoid falling victim to these scams, restaurants advise customers to order directly from them or visit in person. This incident serves as a reminder to remain vigilant when ordering food online and to verify restaurant details before placing an order.
The Future of Ghost Kitchens?
The rise of ghost kitchens, digital-only food preparation spaces, has stirred controversy due to concerns over consumer safety and ethical business practices. Virtual Dining Concepts (VDC), a tech startup, pioneered this model, allowing for the creation of branded food businesses with minimal overhead. Initially conceived as a response to COVID-19 lockdowns to help struggling food establishments generate income, ghost kitchens have now evolved. Major restaurant chains and mobile kitchen trailers are adopting this model, sometimes operating under pseudonyms on delivery apps to increase business.
This practice raises quality and safety concerns, with reports of inconsistent food quality, health hazards for workers, and difficulties in regulation and inspection by health authorities. Additionally, it poses unfair competition against locally owned food establishments, as ghost kitchens can dominate search results on food delivery apps, overshadowing legitimate businesses. As the ghost kitchen trend continues to grow, fueled by collaborations with celebrities and influencers, the debate intensifies regarding its potential negative impact on the food industry and public health.
Despite predictions of a $1 trillion market size by 2030 and substantial investment from big brands like Wendy’s and TGI Fridays, the industry hasn’t met expectations. Evert Gruyaert from Deloitte noted that the impact of ghost kitchens was overestimated, leading to their decline. A shift back to traditional restaurants led to investor withdrawals and closures of many ghost kitchens.
To survive, the remaining ghost kitchens are exploring new models. Some are diversifying into catering and events, not just delivery. Nimbus Kitchen, a New York City-based co-cooking space, is one such example, aiming to change the negative perception associated with ghost kitchens. Co-founder Camilla Opperman believes that shared kitchens are the future, catering to a variety of food businesses that require kitchen space to legally sell to consumers.
Finally, Sam Nazarian, founder/CEO of SBE and C3, recently acquired Kitchen United, expanding his virtual restaurant empire, Everybody Eats, which already includes Nextbite. This move further consolidates the ghost kitchen industry, leaving Virtual Dining Concepts as its main competitor.
Despite being associated with the ghost kitchen trend, Nazarian clarifies that Everybody Eats is not merely a delivery-focused business but a platform connecting audiences through diverse platforms like food halls, digital brand partnerships, and nontraditional locations like airports and stadiums. The company aims to differentiate itself by collaborating with strong partners.
Nazarian highlights the unique strengths of each acquisition: C3’s culinary focus, Nextbite’s digital technology, and Kitchen United’s expansion through grocery channels. Meanwhile, Virtual Dining Concepts emphasizes its omnichannel strategy, aiming to be flexible and relevant across various platforms.
Discussion Questions
How can the food industry ensure ethical practices in digital representations of restaurants amidst the rise of ghost kitchens?
With shared kitchens redefining restaurant ownership, what challenges and opportunities does this present for traditional restaurant models?
Poll
Loading …BrainTrust
Gene Detroyer
Professor, International Business, Guizhou University of Finance & Economics and University of Sanya, China.
Richard Hernandez
Merchant Director
These are not ghost kitchens, they are imposter kitchens. They are passing off as other restaurants in what can only be described as a fraudulent act. Uber Eats and other platforms should clamp down on this by auditing their listings and removing imposters. They should also have some form of verification for genuine restaurants. The restaurants concerned should look at their trademarks and copyrights and bring legal cases where appropriate.
Agree 100% – the premise here that ghost ‘kitchens’ are the problem is a bad headline. Ghost Kitchens are an excellent way for entrepreneurs to simply share exciting new dishes, local flavors and kitchen space. Problem here is not the ‘ghost kitchen’ itself – rather the ‘last mile’ dependency upon relatively new and unchecked third-party delivery networks like Uber Eats and Door Dash, that is riddled with horror stories. Let’s please not paint the ‘ghost kitchens’ as the villain here – rather the delivery services they depend upon (and perhaps that is the moral of the story – without a dependable ‘last mile’, ghost kitchens are doomed).
Completely agree! Thanks Brent.
Red Robin, Dennys, Chilis and IHOP misleading customers, and ghost kitchens impersonating local Las Vegas restaurants? Ain’t right.
This just backs up my refusal to order through third party sites. Sure, I have used Door Dash, but I prefer to order directly from the restaurant. Same thing with travel. Direct is always best.
Good news! Imposter Las Vegas restaurant pages have been removed from Uber Eats. Article in today’s Las Vegas Review-Journal.
https://bit.ly/4bqYJdF
One more reason to dislike “ghost kitchens”, both in theory and practice? Well, I won’t argue “no”… This is, ultimately, an intellectual property issue, and needs to be addressed thru legal channels. Obviously small businesses are more at risk, since they have fewer resources to discover abuse, and to fight it if discovered.Ubereats‘ response sounds good…now if we just didn’t have to deal with the longstanding credibility issues of all things ‘uber’.
Ghost kitchens are scams but the word getting out in Las Vegas and elsewhere, this too shall pass.
I just don’t understand how Ghost Kitchens can maintain the quality and consistency. In order to utilize the resources efficiently, workers will be involved in making each cuisine in the kitchen. Not surprisingly, complaints are high. (NTTimes, 04/22/24) Kroger has scrubbed their kitchens. Wendy’s has pulled back substantially from thier ghost kitchen plans.
Regarding the ethical issues, are we surprised? The ghost kitchen business model invites fakes. It is easy to set up, and the delivery services really don’t care (unless they get caught). Vetting should be easy unless you are only interested in bringing food from one door to the other.
I imagine legal action will be somewhat difficult as companies will be playing Wack-a-Mole to catch them.
Why would Wendy’s, Red Robin, other established brands even be claiming to have ghost kitchens? To try new recipes, test new products, expand into new areas? Don’t think so. Rather, attempting to extend their reach without building another store. And outsourcing ‘deliveries’ to third-parties like Door Dash and Uber Eats – that’s not a ‘ghost kitchen’ IMHO as it was intended, that is a ‘delivery service’.
There are two issues here, and they need to be considered separately.
First, we should not normalize intellectual property theft by suggesting that these operators are “ghost kitchens” and somehow legitimate businesses. These operations are no different from counterfeiters in any other industry.
Regarding legitimate ghost kitchens, this is a brand issue for restaurants. If they’re going to outsource their production, regardless of the reason, it is incumbent on them to ensure that the product they’re selling meets the restaurant’s standards. This is 100% an issue for the restaurant operator; it’s their brand that’s at risk. They need to develop the processes and inspections to ensure the customer experience is genuine. This is the same issue an apparel brand has when they subcontract their production.
These actions put a large ‘nail-in-the-coffin’ for ghost kitchens. Brazen and unethical are not the words for this type of activity. It’s frightening, and it should be shut down with the perpetrators arrested immediately. I suppose the perps were really testing the old slogan, ‘what goes on in Vegas, stays in Vegas!’ Restauranteurs ought to focus their time & talents on high quality food with an exceptionally curated and differentiated dining experience.
This sounds more like outright, intentional fraud as opposed to a ghost.
Ghost kitchens have not moved the needle thus far, and this type of publicity does not help. I think there probably should be more transparency with ghost kitchens. This might help in getting them in the forefront to talk about their benefits (not to deceive customers).
There needs to be appropriate labeling of these kitchens, with legitimate brand names/restaurant names clearly recognized and labeled so that the ghost kitchens do not fool anyone. And in the case of deliveries, sourcing of the food should be transparent.
I am usually all in on anything goes capitalism, but this is too much!
Ghost kitchens are monster-scams, however, with the word getting out as quickly as what seems to be the case, the concept as it currently stands, will dissipate, but maybe return to the surface in some other formative way. Db