AUSTIN (KXAN) — We’ve all been there: too tired to cook dinner and scrolling through a favorite food delivery app. Luckily, Austin has a huge selection of local restaurants to choose from — the catch is, some of them don’t even exist.
Since the pandemic forced restaurants to close their dining rooms, a new, lucrative business model began haunting Austin’s food industry: ghost kitchens.
What is a ghost kitchen?
Julius Sheih said the first time he picked up a DoorDash delivery order from a ghost kitchen, he was incredibly confused.
“I was looking around everywhere for the restaurant name, but couldn’t find it,” Sheih said. “I ended up having to drive back two times before I realized the address was just at this random building.”
Sheih was picking up a food order from Hawaiian Bros, a ghost kitchen brand that operates alongside seven other brands in the Kitchen United MIX warehouse on Burnet Road.
Also referred to as “cloud kitchens” or “dark kitchens,” the business concept is not as ominous as its name entails.
A ghost kitchen is basically a virtual restaurant that doesn’t have a space for customers to dine in. Instead, they only prepare food for delivery and pick-up in a “hidden” commercial kitchen.
Customers typically order from a ghost kitchen through a third-party delivery app like DoorDash, Grubhub, Uber Eats and Postmates. The delivery driver retrieves the order directly from the kitchen, usually off a conveyor belt or through a pick-up window.
Ghost kitchens can also operate out of pre-existing restaurant chains while posing as local brands on the app. In other words, your neighborhood Pasqually’s Pizza and Wings could actually be a Chuck-E-Cheese off MoPac Expressway, and your nearest It’s Just Wings is probably just Chili’s.
Though ghost kitchens have been around since the inception of food delivery apps, the COVID-19 pandemic made the non-contact business model especially enticing to food vendors.
Only 15% of U.S. restaurants operated ghost kitchens in 2019, but that number shot up to 51% in 2020, according to research by the National Restaurant Association and Technomic.
The spooky side of ghost kitchens
One of the main mysteries surrounding ghost kitchen concepts involves their relative lack of transparency on delivery apps.
The apps only tend to list the address of the food brand and not the name of the commercial facility, so customers have to do their own Google sleuthing to find out if they are ordering from a ghost kitchen.
“I think if I were a customer, it would be nice to know where my food is coming from,” Sheih said. “If it’s somewhere that’s marketed to sound and look just like a local restaurant, and it’s actually just a ghost kitchen that also makes food for 10 other ‘local’ restaurants, then it’s definitely not what most people are expecting.”
The online-only model of ghost kitchens has posed a unique challenge to health regulators across the country.
Traditional restaurants are typically required to display proof of inspection at the front of their store or dining area. While ghost kitchens must abide by the same food safety regulations as a traditional restaurant, it’s not as easy for customers to learn whether a virtual vendor is in compliance if they only know the name listed on their app.
New York City council member Mark Gjonaj posed the hypothetical that a brick-and-mortar restaurant may be able to avoid public scrutiny over a low health inspection rating by using a virtual brand with a different name on delivery apps.
Many restaurants in Austin have stepped away from the world of ghost kitchens since the end of the pandemic, according to a statement from the Central Texas Restaurant Association.
For independent ghost kitchens that operate out of commercial facilities, Austin Public Health said the name of the facility and the individual vendor can be searched on this health inspection score database.
APH said its inspectors generally “haven’t seen any trends of non-compliance with ghost kitchens versus dining locations.”
A look inside one of Austin’s largest ghost kitchen concepts
Hoping to bring the so-called “dark kitchens” into the light of day, shared and private kitchens for virtual vendors are popping up all over Austin.
This massive 17,500-square-foot facility may look like an oversized restaurant, but inside is more than a dozen food vendors operating at once.
GhostLine Kitchens is an Austin-based commercial kitchen facility that rents out its 44 private and shared kitchen workspaces.
CEO and Founder Shalou Barth said she hopes to dispel myths that all ghost kitchens are unsanitary “dark dungeons.”
“We set out on a mission to bring a new model of commercial kitchens,” Barth said. “We’re a very transparent, open environment. So we kind of take the opposite approach.”
A unique feature of GhostLine’s private kitchens is its transaction windows, which allow individual vendors to interface directly with drivers.
The facility also has an outdoor dining area with picnic benches for customers who choose to pick up food.
“There might be the misconception that, ‘Oh, I can just activate my brand on Uber Eats and in a week, the money will just start rolling in.’ But the things that make a brand successful still apply. You have to build brand awareness — you have to have good customer service and great food quality,” Barth said.
Keeping Austin local
Steve Laganzas has been a chef in the Austin area for 25 years. He’s always wanted to own his own restaurant, but said rising rents and labor shortages have made it incredibly hard for new businesses to enter the scene.
Instead of running a traditional brick-and-mortar restaurant, Laganas opted to partner with CloudKitchens, a ghost kitchen concept founded by former Uber CEO, Travis Klananick.
“I chose to do a cloud kitchen just because of all the benefits,” Laganas said. “They clean your kitchen, they take care of my trash. And overall, it’s just much cheaper rates than a food truck.”
With no storefront to staff, some ghost kitchens are also able to cut labor costs up to 50%. Laganas runs his comfort-food brand, EveryBuddy Eatz, all by himself most days.
While people may expect to pay $500,000 or more in up-front costs for a traditional brick-and-mortar restaurant, GhostLine Kitchens estimates a $10,000-$15,000 initial investment for its clients looking to outfit their own private kitchens, or $1,000 for those who want to work in a fully-equipped shared kitchen.
Similarly, several other Austin-area shared kitchen spaces like Capital Kitchens and Wingman Kitchens have adopted an “incubator” model to help small businesses build their brand awareness.
“Moving my business from operating at home under the food cottage law to a commissary kitchen was a lower-risk option to grow and has allowed us to prove our concept as we work towards moving into a brick-and-mortar in the future,” said Bakery Cloud Nine owner, Katie Snyder.
Since joining GhostLine Kitchens, Snyder’s social media has gained thousands of followers and her special cinnamon rolls are “especially popular” among locals, she said.
“Austin has been a ‘Food City’ for a long time. We’re a city that appreciates innovation and entrepreneurship,” Barth said. “The need for getting food delivered to your home hot and fresh and having interesting options has staying power. So we’ll see this for a long, long time to come.”