Ghost Kitchen 101: See How to Start a Virtual Restaurant from Home

If the world of ghost kitchens sounds ephemeral and difficult to understand, you’re not alone. What are ghost kitchens, and how do these virtual restaurants use food delivery platforms to launch a virtual brand?

Popularized by the pandemic, the ghost kitchen concept has continued to dominate the restaurant industry. Existing restaurants and ghost kitchen brands leverage the flexibility of a virtual restaurant to prepare food and diversify their income through food delivery services.

But you don’t have to be a professional chef or the owner of a traditional restaurant to put the ghost kitchen model to work as a legit side hustle. Let’s dig into what a ghost kitchen is, whether you can start ghost restaurants from your own home, and how to make delivery apps your virtual restaurant’s dining room.

What Are Ghost Kitchens?

A ghost kitchen is sometimes referred to as a cloud kitchen, a dark kitchen, or a virtual kitchen. And while all of these terms refer to restaurants without a physical location for hungry diners to visit, a ghost restaurant differs in important ways from brick-and-mortar restaurants.

These dark kitchens operate on a different business model than the rest of the restaurant business, focusing on preparing food for online delivery. Many ghost kitchens serve multiple brands that prepare food exclusively for third-party delivery apps.

Some of them may even be your favorite chain restaurants leaning into delivery service under the name of a virtual brand. By focusing on delivery only, these restaurant operators cut costs and have the chance to launch virtual brands in a low-risk environment.

Because virtual kitchens serve online customers, a ghost kitchen can use a commercial kitchen or commissary kitchen located anywhere. This reduces the overhead costs that plague brick-and-mortar restaurants and relies instead on delivery drivers to reach customers.

The Pros and Cons of Starting a Ghost Kitchen vs. Traditional Restaurants

Although comparing a ghost kitchen to most restaurants delivers clear contrasts, note that an existing restaurant can operate both a dining area and through delivery platforms to increase revenue.

Beyond the benefits of a virtual restaurant, the booming industry of ghost kitchens has raised concerns about labor conditions and the ethics of delivery services that don’t offer a living wage or benefits to drivers.

Can You Run a Ghost Kitchen From Your Own Home?

You’ll want to check with your state and local laws surrounding food preparation, but many restaurants are required to prepare food in a commercial kitchen for safety reasons and to comply with health regulations.

That’s not to say that you can’t install commercial kitchen pods into your own home or simply rent time and space in an existing commissary kitchen that serves multiple restaurants.

The Ultimate Guide to Starting Your Own Ghost Kitchen

Many of the steps detailed below that you’ll want to follow to launch a ghost kitchen are similar to those you’ll embark on to start any business.

Step 1: Check Local Laws and Regulations

Most local ghost kitchens serve several virtual restaurants, and some of them handle permits and compliance with city codes. This is why the additional costs associated with using a commercial kitchen are worth the investment.

If you are planning to contract with a commissary kitchen, make sure you’ve also filed for any licenses (such as a business license) you’ll need to operate as a food business.

Step 2: Do Your Market Research

Is your burger den or tender shack going to make a big splash on the delivery app or become another brand in a sea of options for online orders? Operating on a delivery app exposes you to a wider audience, but it can also result in fewer people taking notice of your food business.

Make sure whatever virtual brand you launch has a unique take that will appeal to potential delivery customers and that you design a marketing plan to support and grow the brand through every stage of development.

Step 3: Investigate Local Commercial Kitchens

While a ghost kitchen doesn’t require much in the way of proprietary technology, you will need some place to prepare and serve your food. Investigate local options for commercial kitchens or work up a plan for installing the necessary equipment in your own home.

How much does it cost on average to rent a commercial kitchen? It really depends on the area, the size of the kitchen and the equipment needed. Prices can start anywhere from $25 to $100 per hour.

Step 4: Create A Business Plan for Your Virtual Restaurant

Any successful business starts with more than a dream. It starts with a detailed plan about how that dream will become a reality. You’ll need to dig into operational costs, staffing needs and potential funding options.

Step 5: Secure Funding for Your Ghost Kitchen Startup

Virtual restaurants are much less expensive to start than their brick-and-mortar counterparts, but that doesn’t mean you won’t need a nest egg. Toasttab estimates launching a ghost kitchen can cost anywhere from $20,000 to $60,000.

If you need to get a small business loan, visit the Small Business Administration (SBA) for more details about the types of loans you might be eligible for and how to apply.

Step 6: Hire a Team for Your Virtual Restaurant

Just because there’s no dining room doesn’t mean you won’t need to staff your kitchen. While a virtual restaurant can scrape by with just a few employees, you’ll want to keep a close eye on how limited resources might impact your ability to deliver.

At a minimum you’ll need at least one chef, a kitchen manager who fields orders, and someone packing food for delivery.

Step 7: Don’t Forget to Establish a Social Media Presence

Virtual restaurants don’t have the advantage of foot traffic, so making social media your storefront is a smart move. Consider hiring a food photographer to capture your menu items in their best light and promote those images to generate some buzz.

You could also partner with local influencers to attract some attention for your virtual brand launch.

Step 8: Set up Shop on One of the Food Delivery Apps

Remember that your virtual kitchen can’t always be open, so choose a delivery app that’s popular locally and will support the hours you’ll operate.

Uber Eats is one of the more popular platforms for ghost kitchens. It’s estimated to be home to more than 40,000 virtual restaurants in the U.S. alone.

The Future of Ghost Kitchens Looks Secure Because Food Delivery Is Here to Stay

If you’re worried about the longevity of starting a ghost kitchen business, set aside your anxiety because it’s definitely a growth industry. Statista indicates that the U.S. is home to the second largest food delivery market in the world with $218 billion in revenue in 2022 and a forecasted $500 billion by 2027. So get in there and sell your piece of the pie.

Kaz Weida is a senior staff writer at The Penny Hoarder covering saving money and budgeting. As a journalist, she has written about a wide array of topics including finance, health, politics, education, and technology for the last decade.