The emergence of new technology and online alternatives shattered traditional brick-and-mortar retail operations across the globe. Leaving legacy food service establishments watching from the sidelines, self-assuring themselves that “we are different, digital disruption cannot strike such a blow to us.”
Now, riding on the coattails of the pandemic, food/kitchen technology is experiencing its own period of exponential growth poised to leave a similar and eerie wake in its path. A one trillion dollar wake according to the leading market research firm Euromonitor. Blinded by overzealous attitudes grounded in the ‘irreplaceability’ of physical ambiance and human connection, the food industry was largely caught off guard.
What is causing this digital disruption in the foodservice industry?
Ghost Kitchens. Also known as Shadow or Virtual Kitchens, this style of restaurant operates solely online, void of traditional expenditures such as a high trafficked location, dining rooms, and waitstaff (for reference, wages and rent comprise 60% of the cost of your average Starbucks coffee). Moreover, Ghost Kitchens are adopting new innovative technologies and software solutions at a much higher rate than their fixed restaurant competitors. Why? For millions of people around the world, 2020 and 2021 brought about a mass reshuffling of jobs, careers, and business centers, leading many to venture off in a new direction entirely, including the food industry. The appealing business model and affordable startup costs make the new entrance a real possibility for many. Notably, these industry newcomers (largely millennials and first-time business owners) are not afraid of new technology, and they come ready to disrupt.
While true, the cultural and technological shift driving Ghost Kitchens has attracted ‘fresh’ industry newcomers, many powerhouse brands are beginning to take note. Among those attempting to get ahead include industry goliaths TGI Fridays and Wendy’s, who have both announced a bold entrance into the market. TGI Fridays is planning to launch 300 Ghost Kitchens, and Wendy’s has announced 700 more across the U.S., U.K., and Canada by 2025. No small operation, with Wendy’s CEO Todd Penegor expecting each location to average sales between 500 thousand and 1 million USD annually.
Championed by a unique combination of consumer shifts, new technologies, operators, and established brands, one thing remains certain – digital disruption has reached the food industry and is here to stay.