The Great Ghost Kitchen Collapse Is Here

For a while, it seemed like ghost kitchens were popping up everywhere. You'd flick open DoorDash on your phone to browse around for dinner options, only to notice unfamiliar restaurants all listed in your neighborhood. Of course, they weren't brick-and-mortar spots. They all operated out of the same mysterious space, or sometimes even an existing restaurant.

Everyone seemed like they were in on it, too: Cosmic Wings came out of Applebee's; IHOP still hosts a few like TenderFix, Pardon My Cheesesteak, Thrilled Cheese, and Super Mega Dilla; Hooters weathered the pandemic by spinning off various virtual brands; and up until this year, Wendy's was bullish on ghost kitchens, until, suddenly, it wasn't. After a few years of ghost kitchen supremacy, however, it looks like their heyday might finally be coming to a close.

It was one thing when we had to order out during peak pandemic dining room closures, but people have been heading back out to restaurants since then, and quite a bit, too. Perhaps we can chalk it up to our previous restlessness from having been cooped up for months, but people are clearly cherishing their time outside of the home.

CNN reports that Kitchen United Mix, a large operator of ghost kitchens backed by Kroger, is now selling or closing all of its locations. That is a bad sign for how the ghost kitchen model is working out, because Kitchen United Mix had raised $175 million during previous funding rounds as recently as late 2022. It also means that all the shiny new Kitchen United Mix food halls opened in Kroger locations just this year are in the process of closing.

The ghost kitchen model might have initially shown promise as a way to allow small businesses to operate without investing in a brick-and-mortar space, but it hasn't really worked out like that. Independent restaurant owners operating out of ghost kitchens have to rely entirely on third-party delivery services, whose fees can eat into revenue by as much as 30% per order. For an industry that already runs on low profit margins, that's enough to sink an entire business.

Customers aren't embracing the virtual restaurant concept model, either. CNN notes that while delivery orders remain high, they haven't kept growing as they did during the pandemic, and excessive fees have put some people off delivery as an everyday option. Consistent issues with quality have also made some customers wary of ordering from a place they haven't heard of or actually seen before.

Uber Eats has already cleaned up its restaurant directory by removing the scammiest virtual brands from its services, and some other brands have decided independently that it's time to shutter their ghost kitchen concepts. For example, Chili's virtual wing brand, It's Just Wings, has now been integrated into the bar menu within Chili's actual dining rooms. Applebee's, meanwhile, has stopped running Cosmic Wings; if you head to the Cosmic Wings website, it now gently ushers you to the Applebee's site instead.

If consumers decide that they'd rather sit in boisterous dining rooms, or prefer that their food comes from an actual restaurant, it looks like the ghost kitchen's days may actually be numbered. With a name like "ghost kitchen," who could have seen that coming?