It’s Friday night during a pandemic and you’re in the mood to eat out, so you open up a popular delivery app, pick a trendy looking burger joint and place your order. But here’s the thing, the restaurant you just ordered from doesn’t exist. They have no tables, no storefront, and no waitstaff. In fact, there is no kitchen. Your order went to a “ghost kitchen”— and your food was prepared at a nearby catering shop, or maybe even at the chain restaurant around the corner.
Ghost Kitchens, sometimes also called Cloud Kitchens, are just one of many business and technical innovations restaurants have adopted in the last year to survive the economic pressures of the pandemic.
According to the National Restaurant Association, industry sales were down $240 billion in 2020 from an expected $899 billion, which is comparable to 2019’s $863 billion in sales.
The pressure on businesses to upend longstanding practices has given rise to new restaurant concepts, technologies and organizational structures, hoping to find resilient methods in unpredictable times.
From QR code menus to the adoption of pickup and delivery options to total organizational shifts, food industry businesses and workers across America have had to change or innovate in the face of COVID-19 and its economic impacts.
Pickup and Delivery
The biggest effect on the industry was likely the mass closures and limitations on indoor dining, which pushed many restaurants to adopt pickup and delivery options as their main source of income.
In their 2021 report, the National Restaurant Association found that 53 percent of adults consider takeout or food delivery essential to the way they live.
As restaurants were closing throughout the country, leaving kitchen staff without work, two chefs in Washington, D.C. set out on a new food adventure. Recently furloughed, they used the global pandemic as a springboard for their own business idea: Chefs Teresa Padilla and Geraldine Mendoza opened Taqueria Xochi, a Mexican street food-inspired venture. Within months of opening, the restaurant began to thrive, in part because they chose to embrace a pickup and delivery only model to maintain social distancing measures with customers.
“To be honest with you, I never thought I would ever open a restaurant, especially during a pandemic,” said Mendoza, the director of operations. “It just kind of snowballed.”
Both Padilla and Mendoza worked at the D.C.-area restaurant China Chilcano as a chef and house manager respectively, when they were furloughed. Padilla had over a decade of experience in the industry and wanted to bring cemitas and other traditional Mexican street food to the D.C. area.
Mendoza explained that their success largely came from word-of-mouth. “People come and they love the food and they hear our story,” she said. “We’re very grateful for everyone who has helped us.”
Their success — first as a pop-up, then as their own physical space on U St. — has led them to plan a second location in the Adams Morgan neighborhood of D.C., complete with in-house dining and enough room for Padilla to expand the menu and try more things.
While Taqueria Xochi was originally built for pickup and delivery, many existing restaurants have had to adopt the practice as their primary form of business.
According to a study by the National Restaurant Association in 2019, 60 percent of restaurant meals were consumed off-premise, likely because of the increased use of apps like Uber Eats and Grubhub. When the pandemic hit in 2020, that percentage jumped up to 90 percent.
In 2020, Uber Eats generated $4.8 billion in revenue, a 152 percent increase from $1.9 billion in 2019.
Huertas, a Spanish-inspired restaurant in New York City that started in 2014, found a slightly different method of delivery through a monthly subscription service called Table22. Through this method, they were able to deliver food and drinks both locally and on a national scale. Through this service, subscribers around the U.S. can get their curated tins of seafood conserva while local New Yorkers can also get wines and cheeses.
Jonah Miller, the owner and executive chef, said the delivery service has actually been easy to integrate into the restaurant’s daily routine.
“Of the new innovations, with the exception of outdoor dining, it’s the only one we’re planning to do indefinitely,” he said.
For some, the shift toward pickup and delivery came with a revelation: You don’t need a storefront at all to have a restaurant. Enter the Ghost Kitchens.
One such company within this sphere is Virtual Dining Concepts who run several brands such as NASCAR Refuel, Mariah’s Cookies — in partnership with Mariah Carrey — and Mr. Beast Burger in partnership with Jimmy Donaldson, the titular Youtube star with nearly 65 million subscribers. The channel’s content, with titles like “I Ate A $70,000 Golden Pizza” and “Last To Leave Pool Of $20,000 Keeps It” commonly revolves around pranks and challenges with outrageously large amounts of money at stake.
Virtual Dining Concepts borrows small business kitchen space and staff who produce food for the virtual brands alongside their existing demand. Robert Earl, the co-founder of Virtual Dining concepts said the model can help struggling kitchens survive.
“It’s very gratifying,” he said.
The Mr. Beast Burger app topped downloaded charts in both the Apple and Android app stores when it launched in December 2020 and now is driving orders to more than 600 kitchens around the U.S.
Earle, who also founded Planet Hollywood in the 1990s, said he anticipates this concept will continue to grow even after the pandemic subsides.
“It’s only a matter of time,” he said. “Four to five years from now, there will be very few restaurants that don’t have a virtual brand.”
Delivery apps have also picked up on this trend and are looking to promote and expand into it themselves. DoorDash, recently opened a pop-up ghost kitchen in San Jose, California. The location is occupied by 6 restaurants already established in the area, but with a focus on a streamlined delivery experience.
While some restaurants may not be ready to move into the “ghost” realm, they’ve swapped some common physical restaurant materials for digital counterparts during the pandemic, namely menus.
QR code menus were brought into over half of casual dining establishments according to research by the National Restaurant Association. Using a QR code menu, a restaurant doesn’t need to print physical paper menus. Diners scan a QR code using their phones, which takes them to an online menu to view what dishes are available that day. Around a quarter of all restaurants also added the option to order food through their mobile app even for in-dining customers. Both of these methods minimize the amount of contact between guests and servers.
Yet virtual menus, kitchens and restaurants run the risk of disconnecting people from one of the core aspects of dining out that many enjoy: socializing.
Research by the National Restaurant Association suggests that over 80 percent of U.S. adults think they haven’t gone out to restaurants as much as they’d like to since the pandemic began compared to just over 40 percent at the start of 2020. While pickup and delivery have gained prominence during the pandemic, people miss the social aspect of dining out.
“I do think that … people miss restaurants, and they’re understanding now more than ever before what the value is of going into a place rather than having food delivered to their door,” Miller of Huertas said.
To help bridge the social divide, Miller began to conduct virtual cooking classes, usually for groups looking for team building exercises, which also functions as an additional revenue source for the business.
But as the country reopens, he said he plans to scale down the classes and the nationwide shipping option as his focus returns to the physical restaurant. He believes we’ll be seeing a lot of restaurants returning to their regular operations as in-dining becomes physically intensive again.
“Restaurants are both by choice and by necessity getting back to their bread and butter,” he said.
But as restaurants gingerly reopen some find themselves short-staffed. Richle of the National Restaurant Association says three out of four restaurants have said recently that hiring is their top challenge, a record high for their survey.
The well-documented phenomenon over the last few months has people wondering about the cause. A common refrain from some business owners, including Robert Earl, is that increased unemployment benefits brought about during the pandemic have stifled the motivation to seek out work, especially under conditions that employees are hoping to leave behind.
“The impact of government support, which I fully endorse, has discouraged people from coming back to work at their old conditions,” Earl said.
For Allynn Umel, an organizer with Fight For $15, the answer is simple.
“Over the course of the pandemic, workers absolutely have begun to recognize their own power within the labor market in ways that they haven’t in the past,” she said.
She explained that, even as food industry titans like McDonald’s have made nearly $5 billion in profits over the course of the pandemic, they have continued to deny their employees a U.S. living wage, which is slightly above $16 according to research by MIT.
The painfully slow rise of the minimum wage has been especially highlighted after a recent report by the National Low Income Housing Coalition suggests people who earn such wages cannot afford to rent a two-bedroom apartment in any state in the U.S.
She said that, while larger companies like McDonald’s are fighting the push for a higher minimum wage, many small businesses, like Klavon’s Ice Cream Parlor in Pittsburgh, saw a huge jump in hiring after raising their wage to $15.
In addition to low wages, Umel said large restaurant businesses have done little to keep employees safe by providing adequate personal protection equipment.
After learning that several colleagues she worked closely with got sick from COVID-19, Lizzet Aguilar led several strikes against the McDonald’s branch in Los Angeles where she worked in 2020, aiming to push for stronger safety measures.
“I was especially afraid of not just getting myself sick, but my family — my son and my husband — sick as well,” she said via translator. “That fear was bigger than anything else.”
After continued efforts by Aguilar and three other workers for better working conditions over the course of last year, they were fired in September. Since then, the California Labor Commissioner has fined McDonald’s over $125,000 for lost wages and retaliation penalties and demanded they reinstate their jobs.
Aguilar is currently working at a different McDonald’s franchise but said she’s seeing the “same situation where they’re not doing enough to protect us.”
Umel believes Aguilar’s story may be a part of a broader movement happening across the country where frontline employees, such as those in the restaurant industry, who were initially hailed as “heroes and essential workers” are beginning to recognize their power and are fighting against harsh, unsafe working conditions and low wages.
“It’s clear a tide has shifted,” she said.
For some workers, the pursuit of a more equitable workplace has led to dramatic changes.
Last year, employees of White Electric Coffee in Providence, Rhode Island formed a union after four colleagues were fired after signing a letter to the cafe’s management, asking for diverse hiring practices, sick pay and greater equity access and considerations. The request of management followed the murder or George Floyd that prompted a national reckoning on race and social justice.
A few months after the successful creation of their union, the cafe was for sale and the workers made a bid to buy the space.
Through a GoFundMe campaign and other fundraising methods within the community, the workers managed to make a down payment on the cafe, making them full owners.
Since reopening on May 1, the cafe has been able to sustain itself during the pandemic. Chassaing, one of the worker-owners of White Electric Coffee believes they’ve been bolstered by their story as well as a supportive community of both longtime customers and new guests who’ve heard of the change.
When they announced that they were hiring in April before fully reopening, they received several dozen applications over LinkedIn alone.
“That really struck us,” she said. “This really shows, not that people don’t want to work, but that they want to work with dignity.”
On top of the push for wage increases, Richle said many restaurants are adopting greater benefits to both attract new employees and retain their existing workforce. In any case, he said the industry likely won’t regain early 2020 employment levels until 2022.
It’s unclear what will happen as the hiring shortage continues, but Miller believes it could lead to both raised wages and food prices across the country.
“There’s hope that, come the end of summer, this workforce that disappeared will come back, and if it doesn’t, we’re going to see a huge change,” Miller said.
Earl also believes the combination of reduced government support, increased wages and less fear around the virus will turn hiring issues around in “a matter of months.”
While last year has demanded great resilience from restaurants as the situation and policies changed weekly, the “industry has demonstrated that it’s extremely flexible and rapid to pick up on evolving wants and needs.”