The restaurant business is one of the toughest to be in, with high operating expenses and slim margins. Ghost kitchens offer a unique value proposition to investors: reduced costs for a variety of high quality food delivered to the customer's door. They also provide value in different ways to other players in the industry.
Ghost kitchens have changed the equation for lots of restauranteurs, entrepreneurs, and investors. Below I describe a few of the ways that underwriting of restaurants is affected by ghost kitchens:
The proforma below demonstrates what the underwriting for a ghost kitchen might look like. A ghost kitchen founder would need to raise equity primarily to buy distressed restaurants or other distressed real estate. They would likely start with one location and then continue to raise equity to open more locations in a few years, and with success more locations a few years after that.
Different people derive different value from this new model of a ghost kitchen. While the above demonstrates how ghost kitchens can be financially profitable for investors, other players can also benefit from the ghost kitchen. Some of these players include:
While there is great opportunity in ghost kitchens, the possible repercussions should not be overlooked. Some of these effects are discussed on the "Speculating on the Future" page.
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