What are ghost kitchens and how they are growing in Latin America

The IT Burger hamburger in Mexico City became famous without anyone knowing where it was.

A simple internet search yielded few clues about its location, if not none. However, his clients and followers on Instagram did not stop growing.

It happens that IT Burger, since it was born in 2018 and until a few months ago, was a “ghost kitchen”. Did not exist. It could only be found in food delivery applications, such as Uber Eats.

Today, IT Burger has more than one establishment of this type and has already opened its first physical restaurant, with tables and chairs, like those of a lifetime.

“Starting as a phantom kitchen helped us a lot to give us fame. It was a novel concept and attracted a lot of attention. We were the hamburger of the ‘ghost burgers’,” Vicente Mundo, a young Mexican entrepreneur who set up this business, tells BBC Mundo with other friends

The concept of phantom cooking, dark kitchens in English, emerged with the rise of food delivery applications.

Several articles in the press agree that they were born in London.

“Virtual restaurants,” as they are also known, “only exist in the digital world. There is no store, no facade for the customer,” Cristina Villarreal, spokesman for Uber Eats in Latin America, tells BBC Mundo.

Ramp Business

This type of establishment has become attractive to entrepreneurs because it requires a much smaller investment than a traditional restaurant.

You only need a kitchen, a cook, a product and an agreement with an app like Deliveroo, Uber Eats, Rappi, No apron or Didi to start the business.

“We started assembling the kitchen in an old printing press. We rented it to a real estate developer with several uninhabited buildings that were expensive to keep the buildings empty,” says Cruz.

In the last year, phantom kitchens have become popular in several Latin American countries such as Mexico, Brazil, Argentina, Chile, Peru and Colombia. Some have reaped such success that they have been able to become a franchise and open their first physical restaurants.

Rappi, one of the most popular food delivery services in the continent, attests to this.

“In 2018 we started from scratch and now in 2019 we work with 230 kitchens,” Stephanie Gómez, leader of the Rappi Dark Kitchens project for Latin America, tells BBC.

There are phantom kitchens that were born like this from the beginning, but many other physical restaurants decided to open franchises only for cooking and delivery, without diners, to improve their services.

“Many restaurant owners who operate with us complained about how distributors collapsed their premises. So we started renting establishments that were only for cooking, to lower costs and get more profit,” explains Gomez.

In this case, Rappi’s main bet is to detect where the greatest supply and demand is and which restaurants stand out. Once explored, they offer spaces for rent to these businesses and work with them exclusively.

That is, they only operate on their platform.

“At the moment we are investing a lot in this bet, so we make sure that the benefit is not shared with another delivery service,” says Gomez.

A different strategy is pursued by Uber Eats, the other leading food application in Latin America.

In this case, they do not invest in infrastructure, but in “promoting different brands of the same kitchen that works well,” says Villarreal.

“That way, the same kitchen can have up to six different brands, as has been the case, with six different types of food,” he adds.

Online impact

“In our business, only existing in a virtual way, the role of Instagram was very important. People began to like hamburgers and the word spread, even reaching the ear of celebrities,” explains Cruz.

Uber Eats and Rappi are aware of the impact that these brands acquire, who work with metrics and data analysis so as not to take false steps when betting on a phantom kitchen.

“It is the case of Mora Mora in Mexico, a vegan space from which we detect its potential after analyzing the scope of Instagram labels of products and words related to plant-based food,” says Villarreal.

But operating as a phantom kitchen, despite requiring less investment, also presents problems.

“There was a moment, after the first boom, where you get stuck. Existing only virtually at the end does not generate all the confidence of a physical restaurant. People like to see where their food is cooked,” says Cruz.

Challenges

Precisely, achieving great product quality is one of the great challenges of this industry. Keep in mind that many do not start physically, their reputation is built exclusively on networks and other online spaces.

“We constantly work with chefs to see how they can improve their products. Taste and presentation are very important,” says Gomez.

“I would not say that our hamburgers are not aesthetic, but they are rare. We had to develop a thicker bread base so that the juices of the meat did not soak it and it would get wet to our customers,” Cruz explains his experience in adapting A product exclusively delivered to your home.

Health control, not being a restaurant in conditions, is one of the most common concerns among consumers.

Rappi says that in addition to the controls carried out by the authorities of each country, they have a team of sanitary engineers who ensure that the kitchens meet the stipulated standards.

“Our challenge is that the product is always in good condition, in addition to achieving fast delivery times and minimal environmental impact,” says Gomez, of Rappi.

Asked about the commission charged to kitchens for appearing on their platform, Rappi preferred “not to give specific details because commissions vary in each country.” In any case, they claim to offer “competitive rates.”

On the other hand, Villarreal, of Uber Eats, responded that the “percentages of the commissions are established after an exhaustive analysis of each business”. Then, they evaluate “case by case to ensure that the agreement is equally beneficial.”

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BBC-NEWS-SRC: https://www.bbc.com/mundo/noticias-51503421, IMPORTING DATE: 2020-02-25 13:50:03

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