Unilever Food Solutions bets on the rise of ghost kitchens: ‘UFS can play an important role’

COVID-19 is the most significant challenge the restaurant industry has faced in living memory. Overnight, dine-in eateries around the world were shuttered, forcing operators to pivot and adapt. As a result, one trend that has accelerated under COVID lockdowns is the rise of ghost kitchens.

Ghost kitchens are commercial catering spaces that allow food service brands without a traditional bricks-and-mortar location to develop. In many cases, they can be characterised as delivery-only restaurants without any consumer-facing areas.

The development aligns with the boom in app-based meal delivery services and reflects rising global acceptance of meal delivery options. Data from Euromonitor International reveals global foodservice delivery sales more than doubled from 2014 to 2019, with 52% of global consumers reporting that they are comfortable ordering from delivery-only restaurants. Uptake is likely to have been boosted further still by the pandemic, when consumers choice was limited and ghost kitchens were able to prove their salt.

“Euromonitor predicts that ghost kitchens could create a $1 trillion global opportunity by 2030,”​ Arnaud Leleu, Unilever’s Global Customer Development Director, observed.

The market research firm suggests faster, cheaper and more reliable delivery could help this segment disrupt traditional foodservice and even retail categories. Euromonitor predicts dark kitchens could capture 50% of drive-thru sales, 50% of takeaway foodservice market share, 35% of retail ready meals, 30% of packaged cooking ingredients, 25% of dine-in foodservice and 15% of packaged snacks revenue over the next decade.

Unilever’s food service business, UFS, has been experimenting in the area in an effort to tap into the fast-growing food delivery trend and support its customers in the hospitality industry. UFS now works with ghost kitchens in all 70 countries in which it operates.

“The concept is built on agility, cost-efficient solutions for the growing demand of delivery and takeaway, and new food experiences. These all suggest that, as a channel, it will grow fast,”​ Unilever’s Leleu noted. “We’re extremely keen – and very well placed – to reinforce our position in this channel.”​

Unilever said every market in which it operates is distinct. The company is assessing opportunities in each, defining priority channels and experimenting to determine the most locally relevant approach. Because ghost kitchens remain a ‘relatively new phenomenon’ the company is working to develop its business model alongside its customers to understand needs and trial different solutions. 

Key advantages: Data and cost efficiency

An important factor supporting the development of ghost kitchens is their advantageous cost structure. A delivery-focused model reduces the staffing requirements associated with dine-in service, allows for a higher turnover of meals, and can significantly cut rent expenses.

Another advantage ghost kitchens can leverage is the data they collect, Yulia Zotova, UFS Marketing Manager, suggested.

“Ghost kitchens are usually very data-driven. They constantly optimise the menu, and their success depends on kitchen efficiency as well as the right packaging, logistics and dish presentation.”​

In Germany, UFS recently announced a partnership with the country’s leading ghost kitchen, Vertical Food, to expand the concept across the country. The importance of data is evident in Vertical Food’s approach. The company operates eight digital restaurants in Berlin, producing dishes across multiple locations based on the most frequently searched meals in that area, and delivering them via its own couriers. UFS Germany is teaming up with Vertical Food to roll out the concept to major cities including Hamburg, Frankfurt, Munich and Cologne.

The partnership expects to open up to 50 digital restaurants as well as developing new delivery infrastructure and formats. Enhanced scale is likely to drive further benefits for ghost kitchen operators. For instance, scaling up will help deliver cost advantages, Euromonitor researchers predict.

“By potentially ‘rationalising’ production for delivery, ghost kitchens could drive a process of scaling which could result in drastically lower prices for prepared, delivered food. Carried forward, this could drive a host of daily eating occasions towards restaurants in general and delivery aggregators more specifically," ​Euromonitor noted. 

What does UFS bring to the table?

Zotova believes UFS can play an important role in helping its customers develop robust businesses based on the ghost kitchen concept. “UFS can play an important role with our culinary expertise, HoReCa [hotel, restaurant, café] and diners’ insights, and supply of tasty and high-quality food ingredients,”​ the Unilever executive claimed.

Supplying products and services to the foodservice industry, UFC offers its customers dish and recipe inspiration to optimise menus, nutrition enrichment and chef training to ‘future-proof kitchens’.

The company has used its R&D, food safety and product development experience to support customers as they develop ghost kitchen operations.

In Belgium, Unilever Food Solutions is working with ghost kitchen concept Casper in its first location in Gent. “We provide a range of products from our The Vegetarian Butcher brand, as well as specific ingredients and flavours,”​ the company noted.

Significantly, ghost kitchens face a number of technical challenges. Preparing, cooking and presenting meals for delivery requires a different approach to food that is plated and presented to a customer as soon as it is made. Dish design and ingredient choice needs to take this into account.

Unilever is also leveraging ghost kitchens to develop delivery concepts for its own brands. Last summer, UFS’s Canadian team launched Tea House by Tazo, the company’s tea and herbal tea blender. The aim was to provide an ‘at-home café experience’ delivering tea-based beverages such as bubble teas.

“The recipes, brand experience and operational facilitation were led by a Unilever Food Solutions Core Team, executed by virtual-kitchens assembly company Ghost Kitchens’ Brands, and delivered by third-party delivery apps including UberEats, DoorDash, and SkipTheDishes,”​ the company explained.

The test phase was described as a ‘huge success’ and Tea House by Tazo is now being executed in Walmart.