Industry news

How to start your ghost kitchen like a casual chain

Melanie O'Hanlon
Marketing Associate

Casual dining chains are an iconic part of the American experience. Chains like Applebees, Chili’s, and Olive Garden have locations across the US, and most people have had at least one meal at a casual dining restaurant before.

Looking for tips on how to start a ghost kitchen? We’ve got you covered.

Despite a decline in popularity in the 2010s, these casual dining chains are reconfiguring their operations to stay relevant and meet consumer demand with ghost kitchens.

Casual chain dining’s rapid rise and fall

Casual dining chains became popular in the mid to late 1900s when the boom in the car industry made dining out more accessible than ever. Casual restaurants opened all over the country to meet the demand.

But the shifting economy and change in consumer tastes caused revenue to quickly drop these big chains in the early- to mid- 2010s — hundreds of locations across the US saw a 7.4% drop in foot traffic in 2018-2019. COVID-19 only worsened the problem, with the industry’s sales volumes down by over 80%.

  • Bloomin' Brands, parent company chains like Outback Steakhouse and Carrabba's Grill, announced plans to close 43 locations after a "challenging" 2016.
Graphs displaying a decline in revenue for multiple casual chain restaurants from 2018-2021

The 15-year shift in demand

About every 15 years, there’s a shift in consumer demand as younger generations start holding more purchasing power. This shift hit casual dining chains hard: younger generations see these chains as “un-innovative, unchanging, and lacking value.” Instead, they prefer local venues with healthy options — places where they can try new experiences in the form of food.

Young diners enjoying a meal on the patio of a local restaurant.

Independent and locally-owned restaurants are a big draw for younger generations looking for an authentic experience. In a survey, 96% of young diners said they would rather go to a ‘mom and pop’ or locally-owned restaurant than a well-established chain restaurant. Consumers rated independent restaurants superior to chain restaurants on 12 of 15 attributes studied.

Stepping into the future with ghost kitchens

Despite waning profits, all isn’t lost for casual dining chains. As part of wide-sweeping rebranding projects, many brands took a leaf out of Guy Fieri’s book and discovered how to start a ghost kitchen to appeal to younger generations and recapture lost revenue. Nearly 50% of casual dining operations have tailored their menu to off-premise business.

Applebee’s ghost kitchen

With the addition of Applebee’s Cosmic Wings ghost kitchen, sales have grown 237.4% from April 2020 to April 2021. Launching in February 2020, the Cosmic Wings ghost kitchen concept operates out of nearly 1,300 existing Applebee’s locations nationwide. This method kept the ghost kitchen startup costs low, prevented further closures of in-venue sites, and kept staff employed.

Cosmic Wings is steadily growing as a profitable venture — off-premise sales are nearly 37% of the brand’s total sales, with Applebee’s delivery accounting for 14.7% and takeout accounting for 22%. Plus, with investments in new technology, shifting their focus to off-premise operations has proved to be a massive step in the right direction to re-capture national attention.

Denny’s ghost kitchen

Denny’s is emerging as a leader in rebranding to keep up with consumer interests. Denny’s menu has “improved or changed" in the last six years” by more than 77%. They’re active on social media to stay connected with their customer base and keep an eye on guests’ interests. 

Denny’s is also emerging as a leader in the ghost kitchen franchise space with its two virtual concepts: The Burger Den and the Melt Down. The virtual brands were a hit, with off-premise sales at Denny’s doubling during COVID.

Ghost kitchens push the industry forward

While the heyday of casual dining may be coming to a close, many of these brands are far from extinct thanks to their ghost kitchen franchises. But ghost kitchens aren’t just a solution to save casual dining — they’re a profitable solution for venues of all shapes and sizes looking to add new revenue streams without high overhead costs. This innovative and creative method of operation is pushing the industry into the future, you don’t want to miss out.