As more people take out and deliver goods in order to avoid public places during the coronavirus outbreak, cash-strapped restaurant owners are forced to chase funds in novel ways, including testing new concepts or cutting operating costs through ghost kitchens. Such a facility can be an urban warehouse containing multiple small kitchens rented by restaurants or restaurant subcontractors for delivery only, thereby eliminating the need for high-quality locations and high-end buildings. Orders are usually delivered by “third-party aggregators” such as DoorDash, Uber Eats or Grubhub.
Curt Garner, Chipotle’s chief technology officer, said in a statement: “The digital kitchen incorporates innovative features that will complement our rapidly growing digital business while providing our guests with a convenient, frictionless experience.” Quarterly digital sales have tripled year-on-year, and consumers are demanding more digital access than ever before.”
The company stated that Chipotle’s new method transforms the hiss, smell and sense of steel in the Chipotle dining room into a “hall, designed to contain all the sounds, smells and kitchen landscape of a traditional Chipotle restaurant”. Dedicated storage and pickup space will be provided for large catering orders. Guests must order in advance through the Chipotle website, Chipotle app or a third-party delivery partner.
Prior to the pandemic, deliveries were already on the rise, but in the era of production shutdowns and social distancing, it has become a rare growth path that is otherwise insignificant. A study by the NPD Group found that despite a 22% drop in restaurant traffic, delivery orders in March increased by 67%. According to a report from Restaurant Dive, there are approximately 1,500 ghost kitchens in the United States, but this number is expected to soar. A Euromonitor report predicts that by 2030, the value of the ghost kitchen market will reach $1 trillion. According to Statista, by 2023, overall food delivery revenue will reach US$24 billion.
As the United States continues to break records of new coronavirus infections and threaten the chance of reopening, the hit restaurant industry is operating under the shadow of another round of possible closure. On Wednesday, New York imposed a 10 p.m. curfew, banned restaurants and bars, and prohibited gatherings of more than 10 people in private residences.
A survey conducted by the National Restaurant Association in September found that about 100,000 U.S. restaurants have been closed for long or permanently six months after the first wave of business closures. By the end of 2020, the industry’s sales will lose 240 billion U.S. dollars, and 3 million workers will be unemployed.
Independent businesses have been hit particularly hard: Technomic, a catering consulting firm, estimates that 20% to 25% of independently owned restaurants will never reopen.
Chipotle has felt rapid delivery in recent months, with digital sales in the last quarter increasing by more than 200% year-on-year to more than $776 million, accounting for almost half of the company’s total sales in the third quarter. On the earnings call last month, CEO Brian Niccol predicted that if digital sales remain stable, digital sales this year will exceed $2.5 billion.
Chipotle has more than 2,700 locations in the United States, Canada, the United Kingdom, France and Germany. It has more than 94,000 employees. In midday trading on Wednesday, its stock price rose more than 4.3%.