By Udita Shukla
According to a report by the Wall Street Journal, capital obligations scorch nearly 60% of new restaurants in their first five years. The reason behind this staggering number includes costs involved in the maintenance and regulatory requirements attached to a physical brick-and-mortar building. Additionally, investment in the interior ambience to entertain customers while they dine in is also a major factor pushing up the cost.
In order to increase the revenue without bearing the brunt of such costs, restaurants today have roped in delivery service providers or opened their own delivery centres.
What are ghost restaurants?
As time-poor millennials set out to fulfil their daily culinary cravings, popular apps like GrubHub, Jordache, and Coast NetApp, are set to revolutionise the restaurant industry. They are appropriately termed as “ghost restaurants” or “virtual” restaurants“. This is because there are certain food providers that exist only on apps but have no physical identity whatsoever.
For instance, one of the most popular places catering to New York foodies, Leafage and Butcher Block, are present only on apps. One can rake through the entire list on a Google Map, and the food service is conspicuously missing! They are essentially the operating arms of a virtual eateries group created by a company called the Green Summit Group. This group has a flourishing network of food-delivery services in midtown Manhattan, Brooklyn, and Chicago. Given the relatively smooth business operation out of a “virtual” space, the enterprise is able to integrate numerous food “concepts” including meatballs, salad/sandwich/juice, and burgers/grilled cheese.
Major drivers of the trend
With the burgeoning demand for time-efficient services and hassle-free customer experiences, this new business model has disrupted the restaurant industry around the globe. In the United States alone, online food delivery services accounted for nearly four billion (U.S.) dollars’ worth of revenue in 2015. Moreover, reports state that approximately 28.6 million British residents have availed of similar services in the last six months. With customised product and service suggestions, people have become tuned to the ‘click-and-pay’ service model. This model demands minimal over-the-counter engagement from the customer’s end. Evidently, customers are not visiting the centres so much as they are receiving their requirements at their doorstep.
One of the major drivers of this type of business model is the accessibility and seamlessness of technological channels that facilitate online ordering and order tracking. Although it is hard to estimate the complexity and rate at which the industry will soar, its inevitability has never been more transparent than it is now. From the perspective of business owners, employing more technology is not a major hurdle. This is because they simply need to expand their current online network and collaborate with delivery executives.
Future implications
Perhaps, the culture of ghost restaurants is going to profoundly bear upon restaurant search and discovery service providers such as Swiggy and Zomato. These apps will now have a wider mesh of restaurants to collaborate with. After all, an economy has never turned its back upon restaurants and eateries. These eateries and restaurants form an integral thread of a city’s identity and culture.
Seemingly, the entire business landscape is reinventing itself around the same old thread that controls and drives every other trade segment in the world: the customer. An important and priceless takeaway from the current metamorphosis is that no enterprise can ever hope to make it big without taking into account the ever-changing consumer behavioural patterns.
The significance of data analytics
The primary triggers of customer dynamics are the maturing capabilities of technology and how it interacts with personal user data and information.
Data analytics has a ginormous role to play. Enterprises must embrace data analytics tools to filter out and identify the likes and dislikes of the end-user belonging to different demographics and cultural backgrounds. A healthy (virtual) restaurant will not only have a wide, efficient network of delivery partners but also a sturdy database that analyses and anticipates that next big business opportunity that will transform the service channel as well as its quality judgement metric.
Featured Image Source: Flickr
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