What “Ghost Restaurants” Can Teach Us About Marketing Brick-and-Mortar Businesses

Picture this: it’s 9:30PM on a rainy day and a restaurant’s LED lights are bright and blue, the tin roof is pattering, and the kitchen staff is rushing through the motions of several late dinner orders. A line cook sauces a serving of fettuccine with mushroom cream and shaved parmesan, then places it on the pass for the sous-chef to inspect. But the dish never makes its way to the dining room.

In fact, there is no dining room, only a little e-terminal from which the serving of Italian food — by now boxed and taped — is whisked away by a delivery person from a ride-share app. The restaurant she leaves behind is not in a busy urban corridor: it is four miles from the city core in a repurposed industrial warehouse.

This is the world of “ghost” or “virtual” restaurants—whose numbers have exploded due to changing eating habits, higher real estate costs, and a labor shortage. By going “virtual,” these restaurants have foregone dine-in service to focus on delivery, capitalizing on a $10 billion market, and opening thousands of kitchens around the country.

Ghost restaurants are just one of many digital counterparts to traditional brick-and-mortar businesses that are changing consumer habits. Like Amazon to bookstores, they threaten traditional enterprises with a promise of convenience and comfort—but these innovations come at a price. Here is what marketers can learn from the successes (and shortcomings), of ghost restaurants and online disruptors.

 Lesson 1: The Value of Convenience

There is an arms race to deliver services and products to people where they are most comfortable: in their homes. Companies like Amazon are willing to take on massive losses to offer lightning-speed delivery services, even as cities like New York struggle to accommodate this boom. Peloton brings the gym-experience home, and streaming services such as Netflix continue to challenge movie theaters. This phenomenon has created the perfect conditions for the rise of ghost restaurants.

The key to the success of all these disruptors is straightforward technological innovation geared toward convenience. While ordering from an app is much more expensive than traditional takeout or delivery (for both customers and restaurants), demand remains strong because of the convenience afforded by well-designed and responsive apps at customers’ fingertips.

“These convenience-focused digital ecosystems are ubiquitous,” says Jen Hadley, Digital Creative Director at Brownstein Group. “What makes ghost restaurants remarkable is that they have found enough value in them to forego foot traffic and dining rooms completely. For these businesses, a prominent listing in an app is far more important than physical signage — their sales are entirely dependent on eyes on a screen.” 

Lesson 2: The Missing Experience

The “ghost” in “ghost restaurant” implies that something is missing. In this case, it’s what the word “restaurant” brings to mind: A special family occasion, a first date, a visit with friends to a new international joint. The take-home experiences of the convenience economy, including ordering from ghost restaurants, separate us from the journey and the story. 

But as people become more connected through social networks, their digital expressions remain tied to real-world experiences. Social media content needs a backdrop, so being mindful of lifestyle and social media trends can help make brick-and-mortar spaces a destination. These environments can also differentiate themselves from their virtual counterparts by offering healthy social activities and events.

At Fashion District Philadelphia, Candytopia has become a destination for its topical selfie backdrops and group activities, while simultaneously attracting foot traffic to nearby retail. Just a few miles north in the Kensington neighborhood, Tufas Boulder Lounge partners with groups like SoFar Sounds to create intimate concert experiences within the climbing gym. As the tastes of urban consumers evolve and converge, mixed-media events and experiences prove valuable for drawing crowds to brick-and-mortar businesses.

Lesson 3: Brick-and-Mortar Will Always Be More Human

Despite their convenience, ghost restaurants and Amazon warehouses exacerbate a modern condition that is making us lonelier: the alienation of labor, a phenomenon described as far back as the early industrial revolution.

Alienation of labor is the condition where workers—such as chefs or warehouse employees—are increasingly distanced from the results of their work: people who appreciate their services and products. When increasingly isolated silos of workers put in long hours (typically far from urban centers and public spaces) in order to cater to cooped-up consumers at home, the in-between moments and interactions that make up the fabric of our social lives become fewer and farther between.

In order to disrupt their digital disruptors, brick-and-mortar businesses will have to adapt threefold. They must recognize convenience as the key motivator behind the shift to digital, and then catch up with the technologies necessary to make their customers’ experiences better and more accessible. Second, they need to promote what sets them apart from digital brands: the creation of journeys, stories, and experiences that accompany the making of physical spaces and events. Finally, they need to value their employees, harness the kindness (and necessity) of human contact, and the community-building power of businesses.