Why ghost kitchens are disrupting the lodging industry

The rise of ghost kitchens in the food and beverage industry started to pick up speed during the peaks of the pandemic as a way for restaurants to continue operations. Now, the trend is continuing to build momentum throughout the hospitality industry with its next stop being at local hotels.

The lodging industry was hit hard during the pandemic, but the resilient industry is poised for a strong rebound. The reality is, hotels didn’t make a staggering profit from their on-site restaurants even before the crisis because they were more of an amenity for guests; and as many of these restaurants sit vacant, hoteliers are becoming more strategic in where they focus operations and rethinking the future of food and beverage spaces. From an asset management perspective, we cannot advise our clients to reopen money-losing outlets—it is time to innovate, repurpose unprofitable spaces and eliminate obsolete service standards.

One profitable solution for both hotels and local restaurants is ghost kitchens, in which catering companies and restaurants partner and lease the underutilized space.

This benefits the restaurants by providing top-of-the-line kitchens for restauranteurs to utilize and expand their customer base—whether providing more delivery and takeout options to the hotel’s guests, other nearby hotel guests seeking delivery options or local patrons in that area. In return, the hotel leases the space to ensure a stream of income, reducing a significant cost liability and concentrating its energy on more profitable aspects of the operations.

A concept accelerated by the pandemic, with alternative business models to fit different hotel operating models, from just leasing the kitchen and outsourcing food only to taking over the entire food and beverage operations or using their third-party in-room dining delivery. Selecting the right ghost kitchen business model and working with the right partner is vital to its success. This new breed of restauranteurs is marrying a robust technology base with restaurant, roomservice and catering operations. The pilar of their success is achieving economies of scale while still meeting the hotels’ brand standards. With the food and beverage tenant focused on food quality, hoteliers can focus on the art of their service, prioritizing room bookings and guest experience. Another opportunity for both the hotel and the food and beverage tenant is to enhance guest and customer experience through personalized menus at their fingertips, with transactions being completely contactless via room charge or mobile payment.

Buffets are also top-of-mind for hotels and their guests. Besides made-to-order options, leased ghost kitchens offer opportunity for quality to-go options, including customized, on-demand breakfast options that are more sustainable and combat unnecessary food waste that buffets pose.

The bottom line is that the lodging and food and beverage industries can both increase profits, reduce labor costs and enhance attention to their audience—whether a hotel guest or hungry patron—by optimizing the use of technology and more strategically utilizing space.

Andrea Grigg is managing director of JLL’s Hotels & Hospitality Group.