‘UK retailers could follow US as ghost kitchens swoop into supermarkets’

The last two years have brought rapid change to traditional food retail models, with supermarkets and restaurants forced to adapt to pandemic conditions.

On-demand food grocery services proliferated, typically in partnership with specialists such as Deliveroo and Uber Eats, which had previously worked primarily with restaurants.

Such changes accelerated a trend already underway – the increasing crossover and competition between the two industries for stomach share. Major grocers increased their collective focus on offering restaurant-quality own-brand food options and building extensive food-on-the-move and food-to-go propositions. 

“If Greggs can operate a cafe inside a Primark, why not in a TikTok kitchen?”

Those lines are now blurring further, helped by the rise of another business model that was pioneered by the likes of Deliveroo and grew rapidly during the height of the Covid emergency – ghost (or dark) kitchens.

In the US, the proposition is being adopted in new ways and could inspire similar approaches in the UK.

Next month, social media giant TikTok will begin opening 300 ghost kitchens in partnership with specialist Virtual Dining Concepts, with orders placed digitally through Grubhub. The plan is to open 1,000 locations in the US by the end of the year.

TikTok Kitchens shows the extent to which new forces can shape food consumption trends. The dishes offered will be those that have gone viral on TikTok, such as baked feta pasta. The #FoodTok hashtag is hugely popular, having generated 12 billion views, and it is an obvious next step to monetise the products featured in TikTok videos.

While at least some of the cash generated will be used to support food content creators, who are supportive of the venture, established restaurants can also become partners.

The TikTok initiative has many differences from traditional retail but surely represents both another disruptive form of competition and an opportunity for retailers to get involved and promote their products through the service. For instance, if Greggs was launching its famous vegan sausage roll today, a TikTok tie-up would have been a fantastic way to connect with interested consumers and introduce them to the product. If Greggs can operate a cafe inside a Primark, why not in a TikTok kitchen?

As Virtual Dining Concepts co-founder Robert Earl put it to Bloomberg: “You have a platform with a billion viewers monthly who are constantly engaged, as the numbers show. It’s the first time there’s a brand like this out there — an audience of hundreds of millions of people.”

Alive and well

A ghost kitchen model closer to established grocery retail is being piloted by Kroger, also in the US, in partnership with Kitchen United. 

Restaurant meals, for collection or home delivery, can be ordered from some Kroger stores – the second, in Texas, has just opened following a debut in California in January.

Through the tie-up, a Kitchen United Mix branch inside Kroger sells eats from a raft of local and national restaurants, offering customers the convenience of a meal from Chinese and Italian food specialists, among others.

While it is part of the ghost kitchen trend, a different approach has been taken. Rather than being inconspicuous or hidden, Kitchen United occupies a prominent in-store location.

“Some retailers believe the impact of inflation and rising energy bills could prompt a reversion to old pandemic habits ”

Kitchen United chief business officer Atul Sood told the Los Angeles Business Journal: “The industry term that we have fallen into is ghost kitchen but this is very much not ghostly.

“It’s front and centre, visible in the store, and we’re very proud of the design and architecture that’s gone into it. We even have a conveyor belt where customers can see their food after it’s prepared and packaged make its way to the front-of-house pick-up centre.”

What that means for Kroger includes the opportunity to benefit from footfall generated by order collections.

Sood said: “For Kroger, we definitely can bring in a customer who is interested in getting the fully prepared, restaurant-quality meal who will buy other goods.

“Similarly, for us, the regular Kroger customer who is buying groceries for the week can also buy dinner for tonight.”

The inflation factor

It is not too much of a leap to imagine other retailers doing the same. If Primark, which has been expanding its in-store eating options in branches such as Birmingham, can introduce Greggs then it could do similar with a UK equivalent of Kitchen United and even operate a TikTok-style model that would appeal to many of its shoppers.

Plenty of UK retailers already have in-store restaurants and takeaway propositions, from Marks & Spencer to Morrisons, which has developed an extensive range of dining choices in branches such as Canning Town. Similarly, a number of other major grocers have successful in-store partnerships – Sainsbury’s and Tesco have both installed sushi counters in their larger stores, for example, while Asda’s Milton Keynes supermarket opened a food court at the end of last year, featuring Panku Japanese street food, American bakery brand Cinnabon and New York-style pizza chain Sbarro.

All are still navigating the post-pandemic landscape, including the effect of the cost-of-living crunch on consumers. Some believe the impact of inflation and rising energy bills could prompt a reversion to old pandemic habits – whereas consumers bought a special meal from a supermarket out of necessity when hospitality businesses were closed during lockdowns, they could switch away from restaurants again, this time as a way of saving money.  

After being agile enough to ramp up online operations overnight and to make them profitable by leveraging the benefits of their store estates, the ghost kitchen may be the next arrival in the supermarket aisle.