Are Ghost Kitchens the Next Big Commercial Real Estate Investment

Are Ghost Kitchens the Next Big Commercial Real Estate Investment?

Last year, Food Network fans were delighted when celebrity host Rachel Ray announced plans to enter the Florida restaurant scene. However, unlike a traditional brick and mortar establishment, Ms. Ray would be the first famous television chef to open an experimental ghost kitchen to prepare delivery meal orders. Ray’s concept kitchen featured some of her favorite cookbook recipes with delivery through Uber Eats to 13 Florida cities from October through December 2019. This is an example of the increasingly popular restaurant venture—Ghost or virtual kitchens. With ghost kitchens on the rise, suitable spaces may be a smart commercial real estate investment in the coming year.

The Ghost Kitchen

A ghost kitchen or cloud kitchen is a commercial kitchen that is home to multiple restaurant operations that share the space to prepare food for take-out and delivery orders. The restaurants do not have dining rooms or waitstaff and function only for food preparation. Ghost kitchens can also be food trailers that are sometimes leased in combination with parking spaces. These spaces tend to have lower operating costs, experience fewer inspection issues, and offer a way for customers to patronize restaurants more conveniently.

REEF Kitchens

Miami-based REEF Kitchens has approximately 4,500 ghost kitchen and trailer locations nationwide and is considered to be a technological leader in this emerging industry. Under this operations model, restaurant owners have their food prepared in kitchens and sold in trailers that REEF owns. The trailers are parked in REEF-owned parking lots that are located in specific areas with high foot traffic. Last year, UberEats reportedly entered into an agreement with REEF Technology to lease out several REEF kitchens in the South Florida area. Rachel Ray To Go was based out of a REEF Kitchen in Fort Lauderdale, where, at the time, the company owned three kitchens and was host to 11 ghost restaurants. Recently, West Palm Beach-based burger chain BurgerFi announced plans to open locations in multiple US cities next year using REEF ghost kitchens. The company will use “neighborhood kitchens” and a delivery-only model.

With recent events, many former dine-in establishments have adapted to take-out and delivery only menu options by using virtual kitchens rather than restaurant spaces. Further, this alternative gives new restaurants a lower cost of entry into a market that traditionally has had significant expenses such as rent and labor. As the shift towards ghost kitchens continues, restaurant owners and investors may create a greater demand for these commercial properties.

Contact a Florida Board-Certified Real Estate Attorney

At Rabideau Klein, Guy Rabideau, Esq. and David E. Klein, Esq. are dedicated, Florida Board-Certified Real Estate Attorneys with extensive experience assisting clients with multi-million-dollar property transactions. We have the expertise and knowledge you need to ensure that your property interests are protected in the Town of Palm Beach and throughout Palm Beach County.  Contact Rabideau Klein today to discuss your real estate legal needs.

 

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