COVID-19 Impact on Pharmaceutical Packaging in Chemicals and Materials Industry

COVID-19 Impact on Ghost Kitchen in FMCG Industry

  • FMCG
  • Aug 10, 2021

COVID-19 Impact on Ghost Kitchen in FMCG Industry

ANALYSIS ON IMPACT OF COVID-19 ON THE GLOBAL GHOST KITCHEN MARKET

A ghost kitchen is a professional food preparation and cooking facility, which is designed to prepare meals for delivery alone. Some ghost restaurants offer takeout or drive-through services but lack a storefront or interior seats for clients. Ghost kitchens are those restaurants, which do not have a dining room that sell and fulfil online meal orders for delivery. Several independent brands may use a shared cooking facility at the same time, or a single management team may develop and operate numerous in-house brands.

The outbreak of coronavirus pandemic has brought ghost kitchens and virtual restaurants to the public's attention, although these concepts have been expanding in the restaurant business for the last two years. During COVID-19, ghost kitchens, pop-ups, and other food-industry innovations have emerged to a huge extent. The demand for ghost kitchens proliferated during 2020, when the cooks make meals for delivery or takeout only.

AFTERMATH OF COVID-19 AND GOVERNMENT INITIATIVE TO BOOST THE GLOBAL GHOST KITCHEN MARKET 

The pandemic has only increased the success of ghost kitchens, making them one of the industry's only growth areas and a lifeline for many failing restaurants. The government has taken a number of efforts to encourage small food delivery systems, such as ghost kitchens, to adopt digital technologies and plans in order to enhance the ease of doing business. Also, the governments of various countries have provided short term business loans to different small scale restaurants to set up the business with new and innovative machineries and equipment for preparing foods and strengthen their distribution network. Besides, the players of the food industries were also provided with subsidized raw materials for preparing foods and deliver them to their proper destination.

For Instance,

  • The Government of Canada announced about the Canada Emergency Commercial Rent Assistance (CECRA) program ‘Dunzo’ for food industries in 2020.
  • In 2020, the Government of San Francisco announced to limit the cost of food delivery apps and may charge restaurants at 15%, causing third-party delivery services to face continuing opposition.

STRATEGIC DECISIONS FOR MANUFACTURERS AFTER COVID-19 TO GAIN COMPETITIVE MARKET SHARE

The spread of COVID-19 had positive affect on the global ghost kitchen market. As due to lockdowns in several nations, people were unable to go out of their homes, which forced them to order food through online delivery system, thereby boosting the sales of the ghost kitchens. The chefs of the ghost kitchens were operating their business according to the safety rules and regulations given out by the governments of different countries. Several domestic players in the food industry emerged during the pandemic, supplying foods door to door. Also, the government has provided aid to the small scale business of the food industry in order to support them in terms of making and delivering food.

For Instance,

  • AI-enabled contactless self-checkout solutions, such as Fasto, are assisting restaurants and other food establishments in carrying out their normal operations with zero touch and 100 percent safety.
  • In 2020, the government of Canada announced that the Canada Emergency Wage Subsidy will be continued into 2021, and its scope will reflect a long-term recovery

IMPACT ON PRICE

The outbreak of coronavirus disease 2019 (COVID-19) and the steps done in reaction to it moved food consumption from restaurants to homes in March 2020, when stay-at-home orders went into force. During the coronavirus disease-2019 pandemic, internet food orders reached an all-time high in several nations. Price hikes for certain high-demand food products, such as prepared foods, occurred more often during the lockdown period. Furthermore, fewer promotional rates were communicated. As this adjustment had no effect on the overall price level of food products, it can be assumed that such promotional pricing were employed as a marketing tactic to enhance the sales of the ghost kitchens.

IMPACT ON DEMAND

The Covid-19 pandemic has destroyed the restaurant sector, creating a large demand for meal delivery. It is causing an increase in ghost kitchens, or cooking facilities that exclusively prepare meals for delivery and takeaway, with no dine-in spaces. The crisis has provided an opportunity for digital revenue sources, including ghost kitchens, to accelerate expansion. Although millennials were the major users of technology-enabled food services prior to the pandemic, however, in the post pandemic period, the ghost kitchens grabbed attention of a whole new group of customers.

For Instance,

  • In 2020, as global lockdowns intensified consumer desire for convenience, they also expedited the shift to an on-demand economy, which had previously been anticipated to take years. Third-party delivery apps have all seen a significant growth in partner restaurants, with online deliveries exceeding $45 billion — a figure that was projected to be reached no sooner than 2025.

IMPACT ON SUPPLY CHAIN

Despite the fact that the pandemic allowed restaurants to start in more industrial and inexpensive sections of cities without the requirement for front of house furnishings and fixtures, there were some disruptions in supply chain operations which restricted the smooth functioning of the ghost kitchens. The scarcity of raw materials affected the ongoing functioning of many small scale and local food contractors. Also, the food production process came to a halt due to the shortage of laborers in almost all the manufacturing sites. The shutdowns of distribution and trade routes have affected the supply channel, resulting in the rise of the operating costs of various raw materials and consumables which are used in kitchen.

CONCLUSION

The proliferation of Covid-19 has increased the appeal of ghost kitchens. Ghost kitchens cater to the needs of a new generation that relies on meal delivery services. These kitchens provide higher output for 24-hour food preparation since they have more cooking space for back of house equipment than typical restaurants. When the epidemic struck, the ghost kitchens were joined by a whole new group of customers. Though the demand of the ghost kitchens experienced an upward trend during the pandemic, but still the supply chain faced some issues regarding the timely delivery of the raw materials for preparing food items. However, the government has implemented a variety of measures in order to strengthen food suppliers and improve supplier diversification, new innovation for decreasing the demand for specific resources, and circular economy approaches to boost global economic activity.