Kirsten Brueggemann

Associate Editor

Loyola University Chicago School of Law, JD 2025

If you have ever browsed a food delivery application like Grubhub or Uber Eats, you might have stumbled upon delivery options for “restaurants” with unusual or sometimes risqué names that are unfamiliar to you. These establishments can either share a kitchen with multiple “restaurants” or operate from another restaurant’s kitchen. ‘Ghost kitchens,’— also known as dark kitchens, virtual kitchens, and cloud kitchens—are commercial kitchens designed primarily for delivery services. Their popularity soared during the as traditional dine-in restaurants faced financial challenges due to COVID-19 restrictions. Thanks to their focus on online ordering and delivery through apps like Grubhub and Uber Eats, ghost kitchens have managed to outperform their dine-in counterparts.

Benefits 

For entrepreneurs and established restaurant chains alike, ghost kitchens present significant financial advantages. BMarko Structures notes that while starting a traditional restaurant may cost around, on average, $200,000, ghost kitchens can reduce this expense by 50-60%. This is possible because they can utilize existing commercial spaces or other restaurants’ kitchens, thereby saving on the costs associated with physical premises, as well as on staffing for service and other front-house roles. This model enables a wider array of individuals to venture into the food business with their own ghost kitchen.

Moreover, ghost kitchens offer a cost-effective method for businesses to experiment with new delivery-focused menu items due to the lower overheads, targeted demographics, and reduced labor costs. For instance, Dine Brands, the parent company of Applebee’s, introduced Neighborhood Wings in early 2020 as a platform to trial new dishes not available on the standard Applebee’s menu. Successful items can then be seamlessly integrated into their primary offerings.

For consumers, there’s an illusion of vast choice. Depending on your location, you might find hundreds or even thousands of takeout options available online. However, the reality is that there are far fewer actual kitchens preparing these diverse cuisines than it might appear.

Downsides 

One major limitation of ghost kitchens is that their food can only be accessed through online delivery services, raising concerns about quality and transparency. There are many federal and state food safety requirements that ghost kitchens may be subject to. Depending on the classification of the ghost kitchen, it may be required to register with the Food and Drug Administration (FDA) as a “food facility.” Those that fall under the definition of a “food facility” are subject to routine inspection by the FDA and are subject to food safety requirements under the FDA’s Food Safety Modernization Act. Some notable requirements include compliance with current good manufacturing practices for food and requirements to protect food from intentional adulteration. However, if the kitchen falls under the definition of a “restaurant” or “retail food establishment,” it is exempt from the registration requirement. 

The FDA defines a “restaurant” as “a facility that prepares and sells food directly to consumers for immediate consumption,” and a “retail food establishment” as an establishment that sells food products “directly to consumers as its primary function.” Being categorized as a restaurant or retail food establishment exempts a kitchen from FDA registration, though it must still comply with state and local health regulations. Most ghost kitchens do not meet the FDA’s definition of a restaurant or retail food establishment since they operate exclusively through third-party deliver apps, thus evading direct sales to consumers.

In Massachusetts, health inspectors have repeatedly discovered during inspections that multiple restaurants were operating under a single restaurant’s license. Often, one licensed restaurant runs several other kitchens, creating a challenge for tracking and regulatory oversight both statewide and nationally. This situation also raises the risk of cross-contamination, potentially exposing consumers to allergens.

An investigation by ABC7 Chicago’s I-team identified over 300 ghost kitchens in the Chicago area, the vast majority of which were not found in health department food inspection records. This lack of visibility for local health departments makes tracing the origins of foodborne illness nearly impossible. The I-team also uncovered incidents of restaurants that had repeated food inspection violations now operating ghost kitchens. The Chicago Department of Public Health has stated it cannot track ghost kitchen operations unless they are registered with the city. The Department of Business Affairs Consumer Protection advises that licensed restaurants should list their ghost kitchen operations as “Doing Business As” (DBA). This would enable more efficient tracking of ghost kitchen operations and facilitate consumer access to health inspection records.

In Chicago, The Chicago Department of Public Health (CDPH) is the department that ensures food safety and sanitation to prevent the spread of food-borne illnesses. CDPH Food Protection division educates businesses, inspects food establishments, and addresses food related emergencies. Currently, the City of Chicago requires licenses for shared kitchens as well as shared kitchen user licenses. 

Shared kitchens are classified as “Category 1 Facilities” that present a high relative risk of causing food borne illnesses based on food handling operations. Therefore, CPDH requires a consultation with the Department prior to the issuance of a shared kitchen or shared kitchen user license. However, only a shared kitchen license applicant must complete an on-site inspection prior to the issuance of a the license. Both the shared kitchen and shared kitchen users are subject to periodic inspections, and CDPH may inspect a shared kitchen in response to any complaint. 

Consumer Issues

Several large restaurant chains run ghost kitchens under different names—Pasqually’s Pizza & Wings by Chuck E Cheese’s, It’s Just Wings by Chili’s, and Cosmic Wings and Neighborhood Wings by Applebee’s, among others. While this allows these corporations to test new products and marketing tactics, it also raises concerns about large brands masquerading as smaller, independent businesses to attract customers.

Ghost kitchens represent a strategic move to capture a larger share of the delivery market, benefitting large companies with the necessary capital and resources to implement sophisticated marketing and operational strategies. This puts smaller restaurants at a disadvantage, struggling to compete with ghost kitchens franchises in a post-COVID market dominated by third-party delivery apps. Parent companies of ghost kitchen franchises often negotiate more favorable deals with these apps, securing prime placement that further skews competition in their favor.