Isabel Smrstik

Associate Editor

Loyola University Chicago School of Law, JD 2027

Online food delivery is a growing industry worth over $240 billion, serving consumers who appreciate eating their favorite meals from the comfort of their home. Ghost kitchens are one way restaurant entrepreneurs are taking advantage of this growing market. Ghost kitchens operate as takeout and delivery only venues, needing only a fraction of traditional restaurant space to operate. Today there are over 7,000 businesses in the ghost kitchen industry in the United States. This model was embraced by celebrities like Mr. Beast and large restaurant chains, including Chili’s, and was particularly popular during the COVID-19 pandemic. While these kitchens operate in the dark, they are still responsible for complying with food quality and safety rules like traditional restaurants. However, this has proven to be difficult and resulted in closures – and even lawsuits. Ghost kitchens require greater investigation and monitoring from governmental agencies to better meet consumer concerns.

What is a ghost kitchen?

Ghost kitchens are restaurants that solely fulfill online orders. They do not offer dine-in services and only exist online, usually through third party delivery apps, such as DoorDash and UberEats. Ghost kitchens have lower operational coststhan traditional restaurants, primarily because they do not need wait staff or any of the furniture required for dine-in customers. Instead, they can operate out of shared commercial kitchen spaces or within the infrastructure of an established restaurant.

One of the most well-known ghost kitchen brands is MrBeast Burger, created by popular content creator Jimmy Donaldson, aka Mr. Beast. MrBeast Burger is partnered with Virtual Dining Concepts, an American company that specializes in virtual restaurants. A its height, MrBeast Burgers grew to 1,700 virtual locations worldwide and eventually expanded to include actual brick and mortar restaurants. Additionally, traditional restaurants also have their own ghost kitchen brands, often operating out of their pre-existing restaurants. Chilis’ has “It’s Just Wings” which has over 1,000 locations across the United States. While initially only interested in the ghost kitchen concept, influencers and traditional brands have started implementing elements of their ghost kitchens into actual dine-in restaurants, showing the shift away from virtual kitchens into physical restaurant locations.

The fall of ghost kitchens

Mr. Beast seemed to have the perfect background to operate ghost kitchen. With over 400 million subscribers on YouTube, he has the online presence that would help drive sales and create brand loyalty. However, things turned sour quickly. In 2023, Mr. Beast filed a lawsuit against his partner, Virtual Dining Concepts, claiming reputational damage because of the “low quality” and “inedible food”. The brand scaled faster than what quality control could support and numerous reviews regarding uncooked meat and the inconsistentency of the product began to rise. The model of the kitchen is what led to the downfall in quality control. It was difficult to ensure the same standards were being met across hundreds of locations. Traditional restaurants have the infrastructure to monitor product quality, but with ghost kitchens operating out of a variety of locations, they are often unable to maintain restaraunt level consistency.

Ghost kitchens also struggle with food safety regulations. Depending on how a ghost kitchen operates, it may either be categorized by the U.S. Food and Drug Administration (“FDA”) as a “food facility” or as a “restaurant”. Food facilities are defined as places that manufacture, process, pack, or hold food for consumption, they must be registered with the FDA and are subject to FDA inspections. However, restaurants, which prepare and sell food directly to consumers, are exempt from FDA registration but instead are regulated by local health authorities and state codes. Because of the online nature of ghost kitchens, consumers cannot easily access reports indicating if ghost kitchens are in compliance with health codes and other necessary regulations. For example, health inspection letters are traditionally displayed in the dining areas or storefronts of a restaurant, but in a ghost kitchen model,  consumers cannot easily access the same information. Further, health inspection letter grades do not always account for all the health violations that may be present in a ghost kitchen facility. If the ghost kitchen operates in a shared space and a violation is found in a common space, the violation is only issued to the overall leaseholder.

The future of the ghost kitchen model

Ghost kitchens once seemed like the next step for the restaurant industry, as businesses continue to take advantage of the demand for food delivery. These virtual brands can also be significantly cheaper to operate compared to traditional restaurants, piquing the interest of celebrities and established restaurant brands. However, the nature of a ghost kitchen model comes with its own set of problems. Quality control issues stemming from the lack of oversight and consistency within ghost kitchen operations often lead to consumer backlash. Questions of food safety also leave consumers cautious since there is less easily accessible information regarding compliance with FDA regulations and/or state and local codes. A potential solution could be to mandate ghost kitchens to post their health inspection grades publicly on food delivery platforms, so consumers can then easily access that information. Increased transparency would help shine light on what these kitchens are doing in the dark.