Philly restaurant owners are scaring up delivery business during the pandemic with ‘ghost kitchens’

Cars and bikes come and go from morning to night at a nondescript gray building in West Philadelphia with the word Fairfoods painted on the facade.

Upstairs is a series of hallways lined with 30 small rooms, each housing a restaurant kitchen. Signs on the doorposts identify the occupants: the household names Burger King and Elevation Burger, as well as entrepreneur-run upstarts such as Fat Shack, Smoked and Chopped, Get Melt’d, Benny Casanova’s, and Shai.

The restaurant business is speeding into a new era, driven by technology and fueled by a public’s love of food delivery. The pandemic, and its promise of seamless, contactless transactions, has turbocharged this growth.

The “ghost kitchen” has arrived to feed people more efficiently. Also known as virtual restaurants, they are closed to the public. Ghost kitchens are set up for delivery, not dine-in, though pickup is also an option. They are tied inextricably to the delivery apps such as Grubhub, Uber Eats, and DoorDash.

Fairfoods, at 3300 Fairmount Ave. in the city’s Mantua section, is one of two enormous shared ghost kitchens to open in Philadelphia in the last several months.

At about 200 square feet each, the individual kitchens cost far less to equip than a typical restaurant’s kitchen — less than $100,000 — and can be created in a fraction of the time. They are also cheaper to run: They require no waiters, no flatware, and no china, no dining rooms with $10,000 light fixtures that must be dusted weekly. All romantic notions about “dining” have been left at the curb.

Ghost kitchens are designed simply to make food and make money in a wide-open field. Morgan Stanley estimates that online delivery, valued at about $19 billion in the United States in 2018, could approach $60 billion in 2025.

Not surprisingly, ghost kitchens also introduce new competition amid a now-troubled business climate — dozens of new brands saturate the apps and claw for the same dollar that many established restaurants also seek.

» READ MORE: One chef’s pandemic plan: Selling pizza and falafel from a ‘ghost kitchen’

Also not surprisingly, everyone in the restaurant business seems to be opening or considering a ghost kitchen to broaden the product line, as it were. The idea can be as straightforward as Comfort Philly, which Peter Dissin set up at his Washington Square West seafood restaurant, Pinefish. Here, chef Jose “Ritchie” Vargas offers a menu of less-pricey but higher-profit comfort-food favorites from his 17 years at the old Palm steak house. Or Owen Kamihira at El Camino Real, who, with director of operations Joshua Zameska and chef Michael Thomas, is operating a virtual taqueria called Tiki Tako and a burger shop called Hotburger from the Northern Liberties restaurant.

Or it could be Stephen Starr, who with chef Peter Serpico opened a “kinda-Korean” delivery eatery called Pete’s Place out of the idled kitchen of the fancy Serpico on South Street. (Starr is nearly ready to launch ghost kitchens specializing in pizza and burritos.) Jose Garces soon will offer food from his restaurants, including Amada, Village Whiskey, and The Olde Bar, out of the Garces Trading Co. kitchen for delivery. Glu Hospitality runs Hunnies Crispy Chicken and Tiny’s Burgers out of two locations, Vesper in Center City and Germantown Garden in Northern Liberties, to expand its delivery area. Fine-Drawn Hospitality, which operates Walnut Street Cafe and The Commons in University City, added such brands as Agea (Mediterranean), Philadelphia Wing Shop (bar food), and Ghost Chicken (roast chicken). Veda, an Indian restaurant near Rittenhouse Square, recently added a pan-Asian kitchen called Chopsey. Earlier in the year, Top Tomato on Walnut Street in Washington Square West added five brands, including Firebelly Wings, Grilled Cheese Society, and Mother Clucker.

» READ MORE: One kitchen, two restaurants: How a chef is pivoting to make money in uncertain times

The biggest game in town is Fairfoods, which is an apartment building of sorts, with about 30 individually run kitchens, conveniently off the Schuylkill Expressway. Orders spit out of the point-of-sale machines, cooks prepare and package the food, and runners carry bags sealed with tamper-evident tape to the front door, where delivery drivers wait. This location, which opened in early fall, offers drivers easy access to the western half of Center City and West Philadelphia. Fast-food and fast-casual brands that don’t have brick-and-mortar locations in the area, such as Burger King, Elevation Burger, and Muscle Maker Grill, have set up there.

A slightly smaller shared ghost kitchen called Foodnest opened in early fall in an old bindery manufacturing building at 13th Street and Girard Avenue to serve North Philadelphia and points east. Among its tenants are Yawdie’s Jamaican Delights, Cajun Heroes, Oath Pizza, Capriotti’s Sandwich Shop, and Trios Fresh Italian, a popular pizzeria that closed its Northern Liberties shop in October.

Both Fairfoods and Foodnest are owned by CloudKitchens, a Los Angeles company that develops, builds, and leases similar kitchen spaces all over the country. CloudKitchens representatives did not respond to numerous inquiries from The Inquirer; it works so far under the radar that even the head of one of the Philadelphia CloudKitchens locations discreetly identifies his job as “Operations Manager at Stealth Start-Up” on his LinkedIn profile.

CloudKitchens seems to have been in the right place at the right time, snapping up its Philadelphia real estate long before the pandemic made delivery more commonplace. The company purchased the Girard Avenue building in December 2018 for $1.25 million and the Fairmount Avenue building in February 2019 for $1.8 million, according to public records.

A wide assortment of food is coming out of the kitchens.

Sean Green of BBQ Unlimited, whose thriving catering company was idled by the pandemic, said he was the first to open at Foodnest, on Oct. 9. “I’m running my dream business right now,” said Green, a father of five who has been cooking for 26 of his 40 years. He smokes over hickory and charcoal offsite, but everything else is prepared to order at 13th and Girard. His pork and beef ribs are his bestseller, followed by pulled pork and chicken.

The prospect of breaking into the Philadelphia market year-round was appealing to C.J. Mills and R.J. Smith, who own the seasonal Drifters Feel Good Food, a bar-restaurant in Sea Isle City, N.J. Battered over the summer by the coronavirus restrictions, they pivoted to takeout and delivery and got a taste for that option. They are selling sliders, fries, chicken tenders, and funnel cakes out of Foodnest.

Franklin Becker, a New York-based chef who had spent part of his career in Philadelphia at the old Washington Square restaurant, is operating two brands out of one kitchen space at Fairfoods: Shai, a Middle Eastern concept, and Benny Casanova’s, which makes 10-inch-square pizzas and arancini balls.

Local personality Reuben “Big Rube” Harley is about to open Chef Big Rube’s Kitchen, serving cheesesteaks, halal burgers, fried chicken, and breakfast all day out of both Fairfoods and Foodnest.

Brandon and Jonathan Dearden, whose company is Cloud Kitchen Twins, run three brands from one kitchen at Fairfoods: The Toast’d Egg (egg sandwiches, open at 7 a.m.), Get Melt’d (grilled cheese), and Smoked and Chopped (brisket bowls, chicken thigh mac).

Jamaican native Rachel Grant, a caterer, opened Yawdie’s Jamaican Delights at Foodnest. Oxtail is her best seller.

Sticky’s Finger Joint, a New York City-based chain specializing in chicken fingers, enters the Philadelphia market on Tuesday, Dec. 8. For every small chicken basket sold in December, Sticky’s will donate a small chicken basket to the local Boys & Girls Club.

One other restaurateur who kept his ghost kitchen in-house is Amin Bitar at Bitar’s, the Middle Eastern grocery and restaurant in South Philadelphia. Earlier this year, he signed with Los Angeles-based Future Foods, owned by CloudKitchens, to launch eight restaurant brands out of Bitar’s. A few of the menus are similar to his, such as Vegi Bibi, Saint Pita, Hummus Hero, and Bob’s Kebobs.

“It’s no different from what I’m already doing,” Bitar said.

Future Foods gives his business an online marketing push and handles the financial end of transactions through a single computer tablet managed by Otter, yet another affiliate of CloudKitchens.

Since adding the ghost brands, Bitar said, overall sales have increased eightfold. Not only is he putting more brands out into the world, but he’s also commanding more revenue because Future Foods’ suggested menu prices, keyed to the Los Angeles market, are higher.

Bitar also saves on delivery because Future Foods has negotiated lower charges with some of the apps. Even though the Bitar’s name is not on the food, Bitar is not complaining.

“It’s an ingenious way to grow a business,” he said.