Do you need information about what is the average ghost kitchen profitability?
Well, you’re probably thinking of starting a ghost kitchen. We really appreciate this thought because ghost kitchens are the future of the food industry and you’re thinking of taking the right step at the right time. In this post, we’ll describe the average ghost kitchen profit margins so you may figure out how you can grow in this industry.
Later on, we’ll talk about how you can grow your profit margin in this industry. So, let’s start with the average ghost kitchen profit margin.
Ghost Kitchen Profitability Analysis
When it comes to talking about the profit margins, we can distribute the overall margin into two major categories known as net profit and gross profit. The reason why we’ve distinguished these two categories is that the information currently available on this topic is very confusing. Therefore, we want to make it simple for the new businessmen to make an informed decision.
Gross Profit Margin
When you calculate the profit after deducting the costs of goods sold, it’s called the Gross profit. This category doesn’t include all the costs of running your business. It means it can only help with measuring the efficiency of your ghost kitchen. But if you want to get a detailed analysis, you’d have to take a look at the net profit margin.
Net Profit Margin
You can get an accurate net profit margin after eliminating the rest of the costs from your gross profit. This includes utilities, payroll, maintenance, administrative costs, insurance, taxes, rent or mortgage, etc. It means your net profit margin would be 7% if you’re spending $0.93 for every dollar you bring in. The net profit margin helps you with analyzing the exact ghost kitchen profitability.
Average Ghost Kitchen Profitability
If you’re running a full-service ghost kitchen, you’d be able to achieve a 3-5% profit margin. However, your turnover rates, price range, and location may put a significant impact on your profit margins. There are many ghost kitchens that have successfully maintained the ghost kitchen profitability rate of 6-9% over the past few years.
So, you can also earn a better profit from this industry by implementing the strategies these ghost kitchens have used.
How you can Increase Ghost Kitchen Profitability?
Here are some basic tips you can use to increase the Ghost Kitchen Profitability:
Register on Different Platforms
You can get better exposure by registering on different food delivery apps. These apps are the best option for you to reach out to the targeted audience. You need to find information about apps that are providing services in your area. Even if an app brings you only one customer a month, you should register your ghost kitchen on this app as it may bring you more business in the future.
Introduce a Loyalty Program
A loyalty program can also be a great way of increasing ghost kitchen profitability. It enables you to increase the number of returning customers over time. Although you need to spend some extra money to make this program successful, it can bring you a lot of benefits in the long run.