Platforms: Ghost kitchens rising trend in Estonia

An e-restaurant operating out of a basement.
An e-restaurant operating out of a basement. Source: Ken Mürk/ERR

Even though it might seem that an e-restaurant only taking online orders would be more profitable than a traditional eatery, operator says that turning a profit with a ghost kitchen is more difficult because courier platforms take a huge cut.

Ghost, cloud, shadow or virtual kitchens – restaurants that only offer online orders and work with courier platforms – got started during the coronavirus period, while platforms Wolt and Bolt maintain that their numbers are growing despite the pandemic abating.

CEO of Wolt Baltic Liis Ristal told ERR that virtual or cloud kitchens are becoming increasingly popular.

"After two difficult pandemic years, rapid inflation and soaring energy prices, the economic situation forces businesses to weigh their future activity and possibilities," Ristal said.

"Catering sector businesses are looking for new solutions for cost optimization and expansion, testing out new food categories under different trademarks, also to find customers," the executive said in terms of the advantages of running a ghost kitchen.

Ristal said that cloud kitchens are often far more cost-effective than traditional restaurants.

"Running a cloud kitchen usually means lower rent, modest or nonexistent real estate and decorating investments and lower utility bills," she said.

Wolt is working with over 100 ghost kitchens in the Baltic region.

Ristal said that Wolt runs thorough background checks, also when it comes to food safety and permits.

"Background checks render the process slower, but we deem it necessary and only work with partners who have the necessary permits from relevant agencies," she remarked.

Competitor Bolt gave business reasons for not revealing how many ghost kitchens it works with.

Head of communication Karin Kase said that courier platforms have contributed to the number of host kitchens in recent years. "This makes it possible for restaurants to open additional locations, while keeping costs down," Kase said.

Bolt does not check for permits and compliance with health requirements. "We lack the capability, and Estonia has agencies for that," Kase offered.

Conditions dictated by platforms

Juri Pütsepp, head of Toiduguru OÜ that got its start in the spring of 2020, said that while the business is profitable after two years, it has taken a lot of planning and skill at negotiation.

"It is even more difficult for us to reach profitability than it is for traditional restaurants. The cost of service and rent is nowhere near what the platforms charge from us. You sometimes feel that working just for the sake of working is normal. You won't get anywhere without spreadsheets," Pütsepp said, adding that many countries, including Finland, sport a lower tax rate for takeaway. "It is strange that our government sees no need," he admitted.

He describes his relationship with Bolt and Wolt as wonderful but asks people not to forget that Doordash and Bolt are corporations out to make a profit.

Toiduguru OÜ runs two kitchens in Tallinn's Kesklinn and Kristiine districts offering Japanese cuisine under the Sushiro brand.

"I also created a company called United Kitchen that allows restaurants to save on costs (by sharing kitchen space – ed.). Running a major kitchen is expensive and requires such elements as waste disposal, internet, food board analyses, security etc.," the businessman said.

Risks prompt checks

Consumers do not have to worry about virtual restaurants shirking the requirements that apply to ordinary ones. The Agriculture and Food Board (PTA) holds ghost kitchens to the exact same standard. But the PTA can only inspect a kitchen once it reports its existence.

Külli Joakit, chief specialist at the PTA's food department, said that the Food Act obligates catering providers to apply for an activity permit or notify authorities of starting activities.

The agency inspects companies based on risk assessments. "The purpose of official inspections is to check whether entrepreneurs comply with requirements and offer food that is safe," Joakit said.

Ghost kitchens got started in the U.S. in 2020 when coronavirus restrictions made eating out difficult or downright impossible.


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Editor: Marcus Turovski

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