Is There a Place for a Commissary Kitchen in Your Restaurant Business Model?
Commissary kitchens or commercial kitchen spaces can be a great way for existing restaurants and food businesses to expand.
In a 2019 survey, nearly 70% of shared-use kitchen facility operators said that they believed the industry would grow over the next five years. With the pandemic shutting restaurants, leaving people looking for new avenues of work, and ushering in an explosion of takeout orders, they couldn’t have been more right.
Whether you’re looking to expand with a new concept, a food truck in a new location, or by offering wholesale to other businesses, a commissary kitchen is a great way to test the waters without tying up your current kitchen space and equipment. A shared kitchen is also a great way for food entrepreneurs to expand without the commitment or hassle of renting a whole new space.
The Different Types of Commissary Kitchens
At its core, a commissary kitchen is a space where restaurant and catering operators can process, prepare, and store food. A commissary kitchen has the necessary permits, licenses, and health and safety certifications required for commercial food preparation. There are numerous types of commissary kitchen options for different restaurant models.
Private Commissary Kitchen
A private commissary kitchen, or private commercial kitchen, is a kitchen space exclusive to a single restaurant or business group. It can act as a central hub for multi-unit restaurants, where food and ingredients are prepared before distribution, or as a way to maximize overheads for a catering group with multiple revenue streams.
For example, a single private kitchen space might serve as a prep space for private and commercial catering contracts, a cooking and storage space for goods sold wholesale to other businesses, a delivery-only takeout kitchen, or a prep kitchen for food trucks, pop-ups, kiosks or permanent restaurant operations.
Shared Commissary Kitchen
A shared commissary kitchen, or shared commercial kitchen, is a shared kitchen space, where units are rented out to individual food businesses on an hourly, daily, or monthly basis. They can be used as ghost kitchens for delivery-only takeout operations, prep locations for food trucks and pop-ups, or small commercial kitchens for prepared-food businesses.
These types of operations may not need a large full-time venue but are still required to use a kitchen that complies with local and national hygiene regulations and has the required permits, licenses, and certification. Shared kitchen space costs usually include overhead such as utilities and maintenance.
A cloud kitchen, ghost kitchen, or virtual kitchen is a group of small commissary kitchen spaces, each let out to a different restaurant or food brand, specifically for use as a delivery-only takeout kitchen. A cloud kitchen may also be a single space used by one business to operate multiple takeout-only brands.
Cloud kitchens are located in areas with a high volume of online orders, rather than a high volume of foot traffic, which is the typical location for traditional restaurants. They may have space for delivery drivers to pull up, and even digital screens or check-in points for pickup.
Expanding your restaurant into a cloud kitchen gives you a way to increase your geographic footprint through deliveries. While you will have to pay a part of your sales to a delivery platform (such as GrubHub, DoorDash, or UberEats) or employ your own delivery drivers, takeout can command a premium price tag and requires far less labor and square footage than a dine-in restaurant.
Restaurant Kitchen Space
The other option for a commissary kitchen is to rent out space in your restaurant kitchen to other businesses. This may be a semi-permanent space inside a large commercial restaurant kitchen or renting out the entire kitchen when it is not in use. For example, a cafe might rent out its kitchen to a delivery-only takeout business overnight, or a bar might rent out its kitchen to a bakery early in the morning.
If you have the space or the downtime, renting out your restaurant kitchen is a great way to maximize profits from a single space without adding much in the way of overhead or labor.
How Do Commissary Kitchens Work?
Commissary kitchens are used by all kinds of businesses, from multi-site restaurant groups operating their own private commercial kitchens to smaller start-ups and food trucks making the most of a shared kitchen space.
Using a Commissary to Expand
Commissary kitchens can be a way for food businesses to add multiple revenue streams that require more kitchen space than they currently have available. Restaurants or other food businesses might use a certified commercial kitchen to expand into
- Outside Catering: A shared space rented by the month makes it easy to scale up or down with seasonal event demands, such as for wedding season.
- Wholesale: If you’re well known for something you make in house (your famous doughnuts or the best local fried chicken), space in a commissary can allow you to scale up production and sell that product wholesale to other businesses.
- Food Truck: A food truck commissary can allow you to run a food truck or pop-up, either on a permanent spot or for events and festivals.
- Virtual Branding: Adding a brand through a virtual kitchen with delivery-only takeout (or through a food truck or pop-up) can be a great way to test the market for a new or additional venture, without the immediate investment required for a permanent venue.
- Centralized Operations: Centralizing operations to a private commissary kitchen can take the pressure off individual locations. It also allows you to consolidate labor, training costs, and overhead, and make workflows more efficient.
- Renting Out Your Space: Make the most of your equipment, building costs, and utilities by renting out space in your own kitchen to other businesses looking for a commissary in your business downtime.
How to Choose the Right Commissary Kitchen
Choosing the right commissary kitchen for your needs really depends on your own business model and expansion plans.
An established restaurant group might be ready to improve efficiency by centralizing operations. Investing in a private commissary kitchen for use as a central kitchen space can maximize overhead and consolidate costs for multiple revenue streams by using the same kitchen, equipment, and staff to prepare food for all locations.
A single commercial kitchen space serving a restaurant group can also control food costs and standardize quality control, by ensuring consistent use of ingredients across the restaurants. For example, sauces or baked goods can be pre-made, and meat or vegetables can be cut to standard size.
Centralized restaurant operations can also give you a single source of inventory tracking, which can lead to less waste, lower COGS, and ultimately higher profits.
A restaurant wanting to expand its offering, either through different brands or by adding another business model such as a food truck, can make use of an existing shared commissary kitchen or cloud kitchen. By using a kitchen space that already has maintenance, overhead, and licensing built in, you can scale up operations quickly to meet demand.
Using a shared commercial kitchen can also give you the opportunity to market test an additional income stream quickly without interrupting your day-to-day operations or committing to a whole new venture.
A food business that wants an injection of cash — and has the kitchen capacity to spare — might look at renting out commissary space in their own restaurant kitchen. This can be a fast way to maximize profits from your existing space, especially if you have the space and/or time capacity to spare, without creating congestion in your existing kitchen space.
For startups and entrepreneurs, a shared commissary kitchen or ghost kitchen space can give them access to the commercial kitchen equipment and fully licensed or certified premises they need to test product/market fit before committing to a permanent venue. Small food businesses such as food trucks, kiosks, and food delivery businesses may even decide that shared kitchen space is the right way for them to operate long-term.
Commissary kitchens can reduce overhead and maximize efficiency for food business operators. Whether you’re thinking about expanding to a centralized commissary hub, renting commercial kitchen space to add a new brand or revenue stream, or offering up commissary space in your own restaurant kitchen, commissary kitchens can be a great way to expand your restaurant business.