Comment by aabhay | Hacker News Reader

Comment by aabhay | Hacker News Reader

I worked in a food production and delivery startup (meal prep), and while I was constantly surrounded by the 'buzz' of ghost kitchens, a part of me was sure -- absolutely sure -- that this would be a fad.

Why? Simple market dynamics. After 5000 years, the economics of running a traditional restaurant are essentially identical. That's because the lion's share of the value of a restaurant is the repeat and referral business, NOT in discoverability. That's why a fancy restro-bar on Glitzy Avenue shuts down after 3 months. For a good restaurant, the CAC should go to zero over time. The food should sell itself. By adding artificial market dynamics to this equation (mandatory advertising, artificially low unit costs, artificial discovery), you are removing that crucial, critical element, and the food will inevitably suffer. Burgers-R-Us can pay $1 per customer to appear at the top of your feed, serve you a shitty hamburger, then rename to Best Burger, and rinse and repeat.

Eventually consumers will wake up (many already have), and the traditional restaurants will escape with meaningful margins. Of course only a tiny fraction of restaurants that are started turn into surviving businesses, as has been the case since time immemorial.

I'll be back, post-pandemic, for my favorites. Delivery doesn't fulfill my desires.

As a consumer, everything I enjoy getting at a restaurant has three critical properties.

  * Hot (or cold; extreme) temperature
  * Fresh (IMO: short best by time)
  * Annoying to make at home

The exceptions to the first two on this list were already delivery pre-'gig jobs'; pizza and most (American) Chinese food; those kept reasonably well in insulated or even warmed bags.

The last factor might involve the hassle of deep frying, or the need for food specific industrial equipment (like a pizza oven), or even just a ton of ingredients to keep fresh. Something a kitchen selling 50+ of that thing a week can easily accommodate but I can't.

The secret to the best sourdough bread and butter at the fish shop, pre-pandemic? That butter was farm fresh daily because they just used THAT much; and the bread fresh from the oven the same way.

> The exceptions to the first two on this list were already delivery pre-'gig jobs'

IME just about everything that wasn't awful when delivered was already being delivered decades before gig jobs existed. Indian and pizza work well with delivery but things like burgers or anything with a hot component and a salad component just become a soggy luke warm mess. A gourmet salad place is about the only exception I've come across.

The other big advantages of restaurants is that they get to "hide" the calories, if you make the same thing at home you're aware of everything that goes into it and half the time the restaurant version is only better because the amount of fat/sugar they put in things.

>pizza and most (American) Chinese food; those kept reasonably well in insulated or even warmed bags.

I don't necessarily find those to be good examples. A pizza fresh from the oven will steam its delicate crispiness away in a box. The same applies to a fried dumpling.

On the other hand, a non-crisp dish like a vindaloo or a soup will arrive almost entirely unchanged.

When I order anything time-sensitive, I prefer to get it myself. That minimises the amount of time it is sitting (e.g. awaiting a driver). I like to arrive early, so I can take it away as soon as it leaves the kitchen.

> A pizza fresh from the oven will steam its delicate crispiness away in a box

It's not a coincidence that companies like Domino's specialize in spongy dough.

That's quite brilliant, actually!

After the pandemic is more or less over, consumers will return to restaurants for the experience. These ghost kitchens will continue to shovel mediocre garbage at scale for those Friday nights when you just don't feel like cooking, but Sunday brunch on a patio is an experience you cannot get from delivery.

I think there is room for both the physical and digital experience. Any restaurant who hopes to survive will need to make a choice about who they are, though - are you commodity or an experience? I doubt any can do both well.

The sad reality is that most people just don't give a shit - look at how much whitelabel junk is sold on Amazon to people who don't care. Those same people are the perfect demographic for commodity food delivery - they want some abstracted version of what they think Chinese food is for a reasonable price, delivered to their door.

The real scale of the problem will be when DoorDash et. al merge/acquire themselves a monopoly and push orders to their own entities.

There are food services that are commoditized and physical, they just don't necessarily look like restaurants. Food trucks, the popup at a food hall, hot dog carts, the NY deli, etc. These various forms are commonplace all over the world, they're just less common in parts of America because they were largely made illegal. Here's cops in Texas shutting down a lemonade stand run by two girls: https://www.cnn.com/2015/06/11/politics/lemonade-stand-shut-...

Food delivery, even with all the complaints about how much they skim off the top, how much they underpay drivers, etc. still makes pretty meager margins. And consumers aren't blind to it; I know a lot of people who have grumbled about how much there is in fees.

The sad reality is that most people are too poor to afford to give a shit.

So I see that this comment and a few others make the point that a great number of people are too lazy/poor/busy to make the distinction between good food and ghost kitchen drivel. I think this is an interesting argument, but in food the cheap end of the spectrum is not some unclaimed territory. There are fast food chains and cheap eats galore. These fast food chains survive by franchising and rabid supply chain optimization. But just because something is cheap and easy does not make it a winner. To build an audience, ghost kitchens have to become trustworthy brands, which they can never do by definition.

In your comment on Amazon, I think the difference is that often times, the white label goods are actually pretty good. So while it’s not branded, the reputation is overall positive, and sometimes these goods come from the exact same factories as the branded goods. While some ghost kitchens are derived from real, high quality restaurants, most of the time it is a distressed business that needs to rebrand or a new entrant of questionable quality.

> So while it’s not branded, the reputation is overall positive.

I agree. Trader Joes has a lot of white label stuff, I'd say I usually have a higher impression of their white labeled products than branded products at the same price range.

CAC = Customer Acquistion Cost.

Moving isn’t easy so CAC can’t go to zero. The extra a restaurant pays in rent to be on the street with all the restaurants over being a few blocks away is a marketing cost. That cost is where the ghost kitchen finds their competitiveness and the delivery company finds their margin.

They won’t take over. Rents ability to change in the long term means that if ghost kitchens get too popular then restaurants will face less competition for rent and be able to drop prices.

But I don’t see what time immemorial has to do with it. For a long time paying high rent to be on restaurant st was the most effective way for a restaurant to spend their marketing dollars. For a long time buying carriages was the most effective way to spend your transportation dollars.

The restaurant model has not been around for 5000 years. It's a relatively recent phenomenon from the last 500 or so.

Citation please?

"Reconstructing the Menu of a Pub in Ancient Pompeii":

* https://www.atlasobscura.com/articles/recreate-the-menu-of-p...

* 2d ago: https://news.ycombinator.com/item?id=26210774

Though probably more akin to street/fast food:

* https://en.wikipedia.org/wiki/Thermopolium

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