Ghost Kitchens Find a Home in Empty Hotels

Restaurateurs hunting for cut-rate space in the pandemic are teaming up with eager partners in another beleaguered industry.

Richard Zaro started his sandwich shop, Cutlets, in a hotel kitchen in Midtown Manhattan before moving it to its own location.Credit…Landon Nordeman for The New York Times

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By Debra Kamin

Richard Zaro always wanted to open a chicken cutlet joint inspired by the deli sandwiches served across northern New Jersey, but the challenge was coming up with the required capital. The pandemic finally gave him an opportunity.

Mr. Zaro’s family has a long history in the restaurant business. In 1927, his great-grandfather Joseph Zarobchik founded the Zaro’s Bakery chain, which today is a fixture for New York commuters with storefronts at Pennsylvania Station and Grand Central Terminal and across the city.

But he wanted to start a concept of his own, and in the pandemic, he found a solution: the hotel industry, which, after months of hanging by a financial thread, was renting its empty kitchens and banquet spaces to restaurateurs hunting for cut-rate space.

Ghost kitchens, also called digital kitchens, are cooking facilities that produce food only for delivery or takeout. And as U.S. cities bounce from one lockdown to another, keeping restaurant dining rooms shuttered, demand for the concept is booming. Euromonitor, a market research firm in London, predicts ghost kitchens will be a $1 trillion industry in the next 10 years.

So it’s perhaps unsurprising that the hotel industry, where occupancy rates are still down 30 percent from a year ago, is getting in on the trend. Hotels have become adept at repurposing their spaces throughout the pandemic. They’ve offered their empty rooms as housing for the homeless and temporary offices for executives; they’ve even turned their conference rooms into classrooms for children learning remotely.

The conceit isn’t entirely new: Butler Hospitality, founded in 2016, was one of the first companies to streamline in-room dining by funneling food and beverage service for multiple hotels through a single neighborhood kitchen. Analysts now estimate that fewer than 5 percent of hotels in the United States are operating ghost kitchens from within their properties, but the number is expected to grow.

“Hotels see this as a profit center,” said Frederick DeMicco, executive director of Northern Arizona University’s School of Hotel and Restaurant Management. Name-brand restaurants, in particular, can bring added value to a struggling hotel.

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