Ghost Kitchens Can Help Feed New Yorkers While the City Is a Ghost Town
During the restaurant boom of the 2010s, blue states and cities loaded unfunded mandates onto eateries. (In New York City, the government website lists approximately 32 different state and city permits, registrations, and mandates.) Then COVID-19 shut down an estimated 40 percent of restaurants nationwide. The industry suddenly faced sales losses of $80 billion, and two-thirds of its employees across the country were thrown out of work. The regulatory load only increases the likelihood that a restaurant will stay closed and cooks or waiters will lose their jobs permanently.
Some employees might not get their jobs back even if the restaurant reopens. Rising costs could push more places to remake themselves as ghost kitchens—places that cook solely for delivery with no in-house seating.
Restaurants are high-risk and low-margin. About 20 percent fail in their first year, 60 percent by year five. Profit margins range from 1 to 10 percent. The typical restaurant can’t survive more than a few weeks without profit. Even before COVID-19, full-service restaurants were losing market share to lower-service formats, which increasingly replaced servers with touchscreen and app-based ordering. As of last year,
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