Partner Andrea Gendel, co-chair of Pryor Cashman's Leasing practice, discussed a new era in the restaurant industry as ghost kitchens become more prevalent. According to GlobeSt:
"All restaurants right now are really looking at the concept of pop-ups and ghost kitchens because they are taking advantage of the proliferation of the delivery services, whether they start their own delivery service or [use another delivery service.] A lot of existing restaurants are struggling, and as a means to expand their gross sales, they are using ghost kitchens and pop-up concepts. It is booming," Andrea Gendel, co-chair of the leasing practice at Pryor Cashman LLP, tells GlobeSt.com.
There are two major types of ghost kitchen lease structures. A ghost kitchen is either managed by a single operator or by a ghost kitchen manager that licenses the space out to other users. The latter is akin to WeWork in the office space, according to Gendel. Before inking a lease with a ghost kitchen, landlords need to understand the model and operations. "Ghost kitchens tend to lend themselves to warehouse-type space that is not in a main retail corridor. We are seeing that change a little bit, but landlords need to understand the operation before doing a deal with a tenant," she says. In addition, landlords should understand the build-outs and permits need to convert the space.
Ghost kitchen concepts aren't new, but they have evolved. "Restaurants have always had these concepts in play where there are certain things that they would cook offsite," says Gendel.
"Now, with the pandemic, ghost kitchens aren't behind-the-scenes concepts anymore. They are now front-facing to the public but they are purely online and they are selling direct to the consumer."
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