Monday 8 March 2021
A few weeks ago in Thought Starters we shared an article about ghost kitchens. These ghost kitchens are restaurants that have no dine-in and no customer pick-up. They are built exclusively for the food delivery apps – UberEATS, Deliveroo, DoorDash – and are able to achieve lower costs by occupying non-desirable locations and able to create multiple restaurants in one location (i.e. list a Mexican, Chinese and Burger restaurant on the apps, but cook it all out of the same kitchen).
In our write up a few weeks ago, we made a prediction that the next big fast food chain (think Starbucks, McDonalds etc.) would come out of a ghost kitchen. This was based on the idea that the lower cost structures and outsourced distribution and advertising (just have to list on the app), would allow some of these businesses to scale far quicker than their traditional restaurant competitors. It seems like the New York Times are avid Thought Starters readers, because they’ve just released an article on ‘Ghost Franchises’.
Many of the franchises profiled by the New York Times are celebrity-driven, for example YouTuber Mr Beast opened 300 restaurants across America in December last year (aptly named Mr Beast Burger). These franchises, and the companies behind them like Virtual Dining Concepts and Nextbite, are taking it a step further. They aren’t even creating the ghost kitchen themselves. Instead they are partnering with existing restaurants to prepare their food.
Order a Mr Beast Burger in Midvale, Utah? A restaurant called Buca di Beppo will prepare it for you.
Order a Mr Beast Burger in Manhattan, New York? A neighbourhood bar called Handcraft Kitchen & Cocktails will prepare it for you.
For these local restaurants, ghost franchises are a useful source of funding (especially as the pandemic has cut foot traffic). One cafe in Wisconsin runs 12 ghost franchises out of their kitchen for Nextbite. The franchisors, like Nextbite, then pay the delivery apps to list them at the top of search results.
This is a glimpse at the future of restaurants and food delivery. There are plenty of questions that arise about what it’ll mean for restaurants that now have so many middle men taking a cut (the delivery apps, the franchisor, the celebrity promoter). However, at this stage, there are enough willing restaurants to sign up that these ghost franchises are scaling incredibly quickly across America (and we’re sure, soon enough, the world).