The great ghost kitchen belly flop
What it looks like when restaurants predict the wrong future
Reef, the company that operated mobile kitchen trailers in parking lots across the country and internationally, is scaling back again, closing unprofitable operations in cities including Portland, OR and Philadelphia.
Reef reportedly took over a billion dollars of investment to change how restaurants work, expanding quickly. But it was Wendy’s announcement of a large Reef partnership in spring 2021 that really turned heads. The fast food giant committed to opening 700 delivery-only locations in partnership with Reef across the U.S., Canada, and the U.K. by 2025. Fifty of those were meant to open by the end of the year.
Instead, about a year later, Wendy’s dramatically scaled back the partnership, committing to 150 locations in the same time frame. Then, earlier this month, Wendy’s walked it back again. “We do not envision that delivery kitchens will be a large element of our growth trajectory moving forward,” said Wendy’s CEO, Todd Penegor, during the company’s fourth quarter earnings call.
Turns out the demand for convenient delivery solutions — those are Wendy’s words — was a bit misplaced.
We could all be forgiven for thinking that the massive pandemic pendulum shifts would be permanent. The rapid rise of ghost kitchens was chronicled by another Covid-era hypebeast, Clubhouse. There was a moment during some dark pandemic days in 2021 that the mobile app took over popular culture. The premise: anyone (well, anyone with an iPhone) could drop into virtual audio-only rooms to hear a host of live speakers talk about literally anything. Each “room” had a theme; speakers and sometimes moderators kept rooms on topic with varying degrees of skill and success.
At the height of its popularity, people were hosting rooms to discuss restaurants and restaurant tech every night. And no topic was more popular than delivery-only ghost kitchens, which were then emerging as an alternative to traditional restaurants. My evidence is purely anecdotal, of course. But judging by how many times I — a frequent Clubhouse speaker for a very limited period of time — was personally talked over by someone in a room extolling the benefits and margins and potential of virtual brands and ghost kitchens, there were plenty of opportunists in the (virtual) room.
Get in, loser, we’re going to the future.
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