Discover more from Expedite
TikTok Kitchen? Hey, whatever works!
It's hard to believe virtual concepts are good for restaurants when the companies behind them simply chase the shiny and new.
Last week at a conference, the co-founder of Virtual Dining Concepts (VDC), Robert Earl, announced his company’s next big concept: TikTok Kitchen. “This concept can be ever-changing, with its own huge support system of TikTok followers,” he said onstage.
VDC is the parent company of several celeb-infused brands including MrBeast Burger, a year-old concept bolstered by the fame of MrBeast, a wildly popular YouTuber. It reportedly has over 1,000 locations and is often held up as an example and benchmark of success in fast-growing restaurant brands.
The whole idea of online-only restaurant brands already gives leaders of large virtual restaurant companies lots of room to experiment with concepts and menus. They can target celebs and influencers with the largest followings in order to reach the largest and most loyal audiences, and switch gears quickly to take advantage of new trends.
In the past, leaders of these companies have insisted that they prefer to work with celebrities that have staying power and a true dedication to the restaurant business. Something like TikTok Kitchen, which literally exists to be ever-changing (Earl’s words!) to take advantage of the peaks of fleeting internet fame, seems antithetical to the industry’s previous focus on brands and celebs with staying power.
But: there’s a built-in audience!
TikTok’s power to launch public-facing food careers is well-documented. As of last May, per Taylor Lorenz in the New York Times, videos with the hashtag #TikTokFood amassed 25.2 billion views. The app regularly spawns viral food trends. Remember TikTok pasta — the block of roasted feta cheese with tomatoes tossed with pasta from earlier this year? Not only was it a huge internet hit, but plenty of pros weighed in with tweaks of their own. (Aaron Hutcherson of the Washington Post recommended “Greek feta cheese made from at least 70 percent sheep’s milk” and a stir with reserved pasta water to keep the sauce from breaking; Delish’s Lauren Miyashiro recommends doubling the tomatoes and adding shallots, smashed garlic, and herbs for a flavor boost.) TikTok sensations are also causing literal ingredient shortages.
Could one viral recipe be enough to spawn a temporary online restaurant? My money’s on yes, absolutely.
Nextbite, another virtual brand parent company, recently announced its newest concept, Lucky Dragon Fried Rice. Instead of a fixed menu relying on specific ingredients, the company encourages restaurant partners to “bring your own recipe,” modifying ingredients and menu items that might work best.
“Don’t like our spec’d meats? No problem: use your own. Not into our recommended rice? All good: use your rice.” The menu includes a whopping three varieties of rice: classic, “Yum Yum” with a special sauce, and spicy, with spicy sauce. This is obviously not earth-shattering in concept, but it is a hedge against operators who might worry they don’t have the right ingredients in stock, or even against potential supply chain troubles.
Plenty of experts agree that not only are virtual concepts here to stay — they’re growing. These recent brand launches — from the celeb-backed to the shockingly simple (three menu items and a few drinks = a viable Nextbite concept) — show where the industry might be heading.
I’m not the only one with money on these concepts’ success. (Though it’s worth noting that my money is purely hypothetical here, while plenty of the cash in play is of the very real variety.) Both VDC’s and Nextbite’s new concept creation is bolstered by venture capital. In October 2020, Ordermark, the then-parent of Nextbite, announced $120 million in funding led by Softbank, the Japan-based company known for huge bets on emerging companies like WeWork, Uber, and Reef. (Ordermark has since renamed itself Nextbite.)
This past October, VDC announced its own Series A round, securing $20 million to grow the business. (At a different conference this fall, Earl joked that he’d “spent it already.”)
When I wrote about virtual concepts a year ago for Eater, they felt promising. Small businesses were getting in on the action, testing concepts for delivery or expanding to new markets. Now, any sort of success or expansion in the industry seems to be tied to a large and well-funded venture: usually a virtual brand company like VDC or a ghost kitchen operator like CloudKitchens. It’s unsurprising that the virtual brand space is going this way; anyone with an iPhone and a Clubhouse account a year ago could’ve guessed where this was headed based on those conversations alone.
Yet it is a little bit disappointing to think that the next great evolution in American dining might ride in on a wave of pop culture. All this audience-chasing might also come at the expense of the actual product: the food. Recent reports outline trouble at Reef, the well-funded ghost kitchen provider that works with plenty of virtual brands. At times, per Insider’s coverage, the company has been overwhelmed with orders and sent out uncooked or undercooked food.
It’s an interesting thing to watch, as financial backers celebrate the scale and promise of the suddenly large companies playing in the virtual brands space, rewarding the companies with millions. Simultaneously, restaurants report unprecedented staffing troubles, causing plenty to reduce operating hours or otherwise modify business. It feels like a tale of two restaurant industries: one fueled by tech and the promise of scale, and the other firmly rooted in reality.
DoorDash bolsters its global presence with an investment in Flink
The fall rumors were true: DoorDash invested in Flink, a European ultra-fast grocery delivery company. The Berlin-based startup finally confirmed it raised $750 million in a Series B funding round led by DoorDash. Flink is now valued at $2.85 billion — up from a reported $2.1 billion in September when news of the deal was first leaked — underscoring the popularity but also the high stakes of ultra-fast grocery delivery.
The company, which has only been commercially active for seven months (!), aims to get products to its customers in less than 10 minutes. Part of Flink’s success rests on its strategy to be a supermarket for everyone, e.g. not just catering to city-dwelling hipsters with disposable cash.
DoorDash CEO Tony Xu has insinuated his company has bigger plans for the partnership.“We tend to not make investments. Typically we usually do it if we believe that there might be a commercial relationship or something strategic that is maybe cemented or solidified by an investment,” he said recently in an interview at the Slush tech conference in Helsinki.
DoorDash had originally been eyeing one of Flink’s rivals, Gorillas, but talks reportedly fell through over differing opinions about management styles and growth plans. Gorillas later received a substantial investment from Delivery Hero.
DoorDash is making big — and pricey — moves in Europe. It’s currently in the process of acquiring Finland-based delivery company Wolt in a deal worth $8.1 billion, set to close in the second half of next year.
“We have an opportunity to build a global platform for local commerce in the internet era,” Xu said of the deal in a statement. “Joining forces with Wolt will deepen our pool of superb talent and allow us to accelerate our international growth, while elevating our focus on the U.S.”
What else is happening?
Lyft finally gets in on the restaurant delivery action. A year after Lyft’s president told reporters the company was working on food delivery, the day has arrived thanks to a partnership with Olo. Olo powers direct ordering at some of the country’s biggest restaurant brands, and via its Dispatch product, allows restaurants to offer delivery through third-party logistics providers for orders they accept directly. Lyft joins Olo’s list of partners in 25 markets and counting, joining DoorDash, Uber, and others as potential logistics providers. Restaurants have control over who’s delivering their food — they can choose the cheapest option, pick a default provider, or even blacklist others. According to a Lyft exec, the partnership has the potential to facilitate “several hundred thousand deliveries per week.”
Uber Eats and Grubhub sue New York over its data-sharing law. DoorDash filed months ago. Last week, Uber Eats joined DoorDash in suing the city over a new law that would require third-party platforms to share customer data with restaurants. DoorDash challenged the law in court months ago, and the city agreed to delay enforcement against DoorDash while the suit is pending. Uber is seeking a similar reprieve. One week later, Grubhub filed its own similar suit. In addition to saying that the law’s enforcement will damage business, the companies say it violates customer privacy.
Restaurant menus are shrinking. Chefs say that increasing food costs and staffing shortages are limiting the dishes they’re able to offer on menus. They’re focused on practical and cost-effective options, per coverage in the Wall Street Journal. The piece focuses on several restaurants who have implemented practical challenges, including Vernick Food & Drink in Philadelphia, which cut most of its costly and easily perishable raw-bar dishes.
Danny Meyer funds a taco spot. The restaurateur and Shake Shake founder last week led a $27.5 million funding round via Enlightened Hospitality Investments, his private equity fund, for fast casual taco chain Tacombi. The money will go toward expanding, with a focus on the East Coast. The company, which currently has 13 locations — 11 of which are in New York City — plans to hit 75 within the next five years, aiming to compete with mainstays like Chipotle and Taco Bell.
Byeee Wing Wednesday, Hello Metaverse Monday. What a deal! Applebee’s sold its first NFT, a burger image, for $25 to a buyer who will also get free actual burgers for a year from the restaurant. The restaurant’s “Metaverse Monday” campaign has begun. (really!)
Uber Eats made its first delivery in space over the weekend. I don’t even know what to say about this.