Welcome to the post-ghost era
Ghost kitchens changed the delivery game. Here’s what comes next.
In late 2020, ghost kitchens became the hottest topic in restaurants. I wrote about them. I moderated ghost kitchen panels at online events. I interviewed experts regularly. I talked about them on the news. The concept fascinated diners, often enamored by the model’s promises to restaurants: “Low overhead! Easy to launch! Test new markets! Who needs a dining room?!” Less than two years later, the halo is fading. We’ve moved post-ghost, a time when ghost kitchens are a ubiquitous part of restaurant growth strategy and the term starts to lose meaning.
The delivery business itself is having some trouble. NBC News recently declared “America’s obsession with pandemic-era food delivery appears to be over,” citing a return to in-person dining but also waning app popularity, potentially due to the increased fees associated with delivery orders as inflation in America balloons to new heights. US delivery companies’ stock prices are taking a hit and Grubhub’s parent company is shopping for a buyer.
Delivery success is predicated on growth — more restaurants, more consumers, more business. At the same time, new restaurant businesses are notoriously risky.
Enter: the influencer restaurant brand — the “side hustle” of the independent restaurant industry.
Last month, a company called Popchew announced a $3.6 million round of seed funding and hinted at its future plans: to help creators “build, launch and grow their own local, digitally native food brands nationally in a matter of weeks.” My clear skepticism about the business came through — Popchew’s co-founder emailed me promising there’s “more to [the company] than meets the eye.”
Popchew launched its newest food brand, SnapBack Kitchen, in mid-April. It’s a partnership with SnapBack Sports, a new-ish sports media company that got its start on Snapchat, creating a “digitally native food brand” marketed to sports fans “just in time for the NBA playoffs.” It’s serving food — like chicken tenders — from 37 locations in the US.
While all of this just seems like another celebrity-backed restaurant concept, Popchew’s co-founder and CEO Rushir Parikh told me he believes the relationships the company is building with creators will make all the difference. Those influencers, he said, serve as the marketing drivers for the new brands. That way, restaurants aren’t shouldering any marketing costs from third-party delivery — instead, online celebrities are driving business their way in the form of orders for influencer-associated wings and chicken tenders. The influencers, he said, start the all-important flywheel, generating the demand for the food.
Popchew is just one of the newest class of restaurant-adjacent companies set to capitalize on unlimited digital real estate and the power of influencers to mobilize their fans and followers online.
Virtual Dining Concepts, the company that will always and forever enjoy its association with the launch of MrBeast Burger, the extremely successful virtual concept tied to the extremely successful YouTuber, Jimmy Donaldson, a.k.a., MrBeast. In a year-and-a-half, the concept has scaled to 1,600 locations and is approaching $100 million in revenue. VDC just hired its first CEO, Stephanie Sollers joins the company after working at CloudKitchens and DoorDash. And, per Sollers’ LinkedIn, VDC is hiring for some high-level positions including a marketing vp and creative director, plus marketers and designers and some sales reps. That is: the concept creators tied to the content creators, none of whom actually order, make, or deliver the food.
There are more. A company called Chups launched early this year to connect “culinary creators” to restaurants with space to launch their concepts. Creators make a commission from each order, and Chups takes an undisclosed amount, too, for its work as broker. (A company rep called it “a small percentage of each order.”) The restaurant keeps the rest.
In some research commissioned by Grubhub, 41 percent of independent restaurants surveyed (or about 143 of the 350 that were surveyed) say they’re currently offering a virtual restaurant. I disagree with Restaurant Dive’s assessment here that this amounts to: “41% of independent restaurants operate virtual brands” — the report is clear that it’s 41% of those surveyed and it was commissioned by a company that stands to benefit from virtual brand adoption. Still: the value of these concepts is starting to become proven in the industry, and large delivery platforms will obviously benefit from getting behind the tech.
So where does this leave independent restaurants?
The answer to that question depends on your definition of success in the industry. If we’re talking purely incremental revenue, adding a handful of virtual concepts might help. (Remember that Brooklyn diner from last week? Its owner credited virtual brands with keeping it afloat during tough times.) Alex Canter, CEO of Nextbite, another virtual concept creator (though mostly without influencer types), consistently touts that, in his company’s research, 90 percent of restaurants have excess kitchen capacity.
A side hustle is still a “side hustle,” though. And, just like anyone with a side hustle of their own could tell you, sometimes they’re great — especially when they bring value and money! But if you’re hustling on the side simply as a way to make ends meet, relying on a bunch of internet-famous creators to “save” business might not be the best proposition for a restaurateur who got into the business to create experiences, not operational margins at large.
That’s not to say all is lost in the creator-restaurant economy. Hungry House, a small concept in Brooklyn, bills itself as the anti-ghost kitchen. Its brick-and-mortar space houses several different chef-creators using their influencer status to build restaurant brands IRL. It has received potentially outsized attention for its size, likely because of its founder and CEO, former Zuul ghost kitchen executive Kristen Barnett. Hungry House just launched its “season two,” unveiling a few new creator partnerships including with chefs Pierce Abernathy and Tony Ortiz. It also debuted a partnership between beloved CPG (that’s consumer packaged goods) brand Omsom and current Hungry House chef Woldy Reyes. And Hungry House will expand to Manhattan in partnership with a restaurant group; it’ll cook from the space during the day, and by night it’ll be used as a craft cocktail bar.
“Essentially we're looking to prove how this model of working with chefs can serve multiple use cases — not just to have a menu exist in the world for followers to try, but also for CPG brands to capture great feedback and even test new products,” Barnett wrote in an email.
Hungry House isn’t scaling like others in the space; it’s not injecting influencers into independent restaurants across the country. Instead it’s building a platform for creators *in the food space* to launch restaurants, collaborations, and even CPG businesses. In that way, it’s rethinking what a restaurant can be, not disrupting the model in favor of market penetration for anyone with an online following.
This is where we stand, post-ghost. Delivery isn’t just a utility for existing restaurants, it’s a platform on which others are building platforms and still others are injecting themselves in order to pull a percentage of the profit. Ghost kitchens, and now virtual brands, have warped the way we’re thinking about restaurant businesses. We once wondered how many celeb-backed wing concepts the market could support; the answer seems to be: All of them. Does a sandwich brand from Jersey Shore star DJ Pauly D have staying power? Who knows… because it doesn’t have to.
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Chef defends the practice of banning one-star reviewers, difficult guests.
Carmel Valley chef Michael Jones claims that scoping out potential guests on platforms like Facebook, Yelp, and TripAdvisor can help restaurants identify problematic diners. A red flag might be a user who writes only negative reviews or someone who frequently denigrates restaurant employees, he told Bon Appétit. Jones also has a blacklist of those who are “banned” for life for reasons that include: complaining excessively and then tipping poorly after major comps and asking employees who they voted for. Then there are the occasions that Jones cancels reservations because he simply doesn’t think the guest will be a good fit: “Sometimes we just knew there was no way; they were clearly not suitable for coming to our place. They’re not going to drive an hour into the countryside and be comfortable sitting under paper curtains on a concrete floor with a possibility of a feral chihuahua wandering through. So we’d call back and say, “Hey, I'm sorry, the plumbing broke” or something.” The goal of all this? A curated environment where the restaurant matches the guests, apparently.