That is the second in a three-part sequence highlighting host kitchen partnerships and digital manufacturers. The first in the series mentioned how eating places can develop into host kitchens.
This 12 months, quick informal Asian chain Wow Bao hit a milestone that will have been unthinkable only a few years in the past: It opened 53 areas in sooner or later. How did it pull it off? None of these items have been conventional brick-and-mortar eating places — all of them opened inside different eating places’ current kitchens.
“The issue with the brick-and-mortars opening is you want building schedules, you could rent folks. There’s all this concerned proper now, [including] capital expense. We do not incur any of that,” Geoff Alexander, Wow Bao president and CEO, mentioned.
This technique is a part of the corporate’s Darkish Kitchen program, which was established in 2019 as a solution to shortly develop with out having to show to conventional development. Via its Darkish Kitchen program, it companions with different eating places to deploy its model in delivery-only kitchens with a menu of buns, bowls and potstickers. When the pandemic hit, the plan paid off.
Since April 2020, Wow Bao has opened 400 delivery-only kitchens and is on its solution to one other 300 by the tip of the 12 months, Alexander mentioned. Previous to its Darkish Kitchen program, Wow Bao had solely six bodily areas in Chicago and 6 bodily airport areas.
Different eating places and restaurant-adjacent firms have used host kitchens to develop quickly in the course of the pandemic as properly, together with Dickey’s Barbecue Pit, which goals to be in 25 host kitchen areas by the tip of the 12 months, and Nathan’s Well-known, which opened its 100th ghost kitchen location in February. Creating Culinary Communities (C3) partnered with Chowly, a point-of-sale integration firm, in June to offer 10,000-plus kitchen companions throughout the nation entry to C3’s digital manufacturers. Nextbite can be increasing its attain with its digital manufacturers and celeb model partnerships, including George Lopez Tacos to its lineup earlier this 12 months.
Host kitchens can provide eating places limitless alternative, Alexander mentioned. When you’ve got seven manufacturers, you possibly can have seven totally different eating places in New York Metropolis function considered one of every of those manufacturers after which a block over you possibly can have one other seven eating places internet hosting one, he mentioned. Nearly each restaurant within the U.S. may have a Wow Bao in it, he mentioned, including that it may also be a world alternative.
“You possibly can simply activate extra eating places in a single day,” he mentioned.
Even with the speedy development potential, Alexander doesn’t see a danger in oversaturation, however an opportunity for shoppers to have extra alternative.
Ghost kitchens suppliers, alternatively, want to seek out areas giant sufficient to accommodate a shared kitchen operation, which implies there are restricted quantities of alternatives in a metropolis, he mentioned.
The host kitchen can even assist struggling impartial eating places faucet into new income at little value or disruption to their enterprise.
“What I’ve heard from operators going again to final summer season and even now’s that with out us these eating places won’t even be round,” Alexander mentioned. “We have been their beacon of sunshine that allowed them to maintain the doorways open, pay the lease and so forth.”
Host kitchens provide speedy enlargement, fast returns
Whereas Wow Bao constructed its personal host kitchen program, different restaurant chains like Nathan’s Well-known have leaned closely on partnerships with host kitchen facilitators like Franklin Junction. Nathan’s Well-known is utilizing the channel to develop not solely its essential model but in addition its two digital ideas, Wings of New York and Arthur Treacher’s, James Walker, senior vice chairman at Nathan’s Well-known, mentioned.
“We wished to essentially carry our product to the place shoppers are, in a means that made sense for shoppers and likewise made sense for our enterprise companions. Each of these elements are critically necessary to us,” Walker mentioned.
Nathan’s portfolio has grown to incorporate 235 supply kitchens as of August, and lots of of those areas launched in the course of the pandemic.
“Opening 235 brick-and-mortar areas not solely would have been extra pricey from a capital expenditure standpoint but in addition simply extra time consuming,” Walker mentioned.
He identified restaurant demand for entry to the Nathan’s, Wings of New York and Arthur Treacher’s has been sturdy globally and throughout the U.S., so it made sense to associate with an organization like Franklin Junction that might fast-track enlargement.
“We imagine what’s critically necessary in our choices and our three manufacturers is that they’re branded, they’ve a historical past [and] they have a really sturdy shopper proposition,” Walker mentioned.
Working with Franklin Junction additionally permits Walker and his group to deal with different enterprise alternatives. The platform handles the shopper eating places serving as host kitchens and gives them help, a lot in the identical means Nathan’s would handle its franchisees.
He additionally talked about Franklin Junction prefers to work with established manufacturers as a substitute of utilizing delivery-only ideas.
“We imagine there’s loads of nice manufacturers already on the market which are in search of that speedy enlargement alternative and to entry new markets and new shoppers that in any other case would both take them many, a few years to [capture] with numerous cash, or could not be doable,” Rishi Nigam, Franklin Junction CEO, mentioned.
As a result of folks acknowledge the Nathan’s title, it continues to see sturdy gross sales only a 12 months or two after the model is launched just about in a brand new market, Nigam mentioned.
Darrin White, COO at Frisch’s Eating places, which owns and operates practically 100 Massive Boy eating places in Indiana, Kentucky and Ohio and franchises 25 items, mentioned he prefers working with established restaurant manufacturers, like Nathan’s Well-known. White is a long-time proponent of host kitchen partnerships and has seen an increase in revenue from internet hosting manufacturers from Franklin Junction’s community.
A model with historical past — even when that historical past is a number of areas in a single metropolis — could be very identifiable and has extra buyer consciousness than an solely digital model with no bodily presence, White mentioned. This fashion, even when a buyer has not heard of a model earlier than, they’ll search for it on Google and see that it truly exists. This tends to lend credibility to the model, White mentioned.
Model and menu consistency are key
Although well-established restaurant manufacturers profit from buyer recognition, there are nonetheless a whole lot of issues chains want to grasp earlier than coming into a bunch kitchen partnership, consultants mentioned. For instance, chains will lose management of meals high quality and consistency by outsourcing their model to host kitchen operators, consultants mentioned.
“I believe that’s most likely the place we’re going to see the shakeout when it comes to manufacturers and [host kitchen] facilitators,” Michael Schaefer, world lead of meals and beverage at Euromonitor Worldwide, mentioned. “Those that may be certain that constant high quality … [become] a viable mannequin for manufacturers and for eating places.”
Eating places should be cautious of presentation, consistency, the host kitchen’s coordination with supply drivers and the general buyer expertise, Buck Sleeper, head of retail expertise consulting at EPAM Continuum, mentioned.
“In the event you’re a longtime model like Nathan’s Well-known, you could be very cautious whenever you put your model on the market. As a result of if it flops in partnership with another person’s infrastructure, they do not get the blame, you do,” Sleeper mentioned.
Even when a restaurant model is well-known, the host kitchen operator may very well be performing on a degree of anonymity, which might be at odds with shopper calls for for transparency and accountability, Sleeper mentioned.
“I do assume that for franchise manufacturers which are used to working with outdoors operations, this host kitchen may very well be enticing for the correct menu gadgets for the correct conditions,” Schaefer mentioned.
Nathan’s meals works properly on this mannequin as a result of scorching canines and sandwiches journey higher than fried meals, as an example.
“However [host kitchen partnerships] additionally [require] tailoring of the model expertise, so that you just’re actually solely placing out meals and menu gadgets which are executable in that setting versus one thing that requires a better specificity of a novel kitchen or a in another way educated workers,” Sleeper mentioned.
Regardless of a few of these challenges, center managers and proprietor/operators of restaurant manufacturers have informed Sleeper this association actually works for them. Host kitchens permit them to considerably scale — opening 30, 40 and even 100 digital kitchen areas — and that dynamic is well worth the lack of model management, Sleeper mentioned.
Select your companions properly
A technique to assist guarantee model consistency is to watch out when deciding on host kitchen companions, Walker mentioned.
“[Host kitchens are] going to symbolize your model, no matter whether or not it is the supply expertise. We view supply as only a totally different avenue to create an expertise. We’re simply as involved with the supply expertise as we’re the dine-in expertise,” Walker mentioned.
When a possible restaurant associate inquires about Wow Bao’s Dark Kitchen program, Wow Bao will evaluation its menu, images of meals and opinions on-line, Alexander mentioned. Wow Bao additionally sends potential host kitchen companions a advertising and marketing deck and reseller settlement, which generally results in a telephone name the place Wow Bao can present background on this system. A savvy operator often asks a whole lot of questions. If an operator simply sends again a signed settlement sight unseen and Wow Bao’s group by no means meets its management, that’s usually a pink flag, Alexander mentioned.
“In the event you’re a longtime model like Nathan’s Well-known, you could be very cautious whenever you put your model on the market. As a result of if it flops in partnership with another person’s infrastructure, they do not get the blame, you do.”
Head of Retail Expertise and Consulting, EPAM Continuum
“What it’s important to watch out with whenever you develop at such a charge … [is that] shopper sentiment can’t be forgotten,” Alexander mentioned. “Superb operators know the right way to proceed that hospitality feeling for the customer at dwelling.”
Wow Bao gives a coaching program with digital movies and Zoom walkthroughs to verify the correct kitchen tools is about up. These periods permit the corporate to be assured the operator will execute the model accurately, Alexander mentioned. Wow Bao provides its meals merchandise — the operators simply must steam this stuff and prep them for supply.
“We’re not educating [host partners] the right way to make recipes. We’re not educating them the right way to do prep work,” Alexander mentioned. “It is quite simple as a product.”
Whereas Wow Bao and different manufacturers are rising by this mannequin, Alexander doesn’t assume brick-and-mortar shops will ever go away.
“The restaurant trade must consistently evolve. That is only a new evolution, a brand new innovation to how we are able to attain prospects,” Alexander mentioned.