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The Spoon

Daily news and analysis about the food tech revolution

Virtual Restaurants

Meet The Reimagining Restaurants Podcast, and Check Out The First Episode With Wow Bao’s Geoff Alexander

Here at The Spoon, we’ve covered hundreds of restaurant operators over the past half-decade, in part because we love restaurants and restaurant tech, but mostly because restaurant operators are some of the most creative and hard-working entrepreneurs in the food business.

The truth is they have to be. There’s no business changing faster than the world of food service, with the advent of ghost kitchens, digital ordering, automation, and AI, all against a backdrop of high food costs, changing consumer tastes, employee turnover, and more.

All of which is why we’ve decided to start a new podcast focused on entrepreneurs who are finding new ways to run a restaurant in today’s modern world. We wanted to hear their journey into restaurants, hear how they are rethinking how to do business in today’s world, and where they see the restaurant business going in the future.

For our first episode, we knew no one better to discuss approaching the restaurant business in new and innovative ways than Geoff Alexander. The CEO of Wow Bao got his start in hospitality with a college job as a bartender, where he discovered his talent for connecting with people, and he hasn’t looked back.

He joined Lettuce Entertain You shortly after graduation and rose through the ranks over the next three decades, gaining operational expertise and eventually overseeing his own division. In 2009, he took the reins at Wow Bao, where he embraced technology as a way to turn the business around and innovate on new business models. He introduced self-ordering kiosks, mobile ordering, and partnered with third-party delivery platforms early on, which laid the foundation for Wow Bao’s unique model that spans over 500 locations with a mix of virtual kitchens and centralized food production.

Alexander shares insights on Wow Bao’s approach and how a lack of capital fostered a culture of creativity and efficiency. This approach led to successful innovations like centralized production and distribution, which he says has kept cost low while ensuring quality. Alexander also discusses scaling with hot-food vending machines and dipping the company’s toe into the metaverse.

It was a fun episode, and I think you’ll enjoy it. Listen and subscribe on Apple Podcasts or wherever you get your podcasts!

Is Amazon Working on Something Big in Virtual Restaurants and Digital Food Halls?

What is Amazon up to now?

That was my first thought upon reading a LinkedIn update from Nick Avedesian, a longtime ghost kitchen and virtual food hall executive (and a speaker at The Spoon’s ghost kitchen virtual event in 2020). According to Avedesian, he has just taken a new position at Amazon titled Senior Program Manager, Industrial Launch & Execution, where he will “be supporting projects across our Fresh Food Productions and Amazon Grocery Logistics initiatives!”

Before Amazon, Avedesian held roles at several startups in the ghost kitchen and virtual restaurant space, most recently as the Head of Growth for Byte Kitchens, a startup that raised $6 million in 2022 to build out a digital food hall business. Before Byte, he was with Local Kitchens, which raised $40 million this June to expand its virtual food hall business. Prior to Local Kitchens, Avedesian was the Head of Development and Operations for DoorDash Kitchens.

So, Avedesian, who has spent the past five years overseeing the physical build-out of kitchen spaces tied to onboarding new restaurant brand partners for virtual food halls, is now going to work for Amazon to support projects across Fresh and grocery logistics. Could this mean Amazon plans to launch its own multi-tenant, multi-brand food halls? And if they do, how will those food hall restaurant brands be presented to customers?

While it’s still too early to be certain, I suspect there’s a strong possibility that where there’s smoke, there’s fire. One potential scenario is that Amazon might be planning a combination of in-venue buildouts for new restaurant menus and food offerings from licensed partners at Amazon Fresh stores—similar to what Wonder is starting to do at Walmart. Given Avedesian’s expertise in building both new and retrofit kitchen facilities for multi-brand food halls, I can easily imagine these kitchens, along with customer-facing food hall offerings, being implemented at Fresh locations and possibly other sites as well.

It’s not as if Amazon is entirely new to the idea of ghost kitchens or virtual restaurants. The company was an early investor in Deliveroo, a ghost kitchen and virtual brand pioneer. They are also an investor in Grubhub and recently announced that Amazon Prime users get free Grubhub+ and can order directly from within the app.

Naturally, one update isn’t a guarantee of a new project within Amazon, but there are other small indicators that something is afoot. One of Avedesian’s new coworkers is Kaitlin Garton, a project launch specialist at Amazon, as well as Gavin Worsdale, a manager for industrial launch and execution for Amazon’s worldwide grocery business division.

Amazon’s grocery business has been scrutinized closely as of late, partly because the company hit the brakes earlier this year on the expansion of its Fresh stores and the use of its Just Walk Out technology. However, the company has signaled that they are not getting out of or downsizing their food initiatives, and now you have to wonder if they see an opportunity in using their own kitchens in a virtual food hall business as a growth driver, both in-store (at Fresh and possibly Amazon Go storefronts) and perhaps in centralized kitchens (such as those that produce food for Whole Foods).

The company also has a robust grocery and food delivery business and could begin offering a variety of new home delivery options featuring meals from chefs or restaurant chains.

Whatever they’re up to, we’ll be keeping an eye on things. I’ve reached out to Avedesian to see if he has any specifics on what he’ll be working on, but given Amazon’s notoriously secretive ways, my guess is he’ll likely decline to comment.

A Tale of Two Ghost Kitchens: Why Wow Bao Wowed and MrBeast Bombed

This week, James Donaldson, known online as MrBeast, sued Virtual Dining Concepts, the company behind his virtual restaurant brand.

In the lawsuit, MrBeast and his legal team claim that “Virtual Dining Concepts was more focused on rapidly expanding the business as a way to pitch the virtual restaurant model to other celebrities for its own benefit, it was not focused on controlling the quality of the MrBeast Burger customer experience and products.”

The complaint goes on to say that low quality products have resulted in thousands of negative reviews and viral social media posts, including this Reddit article which showed photos of undercooked ground beef.

Above: Picture from Reddit post complaining about BeastBurger

Through its lawyers, VDC has dismissed Donaldson’s claims as “riddled with false statements and inaccuracies” and says that he is attempting to use “bullying tactics” to force VDC “to give up more of the company to him” and is using the lawsuit to “undermine the MrBeast Burger brand and terminate his existing contractual obligations without cause.”

While it’s too soon to tell how all this will shake out, there’s little doubt that the Beast Burger brand will suffer from its namesake celebrity creator publicly complaining about the quality of the food. While VDC has shown no intent to relent and shut down the BeastBurger brand, the current trajectory for the world’s most famous virtual restaurant brand doesn’t appear sustainable.

Ever since I first wrote about MrBeast’s growing disenchantment with the BeastBurger project, I started to think back to a conversation I had this spring with Wow Bao CEO Geoff Alexander. Like BeastBurger, Alexander’s company ventured into the virtual restaurant business a few years ago. However, unlike BeastBurger, there is no celebrity discord to deal with, and from the looks of it, Wow Bao’s ghost kitchen business appears to be thriving. In fact, according to Alexander, the company had just expanded its virtual restaurant footprint by over 106 restaurants in about four months, which brings the total number of virtual WowBao locations to over 700 at the time of our conversation.

So why is Wow Bao succeeding while BeastBurger struggles? From what I can tell, the two brands have three significant differences: Quality control, partner monetization, and product niche.

From a quality control perspective, Wow Bao and BeastBurger are very different. Unlike BeastBurger and lots of other virtual brands which rely heavily on its various restaurant partners to source and make the food, Wow Bao simplifies the process by delivering ready-to-steam products to the restaurants.

“We ship frozen products around the country,” Alexander told me. “If you can steam the product, you can make the product.”

That’s right; no cooking burgers, fries, or other foods, no assembling different ingredients with varying results. Hearing Alexander explain it, the Wow Bao model is the restaurant kitchen equivalent of me bringing home a bag of frozen dumplings from Costco and throwing them in my Instant Pot.

Another difference is the monetization model. According to Alexander, Wow Bao’s restaurant partners only pay Wow Bao for the cost of the food, a vastly different approach from many virtual brand management companies that take a cut of the overall revenue (while also leaving the cost of food and labor to the restaurants). After deducting labor and food, the third-party delivery fee, and a cut of the revenue to the virtual brand partner, there’s often not enough of a financial incentive for the restaurant operator (which usually has its own branded business to worry about) to give the love and attention a brand like BeastBurger needs.

The third big difference is product niche. Asian food’s popularity has skyrocketed in recent years but is still somewhat underrepresented in quick service chains compared to more standard American fare. A typical midsize suburb town in the US might have five to ten burger joints and a similar number of pizza places but may only have a couple of Asian restaurants (and often very few fast-casual or fast food variations). Wow Bao’s dumplings and buns are more likely to face less competition on third-party delivery apps than other categories.

Finally, one other difference is worth mentioning: Wow Bao is an actual restaurant chain complete with its own restaurants, while BeastBurger was born in the virtual world as a business concept, built around an online celebrity made famous not by food, but by playing video games and tracking his life via almost daily videos uploaded to YouTube. There’s something to be said for food born from an actual restaurant with an actual menu to one born out of a business plan to create a non-core business brand extension.

Beast Burger’s problems are not unique. Over the past year, it became clear that many ghost kitchen and virtual restaurant brands that rolled out in recent years would likely not survive. After Uber Eats and DoorDash began to more closely regulate and cut back on the virtual brands on their platform and chains like Wendy’s started to pare back their plans for virtual locations, it became clear the end of the wild west era in ghost kitchens was near. Now, with MrBeast’s efforts to shut down BeastBurger, we have what looks to be a definitive end to the first chapter of the ghost kitchen industry story.

The good news is some companies like Wow Bao and Hungry House are showing that there are other ways to operate ghost kitchen models and make it a win-win for both the ghost kitchens/virtual brands and their restaurant partners.

As for Wow Bao, it appears they will soon expand beyond their restaurant business and take a page out of MrBeast’s book by bringing their starting their own packaged goods business. This week, Alexander teased the release of Wow Bao retail products with a post on Linkedin.

Wonder Launches Membership Program, Eyes Ten Store Rollout As It Leaves Delivery Vans Behind

Wonder, the food delivery startup made famous by its original model that used customized delivery vans, has launched a membership program called Wonder+ the Spoon has learned.

The new program, which costs $7.99 monthly, entitles members to free delivery with no minimum order value. Wonder+ also entitles members to prioritized delivery or pickup via a Wonder “Fast Pass” with each member’s order.

The launch of Wonder+ comes months after the company disclosed it was giving up on cooking food orders curbside in delivery vans. While the original concept developed the company a loyal following of high-frequency customers in the New Jersey suburb in which it launched, it proved incredibly capital-intensive, even for a CEO who had shown a knack for raising eye-popping funding rounds.

“I see a much bigger opportunity to be more profitable, more capital efficient and slightly improve” the customer experience with physical kitchens compared with the food truck system, said Wonder chief Marc Lore.

The membership program launches just weeks after the company opened its second brick-and-mortar location in Westfield, New Jersey. This 4,300-square-foot storefront serves food from 13 restaurant brands, including Bobby Flay Steak, Tejas Barbecue, and Di Fara Pizza. According to the company, the Westfield location will reach customers previously serviced by its delivery vans in Westfield and the adjoining towns of Garwood, Fanwood, Winfield, Scotch Plains, Cranford, and Clark. According to the company, the new locations will support delivery, pickup, and limited dine-in.

While the company has left behind its delivery fleet, it still plans to deliver all food made in Wonder kitchens with its own employees.

“Unlike a ghost kitchen or other delivery services, Wonder is completely vertically-integrated, meaning it owns and operates every single aspect of the process – from the front-end app and prepping of food to the cooking, delivery, and every step in between,” a company spokesperson told The Spoon via email. Wonder couriers will not only handle deliveries made to customers who order via the Wonder app, but also those orders made through third-party apps such as Doordash or Uber Eats.

Wonder’s Westfield location debut follows the opening of its Manhattan location in February, and the company plans to open ten Wonder locations by the end of the year, including in Chelsea location next month and a Brooklyn location in the fall.

Food hall-ish multi-brand offerings are the same general direction some ghost kitchen operators – like Kitchen United with its Mix concept and newer operators like Hungry House – have been moving in recent years, only without the delivery piece. Wonder new direction is reminiscent of European delivery giant Deliveroo’s efforts towards vertical integration with its lineup of virtual brands via Deliveroo Experiences and in-person food halls.

MrBeast: I Want To Move On From Beast Burger, Enjoy Feastables ‘100x More’

As the virtual restaurant and ghost kitchen business has struggled for much of the past year, proponents pointed to the success of MrBeast Burger, a virtual restaurant chain started by the YouTube star that expanded to over 300 contracted restaurants and included some physical restaurants.

But now it looks like the creator behind the virtual brand wants out, tired of a business in which he claims he has little control over the quality of the end product. In a series of now-deleted tweets late last week, MrBeast – whose real name is Jimmy Donaldson – explained he was ready to move on from the brand and wanted to focus more on his snack brand, Feastables. In one of the tweets, Donaldson lamented that the company he partnered with to launch the brand (Virtual Dining Concepts) won’t let him stop “even though it’s terrible for my brand.”

In the following tweet, which has yet to be deleted, Mr. Beast explained his reasoning for wanting to move on:

MrBeast’s problems with varying food quality are a symptom of the virtual restaurant industry’s decentralized and distributed operating model and lack of a uniform set of enforceable quality standards. Still, much of his loyal fan base has been willing to cut him some slack, and up to last fall, Donaldson was still discussing plans to expand the brand to more physical restaurants.

Despite his wishes, VDC still looks to have an enforceable contract that they plan to run with. Donaldson lamented their insistence on continuing the brand, saying, “the company I partnered with won’t let me stop even though it’s terrible for my brand.”

Donaldson’s disclosure about his feelings leaves VDC in an awkward spot, even if they have the right to continue opening the brand. MrBeast’s fans tend to be pretty loyal to him, and if word gets out that he’s soured on the project, my guess is any remaining loyalty they have to the virtual brand will evaporate.

Unlike the virtual restaurant brand, Donaldson’s snack brand Feastables is one over which he appears to have much more control. The brand was internally incubated through his own management company, and he partnered with industry pioneer Jim Murray (founder of RX Bar) as a co-founder and CEO of the company.

2023 Restaurant Tech EcoSystem: Nourishing the Bottom Line

In collaboration between TechTable and Vita Vera Ventures, we are pleased to share an updated 2023 Restaurant Tech Ecosystem map.

We all saw that the pandemic brought a wave of experimentation in the restaurant tech space, but we also know that tech-driven change is not always linear. 

In early 2022, we made bold predictions about the restaurant tech environment in 2023, as we anticipated numerous acquihires ahead (acquisitions primarily driven by tech talent vs strategic tech value). This was due to the tight tech labor market (at the time) and the increasingly challenging funding and interest rate conditions. 

However, with the recent wave of macro tech layoffs, the tech labor market is no longer tight, and we believe more restaurant tech companies may be forced to shut down rather than finding a soft landing through acquisition. We’ve already seen a strong reset on requirements for capital efficiency and valuations of startups in the sector. This macro shift may create potential for rollup opportunities, but many early-stage assets across the sector are overfunded single-point solutions and still subscale.

This is ironic as the need for tech-driven solutions has never been stronger, but companies without the right growth metrics will likely struggle to survive. The inflationary environment is also forcing harder decisions for operators, which may further dampen their willingness to engage with new solutions.

With that in mind, we are pleased to share our 2023 Restaurant Tech Ecosystem, which serves as a current heat map of the broader ecosystem within the US (and is clearly not exhaustive). 

Click here to enlarge/download image of map. Click here for downloadable PDF.

The Journey from Point Solutions to Comprehensive Tech Stacks

While single-point solutions for things like online ordering, loyalty programs, and delivery were popular during the pandemic, we have reached a moment now with perhaps too many point solutions in the market. 

Tech stacks that require too many logins are now in fact creating a cognitive burden for employees, rather than the intended promise of efficiency and ease of use. As a result, operators are beginning to seek integrated systems and smaller tech stacks that can do more. (See commentary in the previous section about rollup opportunities!) 

Restaurant tech advisor David Drinan succinctly identifies the near-term priority for most operators: “The restaurant industry is thirsty for technology innovation that will deliver high margin, incremental revenue.”

On the operational side, managers are still struggling with certain areas such as scheduling and inventory management. These tasks can be time-consuming, especially for independent restaurant owners who have limited resources. As a result, we have seen a growth category of solutions that can automate these functions and provide real-time data to help operators make informed decisions.

Help *Still* Wanted   

The labor shortage in the restaurant industry has been a major challenge for operators in recent years, and labor optimization is still at the top of every operator’s mind. The pandemic caused many workers to permanently leave the hospitality industry, leaving restaurants short-staffed. 

According to the National Restaurant Association, almost two-thirds of US restaurant operators say they do not have enough employees to support existing demand. Instead of replacing this lost workforce, many operators are turning to tech to automate more functions and reduce the need for human labor. 

From digital menus and ordering kiosks to automated kitchen equipment, there are many ways that technology can help restaurants operate more efficiently with fewer employees. By automating basic tasks such as taking orders and processing payments, operators can free up their staff to focus on more complex tasks that require human expertise, such as customer service and food preparation.

Another trend the restaurant industry is grappling with is the changing expectations of younger workers when it comes to the employer/employee relationship. With more emphasis on work-life balance, career development, and job satisfaction, younger workers are looking for more than just a paycheck. 

To meet these expectations, operators are looking for workforce management solutions that can help to improve engagement, development, and rewards for their employees. This includes tools for tracking and managing schedules, as well as innovative solutions for tip outs and other compensation mechanisms. By investing in these solutions, operators can not only attract and retain top talent but also improve the overall efficiency and productivity of their workforce.

Finally, it is worth noting that basic scheduling and labor management tools can have a significant impact on profitability by reducing labor costs and improving operational efficiency. By automating scheduling and timekeeping, for example, restaurants can reduce the likelihood of overstaffing or understaffing, which can be costly in terms of wasted labor or lost sales opportunities. 

In the end, the ability to leverage technology to optimize labor is critical for restaurants to remain competitive in a challenging operating environment. While kiosks and text ordering have shown promise in the QSR space, there are many other opportunities for technology to make a positive impact on the industry as a whole.

Ghost Kitchens: It’s Even More Complicated

In our 2021 restaurant tech retrospective, we had a lot to say about this growing subsector, including the challenges for success (a.k.a. profitability) within the confines of a ghost kitchen business model.  

Now, as the concept of virtual and ghost kitchens continues to evolve even further, it’s important for operators to understand the complexities involved and navigate these challenges to build successful ghost kitchen operations.

One major obstacle has been the potential for tension between virtual brands and existing businesses, where adding virtual brands can lead to direct competition with their own existing businesses. Finding the right tech and operational partner to balance between these two is key.

Additionally, ensuring food safety and maintaining quality standards across multiple brands can be a challenge. Many of the generic virtual brands have lacked distinct value or clear taste standards, leading to underwhelming food quality issues and removal from the major third-party delivery platforms.

Last Mile Magic

Making the economics work for restaurant delivery is a growing priority for the industry. This includes better interoperability between POS/Kitchen systems and delivery providers, better routing and batching systems, localized kitchens, and of course even the mode of transportation for delivery.

We are tracking over 20 companies in the North American unattended last mile category, but it is still early days with most (all?) of the solutions operating in limited geographies and customer trials. So we have left this slice off the infographic for 2023, but don’t forget to keep your eyes on the sky, as we’ve seen recent growth of backyard drone delivery companies which are proving to be faster and better for the environment (if they can outweigh the noise and regulatory concerns).

GenAI on the Menu

Tech entrepreneurs have long dreamed of personalized food recommendations, but few have succeeded in creating true personalization beyond dietary concerns, allergens, or ingredient likes/dislikes. 

However, we have now reached a unique moment where new technologies like ChatGPT will be able to create meaningful and personalized interactions with guests. This has always been the premise of a variety of AI-driven restaurant tech startups, but the ability to leverage the underlying data to engage and interact with guests in a truly personal and conversational manner is game-changing. 

By using data from previous orders and interactions alone, ChatGPT can help to create a more tailored experience for guests, from recommending menu items to offering personalized promotions. ChatGPT can become a critical part of a restaurant’s marketing team by creating content, with the ability to easily translate to different languages as well. This could give operators a crucial competitive advantage as consumers demand more personalized experiences. We have only begun to see the capabilities of ChatGPT with free templates being offered to restaurant operators already.

Moreover, conversational AI like ChatGPT can also be a valuable tool for restaurant operators seeking to understand their own operating metrics. By integrating ChatGPT into their tech stack, operators can ask natural language questions and receive real-time responses, empowering them to make informed decisions about their operations.

Emerging Restaurant Tech Concepts to Watch

  • Chat/AI across marketing and operations
  • Tech-enabled employee support and training (for example, personalized perks, tip-out options, or language choices) 
  • AI for scheduling to free up managers
  • Dynamic pricing
  • Reusable containers + tech-driven circular economy for foodservice 

Looking ahead –  As always, we welcome your thoughts and reactions, and look forward to continuing to follow this sector together in the coming years. Reach out to us: Brita@vitavc.com and hello@techtablesummit.com. 

OneRare and Honeybee Burger Partner to Bring Plant-Based Food to the Metaverse

OneRare, the first dedicated food metaverse platform just announced a collaboration with LA-based Honeybee Burger to make plant-based food “more desirable, accessible and available everywhere.”

The vegan burger, founded by former Wall Street execs, is considered a mini-chain in Southern California but has grown in popularity alongside the plant-based movement and is planning to open locations in NYC and Chicago. Honeybee plans to leverage OneRare to enter the metaverse and create a virtual location accessible to anyone around the world.

It’s a good move and one that smaller restaurant groups should watch carefully; as giants like McDonald’s, Wendy’s and Chipotle unveil their proprietary “metaverse” environments that will act like virtual storefronts and communities (Wendyverse, anyone?), taking advantage of already established platforms like OneRare will be important to compete in the fast-casual dining space in the future.

Adam Weiss, CEO of Honeybee commented, “we like to think of Honeybee as an innovator, redefining the potential of vegan food in order to increase the appeal of plant-based dining globally. On the food side, that means bringing new and exciting plant-based products to our customers, including things like Nowadays chick’n nuggets…and also Akua kelp patties, which we were the first QSR to serve. This innovation extends to our business and marketing, where we were one of the first to use Regulation CF to raise funds, and now we want to be one of the first to market in the metaverse.”

For now, Honeybee will use the OneRare “foodverse” to promote plant-based food and sustainable dining and feature an NFT menu created by the vegan chain. OneRare has been busy since raising its first funding round in November 2021, announcing dozens of partnerships with food and restaurant brands along with partnerships with NFT and cryptocurrency platforms.

Nextbite’s Alex Canter Shares Insight on Virtual Kitchen Trends in 2022

This week I spoke with Alex Canter, the CEO and a co-founder of virtual restaurant company Nextbite, to hear his perspective on what 2022 holds for virtual kitchens and restaurants.

Nextbite, based in Denver, Colorado, uses a host kitchen model where it licenses a portfolio of delivery-only restaurant brands to restaurants with excess kitchen capacity. Restaurant partners can fulfill orders under these virtual brands to augment their restaurant’s dine-in and off-premise revenue. By taking on an additional restaurant brand, a restaurant can take advantage of their slowest hours, or even when they might not be open (such as the early morning or late night).

According to Canter, while many restaurants are slowly making their way back from the challenges of COVID-19, most are still not operating at full capacity. “Out of all the restaurants in the U.S., the only restaurant I can say confidently is operating at its full potential is In-and-Out,” said Canter. “They have a line out the door from the moment they open to the moment that they close.”

But this could all change in 2022, in part to new opportunities created by virtual brands. In 2022, “restaurants are really starting to understand their potential,” said Canter. “If you think about the kitchen as a manufacturing facility for food, I would say the average kitchen is probably operating at 30% output of what it could what it can do at peak.” After seeing the spike in virtual kitchens and delivery-only brands, restaurant establishments realize that they can cash in on this too. By streamlining online ordering and offering multiple menus and concepts, restaurants can reach new customers and different demographics.

In total, Nextbite has 17 brands that Canter said have been carefully created to consider emerging dining trends both inside and outside the U.S. People’s tastes and cravings change quickly, and can be easily influenced by social platforms like Tik Tok.

So what food categories and concepts will be successful in the virtual kitchen space in 2022? According to Canter, Pizza and Chinese food – the original delivery food categories – remain very popular. He also said breakfast foods for delivery are on the rise as illustrated by Nextbite’s survey which showed that forty-five percent of consumers ranked breakfast sandwiches as one of their favorite breakfast items to order. Nextbite’s celebrity taco concept, George Lopez Taco, does really well in suburban areas where it can be difficult to find an authentic street taco.

Wiz Khalifa and Nextbite’s restaurant concept, “Hot Box”

According to Canter, Nextbite works with celebrities like Wiz Khalifa and George Lopez because a small independent restaurant would never be able to connect with a high-profile celebrity. By using one of Nextbite’s celebrity-driven brands, they can tap into a celebrity brand’s following and demand.

Finally, Canter says food preferences vary depending on where you sell and who the consumer is.

Food preference and demand “change a lot when you go from major cities to the suburbs to college campuses. Depending on the demographic, some of our brands absolutely crush it on college campus markets and some do just okay in the suburbs. There’s a lot of variety happening, but I think people’s tastes are changing so faster than ever and we’re keeping up with that by constantly innovating and launching new concepts that are meeting that demand.”

Ghost Kitchen Operator REEF Continues Acquisition Spree, Buying Hospitality-Focused 2ndKitchen

REEF Technology, an operator of ghost kitchens and proximity hubs, announced it has acquired 2ndKitchen, a provider of turnkey food service to hotels, offices, buildings, and other hospitality businesses. REEF and 2ndKitchen will combine their businesses under the REEF brand and will operate under REEF’s Hospitality division. The terms of the deal were not disclosed.

The concept behind 2ndKitchen is to provide food service to local businesses that don’t have their own kitchen facilities, such as pubs, sports venues and hotels. The company handles everything, including setup, ordering, menu development, payment, fulfillment, and customer support. The company, which has set up shop in Chicago, New York City, Miami, Denver, Dallas and New Orleans, powers food service to over 100 thousand rooms and common areas today.

For REEF, the deal instantly adds a large inventory of customers for their kitchen business. The company, which has grown its ghost kitchen network from 50 in February to 450 as of October, needs lots of new open mouths to feed as it expands it food production capacity at a rapid clip, and this deal helps deliver just that.

The deal also gives REEF’s restaurant brand partners a new outlet for their food. The company has been scooping up new partners like Wendy’s, TGIFriday’s, and 800 Degrees with multi-year commitments for new kitchens. The addition of 2ndKitchen gives these brands instant access to hundreds of hospitality businesses.

The deal continues what amounts to a three-month acquisition spree for REEF. In October, the company acquired Bond, an Israel-based logistics company. A month later, the company acquired iKcon, a ghost kitchen operator in the middle east. This week REEF added 2ndKitchen, marking the third acquisition in a three-month span.

The deal is interesting in that 2ndKitchen traditionally leverages local restaurants to provide food service to hospitality businesses. On the REEF side, the company provides physical kitchen infrastructure to help restaurants extend their brand into markets where they don’t operate a kitchen. Under the newly combined company, it’s conceivable that REEF kitchens could become the primary source of food offerings, displacing 2ndKitchen’s legacy restaurant partners.

On the other hand, REEF might also decide to keep 2ndKitchen’s restaurant partners around for the time being given the ghost kitchen operator’s recent troubles with their facilities. REEF utilizes mobile trailers for kitchens in multiple markets which, as reported by Restaurant Dive, have come under increasing scrutiny as of late for health code violations in Florida and other states.

2ndKitchen’s team will remain intact post-deal, including its three co-founders: CEO Nick Anastasiades, CTO Arik Gaisler and CFO Jon Elron.

Jet.com’s Founder Launches Wonder, a Logistics-Driven Bet on The Future of Restaurants

Today Marc Lore, the ex-CEO of Walmart.com and founder of Jet.com, formally announced the launch of Wonder, a ghost kitchen-driven delivery brand powered by high-profile chef recipes and cook-en-route delivery vans. The company currently is delivering food to four cities in Union County in northern New Jersey and has plans to expand to New York and beyond in 2022.

Wonder has reportedly raised an eye-popping amount of money for a company that only formally announced itself today. According to reports, the company has already raised over $500 million in capital, which likely means a valuation in the multi-billion dollar range. The impressive raise is due to Lore’s track record of building highly successful and disruptive e-commerce businesses. Lore’s Jet.com effectively became the core engine of Walmart’s e-commerce efforts once the retail giant bought the company for $3.3 billion in 2016.

The company has partnered with several high-profile chefs to develop recipes and lend their names to virtual restaurants that Wonder will turnkey. Seventeen restaurants and chefs have partnered with Wonder, including Bobby Flay, Nancy Silverton, Daisuke Nakazawa, and Marcus Samuelsson.

The company was founded in 2018 by Lore and was initially run by his brother Chad. However, in 2019, former Diapers.com exec Scott Hilton took over in 2019, and now, Lore – who had mainly been acting in an advisory capacity – is stepping as the company’s CEO.

According to a detailed report in Yahoo News, Wonder will utilize a licensing model that pays a one-time fee to chefs and will then operate out of a 40 thousand square food commissary kitchen where meals are assembled. Each chef’s restaurant brand is assigned its own delivery van, which is operated by a dedicated employee who responds to orders in the app. Once an order comes through, the runner begins preparing the meal in the Mercedes runner van custom-equipped with special oven. Meals are expected to arrive at the customer’s door within 30-40 minutes.

In some ways, the Wonder business is reminiscent of Zume, a one-time restaurant tech darling that also used a centralized production facility and cooked the food (pizzas in the case of Zume) en-route to the customer in a delivery truck. However, unlike Zume, Wonder’s oven-equipped vans take the food all the way to the customer’s door (Zume used a two-stage delivery network where scooters would deliver the pizza to the customer). Another major difference between the two is much of Zume’s focus was on building a robotic pizza-making machine, while Wonder utilizes in-house chefs to prepare their meals.

Lore’s vision of highly-centralized food production combined with a logistics network to reach the end customer is an evolutionary step forward from Zume and others, combining many of the various advancements we’ve seen in e-commerce, food delivery and ghost kitchen/virtual restaurant models over the past few years. While other regions like China have been developing highly-centralized food production and delivery models over the past decade, the US is beginning to play catch up via interesting new models built upon high-tech advances and an accelerated appetite for food delivery over the past couple of years.

While it’s too soon to say whether Lore’s new company will be as successful as his past, it looks like he has the capital, culinary partnerships and logistics know-how to give it a good run.

NASCAR Fans Can Now Get Daytona Firecracker Dogs Delivered To Their Home

Want to have your own Talladega night at home with some food straight from the track?

Good news: You can now scarf down a Tallamento Dogwich or Daytona Speedway Firecracker Dog while watching Kyle Larson race around the track on your TV by ordering from the new NASCAR virtual restaurant through the DoorDash, a new custom-built app, or through the website.

Called NASCAR Refuel, the new race-car restaurant is brought to you by the same folks who created the MrBeastBurger virtual restaurant concept, Virtual Dining Concepts.

“As a NASCAR fan myself, I know the crowds on race day are there for the excitement of the sport, and of course for the food,” said Robert Earl, the company’s founder, and longtime restaurant entrepreneur, in a release sent to the Spoon. “Our menu highlights specialties from NASCAR racetracks, so race fans can enjoy the NASCAR food experience year-round at home.”

The technology behind the app and the website were provided by Lunchbox, a startup that creates digital commerce platforms for restaurants.

It’s not all that surprising a sports brand like NASCAR would launch its own virtual restaurant concept. Sports businesses make billions of dollars each year from merchandising, so why not start selling your food as well? In all reality, it probably won’t be long before we can have our favorite baseball park or hockey rink food made by a local host kitchen and delivered to our home.

The question is whether these virtual food extensions of sports brands will be successful. There’s certainly potential; If you’re a diehard NASCAR fan or love baseball or football, getting a ballpark burger could be a great way to spend a game or race day.

Where things could fall down is in execution in the local markets where it’s available. NASCAR Refuel will work in a similar way to MrBeast, where VDC kitchen partners can learn the menu and start offering the food in their market.

The reviews for MrBeast Burger have been ok but not great. Perhaps not surprising since the virtual burger restaurant expanded very fast (300 locations within the first month), which means many different kitchen partners across the country.

And that’s the thing: each virtual restaurant will only be as good as the local kitchen making them. This means NASCAR is trusting their brand with a local host kitchen, as would be the NFL or NBA.

But who knows? If NASCAR’s virtual restaurant efforts go well, the temptation to get fans to pay for overpriced food outside of the sports venue may be too tempting to pass up.