Wendy’s announced this week it will expand its number of delivery-only kitchens via a partnership with ghost/mobile kitchen provider Reef. With the deal, Wendy’s plans to open 700 more of these kitchens over the next five years in the U.S., Canada, and the United Kingdom.
Wendy’s and Reef first announced their partnership in 2020, when the two started testing delivery-only kitchens in Canada. The partnership is part of Wendy’s ongoing strategy to be operating 7,000 units globally by the end of the year, according to the company’s earnings call this past week. The QSR chain plans to have 30 percent of all its new units come from nontraditional locations.
Reef’s mobile kitchens certainly count as “nontraditional” when it comes to QSR formats. The company, which raised $700 million last year, houses ghost kitchens in mobile trailers that can be parked more or less anywhere there is underutilized real estate and demand for restaurant food. Right now, the company partners with existing restaurant chains that want to boost the number of delivery-only orders they fulfill. Saladworks, Wow Bao, and BurgerFi are just a few names using Reef’s mobile kitchen infrastructure.
“We are still very early in our nontraditional development journey, but we are encouraged by the results that we’ve seen with Reef, and we’ll continue learning alongside them throughout this partnership as we grow our brand,” Wendy’s CEO Todd Penegor said on the earnings call.
Partnering with Reef on mobile kitchens allows Wendy’s to expand its new build-outs faster, since there’s less development time needed compared to a traditional QSR location with a dining room attached. Wendy’s decision to go the mobile kitchen route differs from other QSRs like Burger King, McDonald’s, and Taco Bell, all of whom have recently announced new store prototypes that emphasize digital ordering and delivery. In those cases, however, the units are stationary and have yet to be built out en masse.
Revenue in the online food delivery segment in the U.S. is expected to reach $32 billion in 2021, which is about 15 percent of the total U.S. fast food market today. That suggests a long-term trend towards non-dine-in formats for QSRs and more focus on the “hub-and-spoke” model where the kitchen is the central piece of the restaurant serving multiple different sales channels. QSRs, in particular, are well suited to the non-dine-in format because customers aren’t typically going to these establishments for the ambiance or experience one expects in a dining room setting.
For their part, Wendy’s and REEF expect to open approximately 50 delivery kitchens in 2021, with the remainder launched by 2025.