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The Spoon

Daily news and analysis about the food tech revolution

virtual restaurants

The Next Big Tech for the Virtual Food Hall

Here’s a concept that seems stupidly simple but is actually a technologically complex feat: letting customers order from multiple virtual restaurants with a single digital transaction.

As ghost kitchens multiply, the idea of housing multiple restaurant concepts under one roof grows ever-more commonplace, be it Kitchen United’s Mix platform, Crave Collective’s virtual food hall or individual restaurants cooking up more than one menu in their kitchens.

Until recently, customers wanting to order from such facilities had to do so through third-party delivery services like Uber Eats and DoorDash, making a separate transaction for each brand they ordered from, despite those brands being physically housed under the same roof. While that’s not the biggest problem the world has ever faced, it does add the so-called friction to the customer ordering experience. And these days, the restaurant biz is all about getting rid of friction.

It follows, then, that some are working to change this siloed ordering process for customers. In the first place, more ghost kitchen/virtual food hall organizations have their own digital ordering properties. Kitchen United has its Mix platform where customers can order from several different brands via the KU website. Crave Collective has 16 different brands available via single app. Restaurant tech company Lunchbox is powering C3’s virtual food halls, making all choices accessible from a single interface.

In addition to letting customers ditch the third-party delivery services and order directly from the ghost kitchen or virtual food hall, these digital properties (and others) also let customers mix and match meals from multiple different restaurant brands.

Speaking to me for a Spoon Plus report recently, Kitchen United’s Chief Business Office Atul Sood called this idea “multi-concept ordering,” and suggested many more virtual operations will soon offer it.

The idea is simple: Take a bunch of different virtual restaurants housed in a single ghost kitchen and make them all available via a single interface (e.g., an app or website). Consumers can mix and match orders from different businesses, pay for them with a single transaction, and get all the food delivered at once.

The execution of this idea is less simple. As Sool explained, “bundling” different concepts is a technologically complex feat and therefore an expensive and time-consuming endeavor for businesses to attempt.

Imagine a family where one person wants a burger, another wants Chinese food, and another prefers pizza. They want to order all their items at once and have them arrive via the same delivery driver at the same time.   

To do that, there are a few different considerations. First of all, the concepts have to be under one roof — hence the rise of ghost kitchens and virtual food halls a la Kitchen United Mix. Additionally, the fire times need to be coordinated across those different concepts. A poke bowl and a rack of ribs don’t take the same amount of time to prepare, and coordinating those pieces is “a technological challenge,” according to Sood. 

KU Mix has solved for these and other challenges by building out its own in-house technology system. The company has even launched a version of it outside the walls of its own facilities. At Westfield Malls, it is installed to enable a more digital and off-premises-friendly food court experience, for example. “It doesn’t make sense for a restaurant to develop this type of technology [themselves],” said Sood. “It just makes sense for for them to license it from from somebody else.”

Kitchen United Mix is one example of this technology at work. It also seems to be an obvious opportunity for restaurant tech companies in general, since there aren’t many platforms yet specializing in this type of functionality. I doubt the playing field stays empty for long, though. Demand for digital ordering is only going to increase, and even outside of the virtual food hall, there are plenty of relevant contexts for this multi-concept ordering: sport venues. airport food courts, the aforementioned mall. Those areas of life may not be back in full swing quite yet, but when they return, they’ll include many more digital processes, including how we get our food items. 

The Brooklyn Dumpling Shop, a kind of automat for the 21st Century, has inked a franchise deal to bring eight new units of its concept to the state of New Jersey. The first location will open this summer in Hoboken.

Pizza Hut has added drive-thru lanes to more than 1,500 of its U.S. restaurants. Dubbed “The Hut Lane” option, it’s available for orders placed through the chain’s website and mobile app, and over the phone in select locations.

Speaking of pizza, restaurant tech company Slice recently launched a POS system exclusively for pizzerias. According to a company press release, this “will put the same tech tools and data insights that Domino’s franchisees receive directly into the hands of independent pizzeria owners.”

C3 to Bring Ghost Kitchens to Residential Buildings

Ghost kitchen/virtual restaurant network C3 (Creating Culinary Communities) today announced a partnership with apartment operator Akera Living to place ghost kitchens inside the latter’s Kenect communities.

Kenect bills itself as a combination coworking space, social club, and residential community that’s become increasingly popular in urban settings over the last few years. Since the idea seems to be to jam as many amenities as possible under one roof, ghost kitchens were bound to show up in this setting sooner or later.

For Kenect properties, C3 kitchens will not only serve up delivery-only meals to residents, they will also provide food and drink for Kenect’s lobby bars, building cafes, and pool areas. For residents ordering in, C3’s virtual restaurant brands will be available.

The company will launch its kitchens in summer 2021 at Kenect buildings in Nashville, Tennessee and Phoenix, Arizona, with upcoming locations planned for more U.S. cities soon. 

The partnership is not unlike C3’s deal with Graduate Hotels, which was announced earlier this year. For that partnership, C3 is taking over the hotel chain’s culinary spaces and converting them into “multi-branded kitchens” that will serve C3 virtual brands to hotel guests and community residents. 

The company’s expansion tactic is somewhat unique in the ghost kitchen world right now. Whereas most ghost kitchen-virtual food hall operations are currently in standalone facilities that require cars to deliver the food, C3 seems to want to bring the ghost kitchen as close as possible to customers. This concept of making a ghost kitchen a standard amenity on high-end properties isn’t widespread yet, though it will probably become so quickly, at least within the luxury property format. Whether it can translate to other settings remains to be seen.

Chris Young on MrBeast: “Everything Just Changed About Restaurants” (Podcast)

If you want to be a chef, the first thing Chris Young thinks you should do before parting ways with a king’s ransom in the form of time and money at culinary school is to just jump directly into the fire.

“If you think you might want to be a professional chef, the best thing you should do is go intern at a restaurant for maybe six weeks,” said Young. “And if you still think that’s a good idea, after six weeks of getting your ass kicked, then by all means be a professional chef.”

This response from Young came during a live podcast interview on Clubhouse where Young and I started talking about the future of restaurants.

One of the biggest changes the onetime Fat Duck employee and coauthor of Modernist Cuisine sees on the horizon is how new models powered by technology, like ghost kitchens and virtual restaurants, will reshape the restaurant. While Young still thinks there will always be demand for places where people can go, sit down, and have great food made by a chef a few yards away in the kitchen, that world – in other words what we’ve known for centuries as a restaurant – will be increasingly upended by the arrival of new models created by the likes of virtual restaurant concepts like that MrBeast Burgers.

“I saw that and went ‘everything just changed about restaurants,'” said Young.

Young pointed to Apple and the consumer electronics industry to explain his thinking.

In the world of electronics, “the people that design the product are very rarely the people that also manufacture it,” said Young. “That’s something we figured out in a lot of things. Apple designs. Apple engineers. Apple does not assemble [products], they have somebody else who specializes in assembly do that.”

But restaurants – unlike most other industry nowadays – remains for the most part vertically integrated.

“Restaurants are kind of weird because you’ve coupled the creative with the manufacturing,” said Young. “You might not think of a restaurant as a factory, but it’s a small micro scale, horribly inefficient factory.”

And according to Young, what MrBeast and others like him has showed is the restaurant can be unbundled.

“What MrBeast showed is we’re going to be able to take apart the creative, the marketing, and everything about the concept and we’re gonna be able to completely divorce that from the manufacturing. If you have a great idea and if you have an audience that gives a shit, then you’re going to be able to do a deal with people who specialize in the manufacturing of recipes and you’ll be able to roll out a national chain of your bagel joints. Within a couple of weeks and everybody who wants one of your bagels can get one of your bagels.”

So what exactly should a young would-be culinary empire builder do if they are excited about this crazy unbundled restaurant future according to Young?

“Learn to cook,” said Young. “But maybe you should [also] build a YouTube channel, rather than trying to invest in a restaurant.”

In other words, you should know your way around a kitchen, but also understand that might not mean a career cooking in a dine-in restaurant.

“My advice is you really want to be thinking about what the restaurant is going to be in the future,” said Young, “and a little less about, ‘do I go get a culinary education and start cooking in a restaurant?’ I think that world is largely over.”

You can listen to my full conversation with Young on Apple Podcasts, Spotify or wherever you get your podcasts. You can also listen by just clicking play below.

C3 Will Launch Its Virtual Food Halls Inside Graduate’s ‘College Town’ Hotels

Food and bev platform C3 (Creating Culinary Communities) this week announced a new partnership with Graduate Hotels to launch the Graduate Food Hall digital kitchen concept. For the venture, C3 will bring its ghost kitchen and virtual restaurant hybrid to Graduate Hotels, which are located in America’s college towns, in the first quarter of 2021. 

C3 operates a number of virtual restaurant brands, including Krispy Rice, the delivery-only version of Umami Burger, a collaborative plant-based concept with Impossible, and a caviar bar. The company prepares all orders in its own network of ghost kitchens, which is steadily growing. For instance, C3 just acquired 22 former locations of the now-shuttered chain Speciality’s and plans to convert those into kitchen spaces. 

For the Graduate partnership, C3 said it is effectively taking over onsite food operations at Graduate properties. Graduate’s hotel kitchens will be converted into “multi-brand kitchens” that can house several C3 restaurant concepts at once. Both hotel guests and those in the surrounding community will be able to order delivery meals and those for takeout. There will also be some seating in hotel lobbies and gathering areas.

The U.S. hotel industry had its worst year on record in 2020 in terms of both lows in occupancy and revenue because of the COVID-19 pandemic. Data provider STR noted that hotels passed the 1 billion rooms unsold mark in 2020, the highest in the industry’s history, and that the first half of 2021 will likely be similar (though conditions are expected to improve in the latter half of this year).

Setting up a virtual food hall that can serve both hotel guests and surrounding homes, schools, and businesses opens up potentially more revenue opportunities for Graduate. At the same time, Graduate’s locations, which are all in major “college towns” around the U.S., will expose C3 and its virtual restaurant brands to a huge number of potential users because of the proximity to universities. 

The first implementation of the Graduate Food Hall is expected to debut in Berkeley, California as well as Richmond, Virginia and Tempe, Arizona. Additional locations will follow.  

Wow Bao’s Virtual Restaurant Concept Will Grow to 1,000 Locations in 2021

Wow Bao’s partner kitchen program, which lets other restaurants make and serve its food products, will reach 1,100 locations by the end of 2021, up from 150 now, according to a press release from the company. The anticipated milestone highlights another format of virtual restaurant emerging as restaurants take more business off premises.

Via the partner kitchen program, restaurants cook some of the Wow Bao brand’s signature items — buns, bowls, potstickers, etc. — then sell them on the usual third-party delivery channels. Wow Bao CEO Geoff Alexander told me last year that the idea is to provide any type of restaurant with a relatively easy way to add some much-needed revenue.

“We believe we have created something restaurants can survive with,” he said at the time.

Restaurants pay a flat fee to participate (~$1,000) that covers supply chain, marketing, and any extra equipment needed. From there, Wow Bao’s food is marketed on third-party delivery platforms via an entirely separate menu from the restaurant’s own. The restaurant makes the food and sends it out for delivery. Today’s press release notes that restaurants maintain about 40 percent of the revenue from each order, even when factoring in things like packaging costs and third-party delivery fees. 

Wow Bao’s idea for the partner kitchen program actually predates the pandemic’s widespread presence in the U.S. However, the concept is an appropriate one right now, given the wreckage COVID-19 has brought to the restaurant industry in the form of dining room restrictions and lost sales. 

The ghost kitchen and virtual restaurant concepts have, in general, proliferated over the last several months. But for restaurants that don’t have a ton of extra money to spend on a major lease with a more traditional commissary, an option such as Wow Bao’s partner kitchen is a promising alternative that doesn’t require a lot of physical space or operating costs.

Wow Bao said in today’s press release that these partner kitchens are especially successful in rural areas, where “food variety is more limited than in metropolitan areas.” Most restaurants, rural or otherwise, have surpassed the expected sales mark of $2,500 in six weeks. 

A new partnership with digital marketplace Franklin Junction will add another 50 Wow Bao partner locations around the Northeast and Mid-Atlantic, while a nationwide expansion is expected to take place in the first half of 2021.

Top 3 Tech Trends for QSR Redesigns

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The “next-generation” restaurant format isn’t new, as QSR brands like Dunkin’ and McDonald’s can attest. But the restaurant industry’s sudden and in many ways irrevocable shift to off-premises formats in 2020 certainly increased both the number of restaurants revamping their store formats and the speed at which they are doing so.

Those revamps come in many forms and features: BK’s floating kitchens, Applebee’s adding drive-thru lanes, everyone’s near lack of dining room space, to name a few.

And since everyone from Sonic to Del Taco seems to be announcing some kind of format revamp — physical, virtual, or both — these days, I thought it’d be worthwhile to round the top common denominators up to get a hint at which tactics will likely become widespread across the restaurant biz in the near future.

Herewith, are my top three QSR redesign trends:

More Curbside Pickup Spots

Digital order/payment capabilities are a must-have for restaurants now, and this technology coupled with curbside pickup is something we will see a lot more of in the near future. 

For many restaurants, offering curbside pickup options is cheaper than building out a drive-thru lane and window. Outside of the technology, all a restaurant needs is to dedicate a few parking spots close to the building, some signage, and a staff person to run the orders out. Bigger brands may have the money to retrofit their existing stores with drive-thru, but for many mid-size and smaller restaurants, curbside is a more realistic option when it comes to fulfilling more off-premises orders.

For customers, digitally enhanced curbside pickup is increasingly seen as a cheap, fast alternative to delivery, which is getting more expensive for customers. (More on that in the next section.) 

Curbside tech itself is getting some improvements to make the method faster and more efficient, Panera’s geofenced curbside initiative from 2020 being the obvious example. While efforts like these are the anomaly right now, more chains will adopt them and other curbside tech in the coming months.

Drive-thrus, Cruise-thrus, Chipotlanes

On the other hand, those that can swing the cost of adding a drive-thru should do so. 

Some chains, like Applebee’s, are testing out the drive-thru concept for the first time. Chipotle is another good example of a restaurant chain that never offered the format before and has now shifted its entire strategy to accommodate more “Chipotlanes.” Ditto for Sonic, a restaurant better known for drive-ins than drive-thrus, and Pokeworks forthcoming “cruise-thru.”

Others, like QSRs that have always offered drive-thru, are expanding the format. Literally. Double, and triple drive-thru lanes, with some dedicated solely to mobile orders. are becoming the norm at the KFCs, Dunkin’s, and BKs of the world.

The common denominator of this common denominator is that tech is integrated into most of these drive-thru concepts, whether that’s through accommodating more mobile app orders or uses of artificial intelligence to improve order accuracy and upselling.

Mobile-Only Zones and Dedicated Delivery Areas

As anyone who’s been in a drive-thru line lately knows, restaurants are struggling to fulfill the influx of off-premises orders quickly. Many restaurants are addressing this by dedicating certain drive-thru lanes to mobile orders and for delivery drivers picking up orders. Some, like Dunkin’, have done this for years. Others, like Shake Shack, are new to the concept. Still others, namely Pokeworks, have taken the concept one step further and do not accommodate onsite ordering in the drive-thru lane at all.

Meanwhile, to keep third-party delivery drivers waiting on orders from taking up all the curbside spots, many restaurants are also building dedicated areas for delivery pickups. Del Taco, for example has both dedicated drive-thru lanes and pickup shelves for delivery orders.

None of the redesigns discussed above have been widely deployed yet; we can expect more of that in 2021. At that point, new standards for store designs will start to trickle down from the major brands listed here to mid-sized and smaller ones, further cementing the role of off-premises across the restaurant industry.

Postmates: the Latest Delivery Service to Raise Its Prices Post-Prop 22

After saying prices would remain the same for customers following the successful passing of Proposition 22, Postmates has now raised those same prices as high as $2.50 per order.

Postmates’ about-face follows similar price increases from Uber and DoorDash, according to a report from Eater San Francisco. It’s also a contradictory to the tagline these companies were pitching in the ramp-up to the Nov. 3 election—that Prop. 22 passing would allow them to continue operating in California and that prices for customers would not increase.  

Prop. 22 passed in a 58 to 42 percent vote, which allows gig-economy the aforementioned companies to continue classifying their workers as independent contractors. Translation: Uber et al. do not have to pay worker benefits like healthcare, workers comp, and sick leave.

The delivery companies said that they would offer their own benefits package to workers that include a stipend for healthcare. The recent price hikes appear to be geared towards paying for those benefits. For example, the Postmates website calls it “the California Driver Benefits fee” and says that it “helps us fund the new benefits offered to drivers thanks to the passing of Prop 22.” 

All of this feels pretty inevitable, to be honest. After all, one could hardly expect companies that are now infamous for predatory and dishonest business practices to subsidize workers’ benefits out of their own pockets. It’s just a shame more voters didn’t reach that conclusion before clicking “Yes” on the Prop. 22 measure.

Restaurant Tech ‘Round the Web

Part of the plan President Joe Biden has issued to combat coronavirus includes providing clear, national guidelines for restaurants on how and when they can operate. Clear national guidelines would be developed around the safety of workers as well as things like restaurant capacity restrictions.

Olo partnered with customer feedback tech platform Tattle in order to improve the process of collecting restaurant guest feedback for off-premises orders. Tattle will integrate with the Olo platform to provide restaurant guests with a digital survey they can take after ordering from a restaurant.

Pathogen control tech company UV Angel has partnered with McDonald’s franchisees in Texas and Illinois to equip locations with proprietary ultraviolet light surface and air technology. UV Angel says its tech targets pathogens at the room level (as opposed to at the building level), which the company say is more effective in fighting airborne and surface-borne bacteria, viruses, and fungi.

What’s After Ghost Kitchens? The Ghost Bar, Of Course

With ghost kitchens now a mainstay in the restaurant biz, it’s only ever been a matter of time before someone took the concept and applied it to the bar scene. Two NYC restaurant owners did just that recently with the opening of Ghost Bar, an online cocktail bar now available to certain parts of Manhattan.

In a press release sent to The Spoon, Ghost Bar’s owners said the point of their concept is to provide specialty cocktails users can get delivered to their own homes in roughly the same amount of time (or less) it would take to get an order from, say Grubhub.

Speaking of Grubhub, users can either order drinks from that service, Postmates, and HungryPanda, or from Ghost Bar’s own website. Where the ghost kitchen concept comes into play is with the bar’s centralized (and undisclosed) location, where cocktails are made and bottled to order before going out for delivery. The concept isn’t terribly different from ordering a juice or smoothie and getting it delivered to your doorstep, something New Yorkers have done for years.

Ghost bar menu items range from classics (old fashioned, sidecar) to in-house specialty drinks, to some beer and wine. Drinks start at $12, which is on par with what you’d pay for a well-crafted cocktail at a Manhattan bar. However, this being a delivery-only operation, users will also need factor service fees and tip into the cost of their drink. Ghost Bar also adds a $5 delivery fee. Whether the bottle sizes are larger than the average cocktail is unclear, as Ghost Bar doesn’t list bottle size in ounces.

That’s not a cheap way to grab a couple of cocktails, so if you’re planning on drinking a lot in a single evening, consider other options. However, for smaller gatherings or random Tuesday nights when you just want a freshly made fancy drink, the concept could prove popular, at least with the folks that can afford to spend $30-plus bucks on a couple drinks.

Currently, Ghost Bar delivers to 66th Street and below in Manhattan from 11:30 a.m. to 10 p.m. daily. The concept will expand to all of Manhattan and tri-bourough areas in the coming months.

Restaurants Hate Third-Party Delivery Services, Actually

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When it comes to talking about the year 2020, one of the things third-party delivery services like to say is that they were “a lifeline” for restaurants that might have otherwise had to shutter permanently due to dining room closures and restrictions. 

Plenty have disputed this over the last several months. But perhaps no one has lately been more to-the-point about the matter than Recode’s Kara Swisher, who hosted Uber CEO Dara Khosrowshahi on her Sway podcast this week.

“You’re not allowed to get away with saying you’ve been a lifeline to restaurants,” she told Khosrowshahi early on.

Swisher noted the oft-cited figure, that delivery services charge restaurants commission fees of up to 30 percent of a single transaction for use of their services. Khosrowshahi countered by saying Swisher’s math was “incomplete” and that the 30 percent is “untruthful” when it comes to representing what restaurants are actually on the hook to pay delivery services. According to his math, restaurants pay Uber Eats 13 percent per transaction “net of the courier.” If restaurants want to use their own couriers, the commission cost is “about 15 percent.”

But as Swisher suggested, even those lower numbers are harmful to restaurants, which typically operate off margins that are about 3 to 5 percent. That irreconcilable math is one of the reasons cities across the U.S. have introduced mandatory caps on commission fees, some as low as 10 percent.

Pre-pandemic, the argument was that if a restaurant took issue with high commission fees, they could simply opt out of doing delivery. That argument holds no water now, though, since the pandemic essentially forced restaurants into doing delivery and most do not have the money or expertise to build an in-house delivery business. Actually, most can’t even afford their own courier fleet.

It’s also worth pointing out that while Khosrowshahi called the 30 percent commission fee “untruthful,” he never actually offered a hard number around how high an Uber Eats commission fee reaches when a restaurant is using a courier, as most are. If anything, his cagey response of “13 percent net of the courier” seems to confirm the 30 percent commission fee’s existence.

Uber Eats had a big year in 2020. It more than doubled its revenues and even acquired a competitor, Postmates, towards the end of the year. Khosrowshahi himself said the service had a $40 billion-plus run rate and would be larger than the company’s mobility business in 2021.

Conversely, the restaurant industry has lost $240 billion in sales and is still 2.5 million jobs below pre-pandemic levels, according to the National Restaurant Association. A total of 110,000 restaurants in the U.S. have closed, which is about 17 percent of the nation’s restaurants total.

Khosrowshahi defended his company’s approach to restaurant commissions, using words like “reasonable” and “fair” to describe them. To which Swisher simply pointed out that most restaurants she speaks with disagree, and only use the Uber Eats and Caviars of the world because the pandemic has forced them to.

“They hate you,” she concluded, flatly, before using the phrase “menace economy” to describe the environment in which restaurants must now operate to stay in business.

Here’s How the Restaurant Biz Survived 2020

I know most of you would rather forget 2020 ever happened, but it never hurts to look back before going forward, which is just what the National Restaurant Association did this week. The trade group published a list of top trends it says kept many restaurants in business last year while the pandemic wreaked havoc on the industry.

The 10 trends that made the list were based on those found in a survey The Association did of more than 6,000 restaurants and 1,000 adults. The majority of the trends on the list are directly related to helping restaurants “keep their businesses open and employees on the payroll,” as The Association puts it.

The full research post is worth a read. This being The Spoon, I’ll highlight a few items that made the list that illustrate how tech-forward the pandemic has made the restaurant biz in recent months:

  • “Streamlined menus.” Part of this is related to the actual food: restaurants needed a way to reduce inventories and fulfill items faster, and “pare down your menu” became a mantra for many early on in the pandemic. However, streamlined menus also have to do with offering food that travels well, for pickup and delivery orders, and not overwhelming digital customers with choice paralysis as they view menus via their own mobile devices.
  • “Off-premises foodservice takes precedence.” The Association noted that before the pandemic, 80 percent of full-service restaurant traffic was on-premises. The change restaurants were forced to make to delivery and takeout formats in March, when shutdowns first started, rippled across the entire industry and is now more or less ingrained in operations. Which is to say, even when restaurants are operating at full dining room capacity once again, off-premises will be an important part of any restaurant’s strategy. 
  • “Selling groceries.” This started early in the pandemic when restaurants began selling inventory unused because of shutdowns, and doing so via off-premises channels like delivery and drive-thru. The Association’s survey found that “more than half of consumers” would consider buying grocery staples (produce, dairy, meat) from restaurants themselves if those items were offered. Little wonder, then, that third-party delivery services like DoorDash and Uber Eats added grocery delivery to their businesses in 2020.

Other trends in the restaurant industry — ghost kitchens, virtual restaurants, better back-of-house tech — are woven into the more general trends on The Association’s list. For example, a shift to off-premises foodservice will inevitably mean more ghost kitchens. Pull up a virtual restaurant menu from just about anyone these days and you’ll find it’s decidedly streamlined. 

“We now know that three things are certain: the pandemic tested the limits of operator creativity and knowhow, accelerated tech adoption and emerging trends, and confirmed that customers sorely miss their restaurant experiences,” says the report.

With a widespread vaccine still months away (at least) and restrictions still in place for the majority of dining rooms, these trends that helped us survive 2020 will also start to shape 2021 and beyond. 

Restaurant Tech ‘Round the Web

Panera is the latest major chain to announce plans to go all-in on ghost kitchens. The brand said this week it also has mobile kitchens, redesigned drive-thru lanes, and a virtual catering business in the works.

Fat Brands, meanwhile, is doubling-down on its existing ghost kitchen strategy. The company said at an ICR presentation this week that it plans to open a dozen ghost kitchens in 2021.

Restaurant tech provider Perfect Company raised $6 million for its solution that brings automation to the front of house, back of house, ghost kitchens, convenience stores, and other foodservice areas. 

C3 Acquires Shuttered Specialty’s Locations to Launch Virtual Restaurants

One thing the restaurant industry has in abundance right now is underutilized kitchen space. A lot of that extra space unfortunately exists because of widespread restaurant closures that are permanent. The small silver lining here is that some of that space is actually getting repurposed for the restaurant biz as ghost kitchens and virtual brands continue to grow in popularity.

Case in point: the Specialty’s Café & Bakery chain shuttered permanently in May of 2020 because of “current market conditions attributed to COVID-19 and shelter-in-place policies.” Today, digital kitchen platform C3 (Creating Culinary Communities) announced it has acquired 22 former Specialty’s locations and will use the spaces to launch a new digital brand, EllaMia.

The locations will also house other C3 brands, which include Unami Burger, Krispy Rice, and Sam’s Crispy Chicken. The idea is to house multiple virtual restaurant concepts under one roof, essentially turning each of those shuttered Specialty’s locations into a mini food hall. Users can bundle items from all of the different concepts at a particular location into a single order, which is placed and paid for via the C3 app. Orders will also be available for pickup.

The draw of repurposing underutilized kitchen space, rather than renting infrastructure from a more traditional commissary, is that it is potentially much cheaper for digital restaurant companies like C3. Existing kitchen spaces usually come with a good amount of the physical kitchen infrastructure built in. Many other companies are also taking advantage of the concept, including Ordermark/NextBite, which pairs restaurants with unused kitchen spaces, and Fat Brands.

C3 founder and CEO Sam Nazarian said in today’s press release that underutilized kitchen space is “key to the C3 model” and that this new endeavor means “operating 100 distinct dining concepts in a third of the space required by a traditional restaurant.”

The EllaMia concept, meanwhile, has two existing locations, in Dubai and London. The first of these new U.S. locations will open in February at former Specialty’s in Chicago, Seattle, San Diego, the San Francisco Bay Area, and Orange County.

3 More Restaurant Biz Predictions for 2021

Even in the best of times (not a pandemic) making industry-wide predictions is kind of a guessing game. After all, anything can happen, a point underscored by the restaurant industry’s COVID-19-induced meltdown followed by a seismic shift to off-premises formats. 

One thing we do know with certainty as we head into the new year is that those off-premises formats — delivery, takeout, drive-thru — are here to stay. So with that in mind, here are a few mini-predictions for 2021 that suggest how restaurants might further adapt to these new formats.

An overwhelming number of virtual restaurants will surface.

Some good news is that practically anyone can start a virtual restaurant brand. Some bad news is that everyone from established restaurants to celebrities to random internet stars is doing just that, quickly saturating the market in the process.

This is likely to increase, especially in the first half of 2021. However, there is a huge difference between launching a chicken wings brand and maintaining a successful, even profitable, concept for the long term. Over the next 12 months, we will learn more about what it takes to achieve the latter. In the process, many, many virtual brands will come and go.

There will be more off-premises options for high-end restaurants.

Full-service, high-end restaurants were hit hardest by the pandemic in 2020, since those experiences have historically relied on the full dining room experience to reach customers. 

But towards the end of 2020, we got a glimpse of how these restaurants might both survive and prosper in a restaurant industry that’s irrevocably shifted to meal formats like delivery and takeout. Lunchbox and C3 launched a virtual food hall for fine dining, and Crave Collective showed us what an entire ghost kitchen operation for such restaurants would look like. 

Rather than try to replicate existing fine-dining experiences in a to-go box, concepts like those of Lunchbox and Crave work with the chefs to imagine new ones that maintain a higher-end feel while being simpler and more travel friendly.

Expect more virtual food halls and ghost kitchens dedicated to higher-end dining to emerge in 2021, and more restaurants to take a chance with these formats. 

Cell-based meat will come to more restaurants. 

At the end of 2020, Singapore-based 1880 became the world’s first restaurant to sell cultured meat via a partnership with Eat Just. The combination restaurant/club/social enterprise threw a launch party for Eat Just’s GOOD Meat cultured chicken and will carry it on the menu in some capacity moving forward.

Restaurants are a logical stop for cell-based meat companies on the road from lab prototype to mainstream staple because they have historically always played a role in consumers’ eating behaviors and patterns. 

Just Eat isn’t the only cell-based meat company currently in restaurants. In Tel Aviv, Israel, Supermeat has its own test kitchen-turned restaurant called The Chicken that invites consumers to dine on cell-based meat in exchange for feedback.

More restaurants around the world will play host similar developments in 2021. 

MrBeast Burgers’ Overnight Success Actually Holds Some Lessons for Aspiring Virtual Restaurants

You know the virtual restaurant movement is catching on when a famous YouTuber gets involved and their efforts are a massive overnight success. This week, Jimmy “MrBeast” Donaldson, teamed up with a company called Virtual Dining Concepts and launched a virtual restaurant brand called MrBeast Burgers. The restaurant is already serving 300 locations across the U.S., according to a press release sent to The Spoon and a very excited tweet from Donaldson from the weekend:

Donaldson is a YouTuber who is as famous at this point for his large charitable donations and other philanthropy as he is for his online stunts. He unveiled MrBeast Burgers over the weekend via his own YouTube channel and a one-day pop-up event in Wilson, North Carolina, where he gave free food to, well, thousands, it seems, along with some iPads, cash, and a new car.

Those interested can get the delivery-only menu via the MrBeast app and on the major third-party delivery platforms. Virtual Dining Concepts said in this week’s press release that it worked with Donaldson’s team to create the menu, which includes burgers, chicken sandwiches, fries, and other quick-service staples. 

Restaurants can add the MrBeast menu to their existing operations and essentially run the restaurant out of their own kitchen. The concept isn’t brand new. Wow Bao and others have been running similar “dark kitchen” businesses for some time. However, the MrBeast brand’s popularity may push the concept into the mainstream, given the practically overnight popularity of the initiative.

As to the quality of the actual food, the initial response is a patchwork at best. My very unscientific glance at some recent tweets turned up everything from complaints about the high prices and uncooked meat to high praise and overseas followers begging for international locations.

Even so, the whole thing is another piece of evidence that branding is critical for virtual restaurants to be a success. We talked about that at length a couple weeks ago at our ghost kitchen event (you can view the sessions here), with the majority of restaurant industry panelists agreeing that it’s much easier to start a virtual restaurant operation when you have an existing platform and recognition. Otherwise you’re just the random dude who wants to sell chicken wings but can’t stand out from the masses of folks trying to do the same thing.

Jimmy Donaldson is not a chef, but nor is he a random dude, as his nearly 49 million YouTube following can attest. But overnight success and longevity are two distinctly different things. The big takeaway here for anyone wanting to launch a virtual restaurant is that the food, customer service, speed, and efficiency matter more than ever in today’s to-go focused restaurant industry. Fifty million fans is one thing. Fifty million fans that love you because of your food is an entirely different, and more difficult, feat to pull off.

‘Just Do What Domino’s Did’ – Takeaways From The Spoon’s Ghost Kitchen Deep Dive

It’s our weekend restaurant tech news wrapup. You can subscribe to our newsletter here to get this delivered to your inbox.

And now for some final thoughts on The Spoon’s ghost kitchen event, which we held this past Wednesday.

For the (virtual) event, we gathered restaurant operators, tech companies, ghost kitchen infrastructure providers, and thought leaders together to discuss not just the promise ghost kitchens hold for restaurants, but also the realities those businesses must face when using this model.

Last week, I covered a couple of the major points made at the event around building a virtual restaurant brand and the risks of relying on a 100-percent delivery-only operation. 

To top that off, here are a few more noteworthy points raised by event panelists and attendees throughout the day:

Ghost kitchens and virtual restaurants are here to stay. Many of the developments in recent months have been in reaction to the pandemic, but the ensuing focus on ghost kitchens, delivery, and virtual restaurants will stay long after vaccines have been administered. Huge numbers of consumers have found new ways to interact with food via online channels. Even when it’s safe to dine inside a restaurant again , those new behaviors will continue driving the industry towards the off-premises model.

There is a lot of under-utilized kitchen space out there. From extra space in existing restaurant kitchens to hotel facilities to coffeeshops not open during dinner time, plenty of kitchen infrastructure already exists for restaurants to turn into a ghost or dark kitchen operation. The benefit of this route, versus renting space for a commissary, is that restaurants can leverage fixed costs that are already there. For example, if you are running a virtual brand out of an unused part of your own kitchen, you’re not paying for additional electricity, staff, or equipment. As restaurants plan for off-premises orders and virtual brands, they should consider the infrastructure assets they already have as an important factor in determining how to approach the ghost kitchen question. 

Third-party delivery: Love it or hate it, we still need it. More than one panelist felt that, despite high commission fees, restaurants need third-party delivery services right now. Some went as far as to say the industry would have been decimated over the last nine months without them. Others said restaurants need third-party delivery services in the initial stages of an off-premises/ghost kitchen strategy because of the visibility these services are able to provide via their online marketplaces. 

However, restaurants absolutely must invest in their own native delivery platforms. After a restaurant has attracted an initial following on a third-party marketplace, the big challenge is converting repeat customers to one’s own website and getting them to place orders there. A good deal of marketing and communication has to go into this process, not to mention investing in actually building out that direct channel. Technologically speaking, this is very expensive, but numerous companies exist that help power the back end of native storefronts without demanding 30 percent of each transaction.

Just do what Domino’s did. Quote of the day goes to Lunchbox’s Nabeel Alamgir, who said, “The best thing you can ever do is just do what Domino’s did—invest in it 20 or 30 years before everyone else did.” Of course, he quickly followed up with some actionable advice about delivery and ghost kitchens. But his half-joking, half-serious comment also serves as a reminder and a call to action to the entire industry to keep on innovating, even — nay, especially — amid the uncertainty that has defined the restaurant biz in 2020.

Data :Full-Service Restaurants Are Still Flailing When It Comes to Sales

Apparently it was the week for new data on just how badly the restaurant industry is struggling right now, especially when it comes to full-service restaurants. Payments company TableSafe just released data that found transaction volumes at full-service restaurants declined to 50 percent of pre-pandemic levels in November after recovering 60 percent of pre-pandemic levels in October. 

These numbers follow those from Black Box Intelligence, which found same-store sales growth at restaurants at -10.3 percent, a 3.8 percentage drop from October’s year-over-year sales growth rate. Black Box Intelligence called November “the worst month for the industry since August based on year-over-year losses in sales and traffic.” Sales may continue their decline in the coming months, too.

Both those reports coincide with the National Restaurant Association’s recent letter to Congressional leadership that detailed the rapid economic decline of the restaurant industry and more or less pled for restaurant relief from Congress. 

All this data is also coming at a time when cities around the country are operating under indoor dining restrictions and cold weather has made outdoor seating a non-option for many. 

We’ve said many times before that continued focus on off-premises channels — takeout, delivery, drive-thru (where applicable) — should be a priority for restaurants, both as a short-term response to the pandemic and as a longer-term play. Off-premises channels won’t provide the same level of assistance as, say, stimulus relief or a bailout, but they can provide an avenue to extra revenue that, judging from the above data, is badly needed right now.

Restaurant Tech ‘Round the Web

Hand-hygiene system PathSpot this week announced an ongoing partnership with Opus, which makes a text-based training tool for employees. Together, the two companies will provide a more comprehensive onboarding and training program for restaurants using PathSpot’s device in their stores. 

Can’t go out for a holiday steak? Restaurant chain Ted’s Montana Grill will deliver it to you via its new Butcher Shoppe service. Customers can buy bison and premium beef as individual steaks, fresh grind, and specialty boxes via the new e-commerce site. All orders arrive fresh the next day.

Guardian writer Oliver Holmes got a chance to head over to The Chicken, a restaurant in Israel that happens to be the world’s first location for testing cell-based meat in a restaurant setting. Check Holmes’ review of his experience and the food here for a meaty (sorry, not sorry) weekend read.