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Daily news and analysis about the food tech revolution

Wow Bao

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.

Kbox Global Raises £12M to Expand Its Virtual Restaurant Network

Virtual restaurant platform Kbox Global announced this week it has raised £12 million (~$15.5 million USD) to expand its food delivery concept. The round was led by London-based venture firm Balderton Capital, according to a press release sent to The Spoon.

Founded in 2019 in London, Kbox operates more than 30 delivery-only restaurant brands. It licenses these brands, along with a technology stack, to restaurants and other foodservice operations looking for incremental revenue to add to their businesses.  

To do this, Kbox assesses each restaurant, including its location and main demographic, then uses those factors to choose the most relevant virtual restaurant brands for the business to offer. Restaurants cook and fulfill the orders themselves, with their existing staff, while Kbox’s tech stack integrates with third-party delivery services that handle the last mile of the delivery.

The company says there are no upfront fees for restaurants looking to utilize this concept, which is a way for restaurants to diversify their food offerings without investing in a full brick-and-mortar operation. In essence, restaurants are turning themselves into ghost kitchens for Kbox brands by partnering with the company.

The idea of one restaurant licensing and running a completely different brand from a third-party is a more recent development in the world of ghost kitchens, though Kbox isn’t alone in expanding the concept. Chicago-based Wow Bao said in April it was licensing its own menu to other restaurant brands in much the same manner as Kbox. Some Fatburger locations double as ghost kitchens for the chain’s sister brand Hurricane Grill & Wings. And let’s not forget about the celebrities launching their own virtual restaurant brands that existing businesses cook and fulfill. 

Needless to say, restaurants need any extra revenue they can get right now, thanks to the pandemic shuttering dining rooms left and right and all but forcing many brands to go the ghost kitchen route. However, we’ve yet to see many numbers about how financially fruitful it is to run a third-party brand out of one’s own restaurant kitchen.

For its part, Kbox says it is on track to have 2,000 of these kitchens in the UK before the end of 2021, and is also in the midst of an international expansion. The company has franchise agreements in Australia and India and says operations will launch in another eight countries at some point next year. The new capital from Balderton will support this expansion, as well as help Kbox establish a presence in the U.S. in earl 2021.

Wow Bao Launches an Off-Premises Platform for Other Restaurants

Chicago-based Wow Bao is expanding its presence across the U.S. by opening ghost kitchens inside other restaurant brands’ stores. The fast-casual chain just launched an off-premises platform that allows other restaurants to make and serve Wow Bao’s products via third-party delivery channels and keep the revenue from those sales, according to a press release sent to The Spoon. In exchange, restaurants pay a product fee to Wow Bao to use the platform. 

While it might at first sound odd to add a sales channel to your business by selling another restaurant’s menu, but Wow Bao President Geoff Alexander thinks this strategy could work for just about anyone. “We believe any restaurant can be a ghost kitchen serving Wow Bao,” he told me this week over the phone.

Once a restaurant is onboarded to Wow Bao’s off-premises platform, they are sent their first food shipment and can start selling the chain’s menu items online via third-party delivery channels like DoorDash, Uber Eats, and Postmates. Items are sold via an entirely separate menu Wow Bao provides and manages; the Wow Bao name appears in those delivery apps, and restaurants only have to prep the food in their kitchens and hand it over to a delivery courier.

Using a hypothetical Italian restaurant as an example, Alexander explained that kitchen staff might be cooking their usual pasta fare when a Wow Bao order comes through the ticket system. Without really interrupting the flow of the regular work, a chef or staff person could quickly put the item on the stove to cook or steam and continue going about their usual tasks. 

Nor is it a lengthy, complex process for a restaurant to get set up on the platform. Businesses pay a startup fee of $2,000 to get set up with reference books, a supply chain, digital marketing, and any necessary equipment. Wow Bao will also help restaurants get set up on third-party delivery platforms if they aren’t already, and the flat fee also includes the first order of to-go packaging supplies.

Versions of this concept exist in the restaurant industry. In 2019, Fatburger turned some of its stores into ghost kitchens selling food from the chain’s sister brands. However, that operation remains within the Fat Brands family. Wow Bao, on the other hand, wants to make its off-premises concept available to anyone — chain restaurants and independents alike — in the hopes that it might be able to increase sales.

Restaurants need all the help they can get in terms of improving their bottom lines. Right now, 3 percent of restaurants have already shuttered permanently, according to the National Restaurant Association, and another 11 percent anticipate doing the same within the next 30 days. Those hanging on are struggling to quickly pivot to a delivery/takeout model in the hopes that those off-premises sales will be enough to keep business going during dining room closures and social distancing.

Alexander told me this concept isn’t actually a response to pandemic or subsequent restaurant industry fallout that’s currently happening, it just happens to line up timing-wise with current events. “We think we found a way to grow our brand and more importantly help restaurants at this time,” he said.

There aren’t yet numbers to show if this concept will indeed be profitable for other restaurants, though Alexander told me restaurants could make as much as a 40 percent bottom line profit with little extra labor and almost no disruption to daily operations. “We believe we have created something restaurants can survive with,” he said.

At the moment, Wow Bao is operating one of these ghost kitchens in the San Francisco Bay Area. Miami is next, followed by several other cities over the next few weeks.

Quick-Service Restaurants Are Quickly Turning to Facial Recognition

Once upon a time in the not so distant past, most considered ordering food via facial recognition either a gimmick that was either unrealistic or just creepy.

Times have changed, thanks in large part to technologies like the iPhone X, which you can unlock using your own mug. And while we’re some distance from facial recognition becoming a facet of everyday dining everywhere, there’s a growing number of restaurants now offering customers this option when it comes to ordering.

CaliBurger was the latest to join that group this week when it launched self-ordering kiosks at its Pasadena, California location. If customers like this move, the company said it plans to roll out kiosks to all 40 of its locations in the future.

It’s the quick-service restaurants like CaliBurger where facial-recognition ordering appears to be making the biggest impact. It’s not hard to understand why. Quick service got its name for a reason, and facial recognition can certainly speed up the order and payment process. 

Just look at UFood Grill, who earlier this year debuted self-order kiosks in its Owings Mills, Maryland location. According to the restaurant, customers using the kiosks can order and pay in less than 10 seconds. Kiosks use facial recognition to remember customers’ orders for future visits; they’re powered by technology from Michigan-based Nextep. 

Addressing the need for restaurants to increase speed, Nextep president Tommy Woycik recently said, “Imagine visiting your local drive-thru and ordering your favorite customized coffee drink with a quick glance at the camera.” Likewise, if you’re in China, you can pay for your next KFC order just by smiling at the camera.

While it’s not a quick-service restaurant, Dallas’ Malibu Poke opened this past November with the option to order via facial recognition already in place. Talking to the Dallas Observer, owner John Alexis referenced the new iPhone, saying that thanks to the phone, ordering via facial recognition is no longer gimmicky. He was also quick to point out that the system Malibu Poke uses actually prevents him or anyone on staff from accessing the scanned faces from customers: “I literally would not know how to find [a customer’s face] if I wanted to. If you want extra cucumbers, that’s between you and the machine.”

Data—who sees it, where it’s stored—is definitely one of the challenges that has to be addressed in order for facial recognition to become a more widely used way of ordering. (See this year’s lawsuit against Lettuce Entertain You, who owns the Wow Bao quick-service chains.) Just because, for example, Malibu Poke can’t access your facial scan doesn’t mean some ill-humored cyber criminal can’t.

Data will continue to be both a question and a challenge moving forward, but so far, it doesn’t appear to be raising too many concerns for businesses. Restaurants themselves are more likely to be occupied by things like increasing the speed of these kiosks and dealing with some of the reported glitches around lighting and camera angle—basically things that will impact the business’s bottom line today.