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.