Digital takes center stage
When it comes to technology, the foodservice industry was once labeled a slow adapter. Those accusations are long gone. The sector barreled forward years in a matter of months thanks to COVID-19, as virtual kitchens, digital marketplaces, and the very definition of what it means to be a restaurant become constant topics of debate.
Consumers are craving convenience in more channels than ever, and what this looks has yet to fully materialize: dine-in classics gone digital, ghost kitchens galore, and new avenues of brand engagement are early layers of a fast-moving future.
For the first time, QSR searched the digital ranks to find 12 leaders disrupting the landscape and laying the foundation for the future.
Founder and CEO
In the pre-iPhone days of 2005, Noah Glass had a decision to make. Working at Endeavor Global, a nonprofit that operates like a venture capital firm targeting high-growth entrepreneurs, Glass presented his Olo prototype to investor David Frankel.
Frankel said only if Glass believed in Olo enough to withdraw his admission to Harvard Business School, where he was scheduled to attend that fall, and quit his job at Endeavor to pursue Olo full time, he could have the capital to get started.
“I just knew that it was the right time in my life to take an entrepreneurial risk like that,” Glass says. “And I also knew that it was really the only time in human history where we were about to have the smartphone become ubiquitous across the population.”
Years earlier, Glass had his first taste of the restaurant industry as a high school pizza delivery driver at an independent Newton, Massachusetts, restaurant called Pizzaman. During Glass’s college years, he worked as a bartender and a cashier, but the spark for Olo didn’t occur until Glass was in New York City after college.
Carrying around a PalmPilot, he began to imagine that in the future, everyone would sport a device that could show restaurants as points of interest around you. He had no idea we’d call these “smartphones,” but he had the foresight to identify this tech could be more than just communication—it could be transactional, on-demand commerce.
“That was the original insight, this idea that I now call on-demand commerce, the idea that we would be able to have a device on us at all times that was internet connected, location aware, personal device, and that would enable the consumer to be able to order and pay ahead and get their food faster or their coffee faster at a local restaurant or coffee shop,” Glass says.
From a novel concept, operators could become more efficient and customers would have better experiences. Although Olo was founded on the principle that smartphones had pervasive potential, it was still a couple of years until the iPhone lifted the curtain (January 2007). Glass says they had to work backward, creating a text message ordering system as the initial concept of what mobile ordering would look like.
At first, users created a profile with a credit card and got sent a personalized menu. They’d reply with a corresponding text and could even answer via text if they wanted delivery, pickup, and their preferred time. As smartphones gathered steam and apps like Uber opened up consumers’ eyes to location-based digital transactions, larger restaurant brands came onboard, Glass says.
Top players in the fast-casual segment like Five Guys, Noodles & Company, and Shake Shack tapped Olo to address long lines of customers who wanted to grab food at peak times with order-ahead options. Casual-dining concepts were next.
Quick-service brands arrived last, Glass says, because when Olo started, they already boasted the most convenient way of ordering food. But Olo allowed them to avoid hiring delivery fleets, and they could just plug into all of the on-demand couriers out there and use a smartphone as a tool for a fresh model of delivery.
Over the next 16 years, Glass witnessed digital transformation take shape. Olo’s growth curve was exponential: In 2017, it processed 50 million orders. In 2018, 100 million, and in 2019, 200 million. In 2020, when customers sought digital outlets more than ever, Olo pushed 500 million.
Over the past year, Glass says, he has begun to think of Olo, which went public in March, in a more profound way as it continues to support 500 restaurant brands (with 74,000 individual restaurant locations).
While some may doubt the permanence of the sector’s digital rush, Glass knows this movement was coming to a headway long before COVID.
“I think that the virtual space is easy for people to dismiss as some sort of fad or some sort of an outcropping of the times that we're living through with COVID and social distancing and dining rooms being closed and that's what's led to this,” Glass says. “Given the longer-time horizon that I've had to observe the growth of digital in the industry, I don't view it in that way. I think that this is a durable trend. I think it's an exciting trend.”
Virtual brands are innovating in light of this increased demand and the ability to grow is monumental, he says, whether that’s in an established restaurant’s brand or a celebrity-backed concept.
“The days of throwing it together and seeing what works will continue, but we're also going to enter into a much more professionalized phase of this, much more sophistication in terms of the tools that brands are utilizing to manage their digital ordering platform,” Glass says.
In the years ahead, restaurant brands will seek higher levels of digital IQ, incorporating metrics that concern lifetime value of a consumer, and comparing that to customer acquisition costs, Glass says.
“All of that is really on the forefront at the bleeding edge right now but will become mainstream, and those will become critical skills that up until now have been differentiators for those really forward-looking brands,” Glass says. “I think that is going to hit the mainstream very soon because it's really a matter of survival in this industry.”
Restaurants will need tools to personalize experiences based on consumer data. They will also continue to compete against delivery marketplaces and work to drive consumers to their direct channels.
“The north star that I articulate is what I call ‘digital entirety,’ which is imagining a future in which Olo has the ability to touch every transaction, add value to every transaction, and derive revenue from every transaction in this industry,” Glass says.
Nabeel Alamgir is a Bangladeshi immigrant who came to the country when he was 15. His dad was a cab driver and his mother worked at Dunkin’.
At age 17, Alamgir wanted to raise some money for prom and got a job as a busboy at emerging brand Bareburger. This teenage decision transformed into a career. He ended up becoming the Chief Marketing Officer of the better-burger chain while it grew from one to 50 units over the next decade.
Eventually, Alamgir started thinking about Lunchbox. Looking at the bills coming in from third-party companies like Grubhub, he wanted to do something about the high costs and was inspired by fast casual sweetgreen’s tech strategy (its CEO is now an investor in Lunchbox).
Lunchbox develops customizable online ordering engines for restaurants to help operators looking for increased virtual mobility.
“The reason we want you to have virtual content is because gone are the days where you open to brick and mortar and serve one food until the restaurant closes,” Alamgir says. “We wanted to enable you the mobility to go ahead and increase your revenue and start more brands from your own kitchen.”
If restaurants don’t, other platforms will capitalize on the opportunity they missed, Alamgir says.
“What ghost kitchens do for restaurants is give access to a new line of revenues,” he says. “More importantly, it opens up for people of color and immigrants and other people with less capital to go out and also get into the restaurant industry, which is good for everyone.”
“We also think you should have your own channel, your own elevated visual experience that is as impressive as your physical experience,” Alamgir adds. “There is no reason to let the pandemic deter you from not expanding your brand in a virtual world, so we want to go out and help you speak to your customers directly.”
Alamgir says his goal is to help restaurants deliver quick commerce, with a present focus on chains and ghost kitchens. Whether a physical or virtual restaurant, technology should be the easy part, he says. The hard part will always be the service, operations, sourcing, and actual delivery of a great food experience.
When it comes to third-party platforms, restaurants should be careful to never depend too greatly on one particular source, he says.
“We think everyone deserves a chance to have a fight and feed everyone in their neighborhood,” Alamgir says. “And we want to enable that.”
Fast casual Wow Bao was hardly a product of COVID. But with the pandemic, the brand saw an explosion of growth as operators became more aware of the need to drive revenue from delivery and overall kitchen efficiency. Wow Bao’s ghost kitchen model fit the bill.
“Because of COVID, I would say we are able to help many more restaurants,” Wow Bao CEO Geoff Alexander says. “That is the greatest motivator that my team has as we come into work every day.”
Alexander’s food career began as a teenager working at a grocery store. He then became a restaurant manager while attending the University of Wisconsin-Madison and joined Lettuce Entertain You out of college, working on a variety of different concepts until his final one: Wow Bao.
Upon taking over the brand in 2009, Alexander grew the brick-and-mortar presence and implemented self-ordering kiosks, which at the time typically only existed in airports and movie theaters. Wow Bao online delivery started in the early 2010s, and from there, the brand focused on college campuses, sports stadiums, and grocery stores to get its product to the masses.
As a brand that already had fully automated locations with zero human interaction, Wow Bao began to imagine a world where other restaurants could sell its food through delivery. Imagine an ice cream shop looking to boost sales during down months.
“We thought of the mom-and-pop coffee shop who only has two dayparts,” Alexander says. “We thought of the hotel chain that has an entire room service kitchen and staff but nobody's ordering room service. You could sell Wow Bao on a third-party delivery platform and grow top-line sales and increase their bottom-line profits. And that's what started us on this journey.”
Today, Wow Bao is on a quick path to growth with more than 400 locations and hundreds more in the pipeline (along the ghost kitchen path). By the end of the year, Wow Bao projects 1,000 units. And more grocery stores and airports are in the mix. Wow Bao’s business plan enables the operator to keep a 40–50 percent return on sales with no additional labor or overhead costs.
While many concepts are trying their hands at the dark or ghost kitchen strategy, the Asian food market is a relatively unsaturated one, Alexander says. This means host kitchens are more likely to drive higher sales and revenue.
Also, anything can be delivered now within a moment’s notice. If restaurants are not looking to expand their footprint and sales in the digital space, Alexander believes they’re leaving growth on the table.
“It's not easy to just create a virtual brand overnight,” Alexander says. “You need a story and a soul behind your brand that makes people want to order your food versus someone else's food. All of that takes research and development and time and energy and money that Wow Bao can offer.”
To Alexander, the future of restaurants is a bevy a of virtual food halls or one-stop shops for various options.
“No matter what happens to the world, the hospitality industry always feels the brunt of it,” Alexander says. “We have the most resilient industry in the world because we always come out of it better than we went into the crisis. Right now, this is an evolution of our industry that we've not seen take place in such a short period of time.”
When neighboring restaurant Otto’s Tacos feared it would have to close its operations permanently, Mighty Quinn’s Barbeque stepped in. It was a perfect opportunity to add an established brand with a similar inventory list into Mighty Quinn’s virtual brand repository, brand co-CEO Micha Magid says.
“Just like Mighty Quinn's, Otto's does a few things, but does them consistently and very well,” Magid says. “Virtual brands don't have the ability to curate an atmosphere with a physical presence so you're putting 100 percent of the brand's success on food and packaging. Get them right.”
Mighty Quinn’s explored launching a virtual brand in the Mexican food category for some time, and Otto’s locations closely mirrored the chain’s footprint in Manhattan. Real estate alignment, menu simplicity, and the pre-existing friendship made it work. Today, Otto’s is run out of Mighty Quinn’s kitchen facility and supported by a 6,000-square-foot commissary. All food prep is handled in-house, and there was only one more piece of equipment needed to execute Otto’s menu. Mighty Quinn’s was able to launch a new, profitable revenue stream with almost no investment, Magid says.
“We had capacity in our kitchens to do more so it allowed us to be more economically efficient with our existing infrastructure,” Magid says. “It benefited Otto's by allowing them to continue serving the customer base that took almost a decade to develop. The brand is alive once again through a digital-only format, and we look forward to expanding it to new markets.”
Magid advises others to find alignment on virtual brands by not straying too far outside their kitchen’s core competency. Because of low-entry costs, the space can get crowded quickly. “You need to figure out what you can do better than your neighbor,” he says.
Altogether, Magid compares the industry’s digital disruption to Netflix’s takeover of Blockbuster’s customer empire.
“Here we are at the precipice of the same disruptive revolution in restaurants,” Magid says. “The disruptive distributor now sends bags of food; not its own culinary art, but from other kitchen studios. We’ve seen this movie before … Corporate restaurants and independent chefs are already teaming up with these distributor kitchens. The Trojan horse is inside the gates.”
Last year, DoorDash moved $24 billion in goods through its platform, up 200 percent from the year before. With roughly 56 percent market share, the total third-party delivery is roughly $43 million, Magid says. There are key differences in the tale of restaurants and streaming services, though.
“Happily, the restaurant industry will not go the way of Blockbuster and there are tremendous opportunities ahead,” Magid says. “Eating is an essential need unlike movie watching [unless you’re locked down in a pandemic]. The infrastructure of restaurants is too embedded in our lives to be displaced. Frankly, life would suck. And I believe in the power of humanity’s self interest in social happiness.”
So where does that leave the industry? Magid says restaurants will enter post-pandemic life with an understanding that third-party delivery and ghost kitchens will be a growing market segment at the expense of traditional dining. “This leaves an attractive profit opportunity for any restaurant kitchen with creativity, ambition, and great cooking,” he says.
Digital delivery transformed restaurants’ revenue opportunities from one point on a map to a multi-mile radius.
“For the hundreds of billions in revenue at stake, with a nominal capital investment, it’s too compelling to ignore,” Magid says. “These new brands must be built now because those companies controlling last mile delivery are moving quickly.”
Hospitality runs in Alex Canter’s blood. As the fourth-generation owner of Canter’s Deli, a 90-year-old business in Los Angeles that began with his great grandfather, Canter grew up working in kitchens, collecting menus from restaurants, and with his eyes always on the future.
He became passionate about adapting restaurants for the next generation, attending conferences every year “like a kid in a candy store.” He says he treated Canter’s Deli as a playground for innovation, and it all began with Ordermark.
Ordermark (which is now Nextbite) set out to solve a problem Canter experienced firsthand. The deli had started to reach customers outside of its four walls through a massive collection of online ordering platforms. Every channel brought in new revenue, but 14 ordering platforms later, Canter’s had to deal with nine tablets, two laptops, and a fax machine just to manage all the incoming business.
Delivery was so integral, however, that it had grown to more than 30 percent of Canter’s Deli’s revenue as a restaurant. But Canter wanted to take a step back and reimagine the experience. What if restaurants could have a single device in their kitchen to manage the off-premises business? One dashboard, one command center, one menu, and one report system.
By 2019, thousands of restaurants were using Ordermark’s tech, but one underlying theme that emerged from all users was the excess capacity in their kitchens during certain dayparts. Canter’s Nextbite began as an experiment to address that. These venues could now cook the food for Nextbite’s initial ghost brands like Grilled Cheese Society and Firebelly Wings.
”Instead of looking at ghost kitchens, which are these facilities that are specifically designed to house delivery-only restaurants, we decided to turn every restaurant into a ghost kitchen, leveraging their existing infrastructure and really partnering with them to create these turnkey concepts that all they have to do is put their heads down and make food,” Canter says.
Currently, there are more than 5,000 restaurants using Ordermark and an additional 15 established Nextbite brands.
“Even pre-COVID, we had a lot of conviction that there was already all this excess capacity in restaurants,” Canter says. “Our mission is to help restaurants adapt to the changes that are happening in consumer behavior and give them products and services and tools to help them reach customers wherever they are.”
The pandemic accelerated Canter’s mission, making it even more essential for restaurants to mitigate the loss of income they faced amid dining room closures.
Canter knows the virtual space is something that can sound scary or daunting, and there are so many different companies taking various approaches. However, rather than spreading a virtual footprint with ghost kitchens, Canter says, restaurants should look internally to what they can add to existing operations.
In the future, restaurants will likely have less square footage and a larger proportion of kitchen space, Canter says, as concepts shift toward off-premises and takeout/delivery.
“The physical layout of a restaurant is going to fundamentally change over the coming years,” Canter says. “The need for large seating capacity is becoming less and less relevant. The need for a larger kitchen is becoming more and more relevant.”
Nextbite continues to focus on growing restaurant counts and developing brands that will drive meaningful incremental revenue, Canter says. This means partnering with celebrities and consumer-packaged goods brands. One example being Wiz Khalifa for HotBox, a “munchie” brand leveraged by Khalifa’s 35 million Instagram followers.
“I think it's a really powerful tool if you're really open to embracing it,” Canter says. “My dad always says, ‘if we're not adapting, we're going to die.’ And if you don't have that mindset and that approach, it is going to be really difficult to sustain whatever challenges get thrown our way in the future.”
Virtual Dining Concepts
For years, the restaurant industry lagged behind others in using tech, says Robert Earl, the founder of Virtual Dining Concepts. But now, foodservice has a fresh weapon at its disposal: virtual brands.
Earl spent the past 50 years owning hundreds of restaurants and developing concepts. From Earl Enterprises, Planet Hollywood International, and now Virtual Dining Concepts, Earl has his hands in a lot of pots.
Earl’s brick-and-mortar collection includes Earl of Sandwich, Chicken Guy, Asian Street Eats, and Mixology101. Lately, virtual has taken the lead. This includes celebrity brands like Tyga Bites, MrBeast, and Mariah’s Cookies, along with Atomic Dogs, House of Subs, Wing Squad, and more.
“As all reports show, this is an under-exploited sector that is going to continue to grow and grow,” Earl says. “When you think about it, up until the arrival of companies like ours, it was just an extension of the brick-and-mortar brands making it easier for you to have [food] at home.”
VDC brands first proved themselves as Earl put them in his other restaurants. But the main goal now is to provide a backup plan and support mechanism for individual restaurateurs, he says.
“By coming to us, they can have the ability to become a market partner within a geographic-specific area, and unlike many of our competitors, we provide them with our entire playbook,” Earl says. “We tell them exactly what to buy in order to prepare the meal.”
That includes the packaging, marketing, PR, advertising, and quality control. In an industry where consumers are moving toward virtual options, Earl says, people value the variety of choosing from specific cuisines and cravings as well as the snacks created by personalities they follow.
On the operator side, Early says, VDC allows restaurants to continue building their top line, maximizing teams and kitchen equipment. Some of his brands merely require refrigeration.
“Virtual Dining Concepts amplify those initiatives, offering the industry more variety, more sales, and more use of their staff and kitchen,” Earl says.
Ghost Kitchens Brands
As an early adopter of third-party delivery, George Kottas was ahead of the pack.
“I knew in my gut that food delivery was the way the industry was moving and that customer demand for convenience and flexibility were only going to grow,” Kottas says.
Kottas, who considers himself a serial entrepreneur, founded Ghost Kitchens Brands in 2016. It started with a few virtual concepts that offered customers a variety of options late at night and through the early morning out of a single kitchen. Then, Ghost Kitchens attracted major brands like Quiznos and Cinnabon, and the current model ignited. To date, Ghost Kitchens has 25 well-known concepts in locations, open 24 hours for delivery, takeout, and dine-in where possible. The reach of Ghost Kitchens Brands extends to delivery apps, local neighborhoods, malls, and big-box stores like Walmart.
“Some have called us the ‘Revolutionary Food Court,’” Kottas says. “What sets us apart is our famous brands and the technology we utilize.” Customers order and pay for food through kiosks and QR codes and can mix and match brands in one order.
In plotting growth, Ghost Kitchens is not afraid to be ambitious. The company’s mission is to have a Ghost Kitchen open to reach every consumer in every urban market, all hours of the day. It expects to have 100 by the end of the year, with 1,000 in sight over the next two.
“The 2020 global pandemic set the stage to accelerate trends that our business model is hitting head on—increasing consumer demands for contactless interactions, comfort food, and convenience,” Kottas says.
All of the behind-the-scenes work can happen in spaces many never think of, like hotels, military bases, train stations, and parking lots.
“In-store dining will always be important,” Kottas says. “But using Ghost Kitchens like us is another way for brands to get new customers in new markets and to grow their brand profile. When we work hand and hand with brands on their strategies, magic happens.”
As far back as 2016, Sam Nazarian knew trends were shifting. People were ordering food at greater velocity and outpacing guests who visited restaurants.
Nazarian, an industry veteran who founded sbe to revolutionize the lifestyle space, decided to double down and create C3 (Creating Culinary Communities) in 2020. The intent was to become a comprehensive solution for the modern foodservice ecosystem, with all of its digital ordering demands.
“Like many others across the world, we had to navigate COVID concerns with our employees and families, which can never be looked at as an opportunity,” Nazarian says. “But, we knew we had the obligation of being an amenity to our community and making sure our kitchens were open and were providing our community with essential needs.”
Nazarian says C3 found 60 percent of Americans were now ordering delivery at least once a week and that food delivery was growing 300 percent faster than dine in. Even more stark, 59 percent of all millennial orders were deliveries. In turn, C3 ended 2020 with close to 200 digital kitchens, 15 brands, 12,000 employees, and 1.1 million meals served. C3 also launched a food delivery app, Go by Citizens, where customers order directly from C3 restaurants in a single cart order.
By the end of 2021, C3 aims to have more than 1,000 digital kitchens and 40 new brands. In 2023, Nazarian says he hopes to boast over 12,000 locations in the pipeline and be solidified as one of the world’s fastest-growing restaurant companies.
“People think C3 is a ghost-kitchen company, but no, it’s not,” Nazarian says. “We do have ghost kitchens. We do have food halls. But we’re a brand company, and we’re a technology company to get you the food in the manner you want it.”
Now that the pandemic is beginning to subside, Nazarian sees a returning demand for in-person dining, which means C3’s culinary center concepts, like the soon-to-open Citizens New York and Citizens MiamiCentral, will bring digital brands to life.
“These new culinary centers will democratize food by providing inspired offerings and international flavors under a single roof with C3’s featured restaurant brands and world-renowned chefs,” Nazarian says.
Still, delivery is here to stay, he adds.
“Restaurants must navigate the entire process from ordering to delivery and be accountable for the best dining experience possible,” Nazarian says. He adds that having a strong virtual presence is extremely important in connecting with Millenials and Gen Z groups.
“Food got so commoditized that it isn’t associated with an experience anymore; it’s become extremely underwhelming,” he adds. “To convince people your restaurant brand is better than the next, you will have to cultivate an experience or moment that builds a strong emotional connection between consumers and the brand.”
The restaurant industry is not the same today as it was a few years ago. Heck, months. The rise of the on-demand economy drove a monumental shift, leading to the adoption of new technology and innovation, Kitchen United CEO Michael Montagano says.
“The global pandemic accelerated an already existing and rapidly growing consumer trend and preference for consuming prepared restaurant cuisine at home,” Montagano says. It’s a change in consumer behavior Montagano says is not just limited to Gen Z and millennials but expanded across all generations, including Baby Boomers. Ghost kitchens enable restaurants to capture this demand while reducing operating costs.
Montagano grew up in a restaurant family. His grandparents founded an Italian restaurant, neighborhood grocery store, and butchery. And he helped thousands of restaurants enhance their digital presence and online ordering capabilities before he assumed his current leadership role at Kitchen United.
In 2017, when Harry Tsao and John Miller recognized the restaurant industry was on the verge of a major shift at a former Le Cordon Bleu Cooking School in Pasadena, California, Kitchen United formed. Its aim was to reduce the growing expenses required for restaurants while empowering them to meet increased takeout and delivery volume. Since, Chick-fil-A, White Castle, Wendy’s, Panera, and a host of other big names have come on board in metro markets across the country.
Over time, the technology matured and the model adapted to open purpose-built facilities in high-volume formats like grocery stores, food halls, and malls with a process to optimize cycle time and cost. In essence, Kitchen United houses multiple brands under one roof and platform, driving takeout, delivery, catering, and walk-up revenue.
“Our goal has always remained the same—help our restaurant partners adapt to the growing consumer demand for off-premises in a cost-effective and streamlined way,” Montagano says.
Kitchen United’s Mix tech platform streamlines ordering by reducing time and transaction fees. Consumers can order from multiple brands on one ticket in one delivery.
“We truly believe that we are in a restaurant renaissance, and we’re proud to be a part of this positive transformation,” Montagano says.
Ghost kitchens could be a $1 trillion global market by 2030, according to Euromonitor. “Our offering and vision is more robust,” Montagano says. “We are a technological and physical infrastructure that powers restaurant brands to profitably capture consumer demand, wherever and however the consumer wants it.”
This could mean in a Kroger grocery store, in a food hall or a mall, or somewhere else.
“We predict kitchen centers like ours will continue to pop up nationwide and internationally as restaurants continue to look for ways to maximize off-premises orders and fill in the gaps in existing markets and reach new customers in new territories,” Montagano says.
When Dog Haus unleashed Absolute Brands to the world, the goal was twofold: offer consumers convenience and variety. Although its brick-and-mortars were known for signature hot dogs, Absolute Brands is an entirely different setup: meat lovers, vegetarians, and everyone in between can find something in the virtual lineup, Dog Haus Founding Partner André Vener says.
Before Dog Haus, Vener founded and operated redwhite+bluezz, an award-winning restaurant and jazz club for eight years in California. After that, Vener and friends, Quasim Riaz & Hagop Giragossion, brought Dog Haus to market.
The idea for Absolute Brands was already in the works before the pandemic. Dog Haus was testing concepts in its ghost kitchen facilities, aiming for an August 2020 launch. But, suffice to say, the pandemic catapulted impending plans forward.
“When the COVID-19 crisis forced dining rooms to close across the country, it was clear we needed to react quickly to keep our franchisees in business and their team members employed,” Vener says. “This resulted in accelerating our timeline to immediately implement our unique strategy.”
That was in April 2020. Already well positioned within third-party delivery, Absolute Brands includes Dog Haus and other concepts in a delivery-only format. At first it was just Bad Mutha Clucka, Plant B, and Bad-Ass Breakfast Burritos. In 2021, Absolue Brands debuted new concepts JAILBIRD and Big Belly Burger.
Vener says Absolute Brands plans to add a new virtual brand serving a wider net of dietary preferences this year.
“The Absolute Brands were a key asset for Dog Haus staying in business during the height of the pandemic—and they’ve continued to be an asset as things settle down,” Vener says.
Absolute Brands allowed the Dog Haus team to target consumers beyond just the hot dog lover.
“Most people hear ‘Dog Haus’ and automatically think ‘hot dogs’ but with our virtual brands, we’re able to target fans of chicken sandwiches and wings, breakfast burritos, and even plant-based foods,” Vener says. “As the industry continues to work through the impacts of the pandemic, virtual brands will be a vital resource for driving sales and testing concepts, especially with the explosive growth we’ve seen in the virtual kitchen and delivery space.”
“With virtual spaces, you must get creative with marketing,” Vener adds. “You no longer have a storefront or signage letting potential customers know you’re there. It’s also harder to make a connection with the consumer through experiences. So when opening a virtual kitchen, it’s important to think outside of the box and explore digital avenues for getting the word out there.”
While Vener doesn’t believe dine-in restaurants will ever go away completely, restaurant brands will continue to explore new ways of getting food in consumers’ hands.
“Guests are now attuned to enjoying meals in the comfort of their own homes,” Vener says, adding more brands will make the leap into virtual concepts due to their low costs. “COVID showed us how to prepare for the unimaginable and those that lacked takeout or delivery capabilities previously will not be left in the dark should we ever face such a crisis in the future.”
Franklin Junction was founded on the principle that restaurants generally have poor economics, kitchens are underutilized, and brands lack rapid expansion opportunities. The adoption of e-commerce, however, made it possible for Franklin Junction to let kitchens create multiple menus, CEO Rishi Nigam says, and change that trajectory. And it’s not as easy as simply dialing up ghost kitchens.
“[They] don’t fix the problem—they create new infrastructure with equally poor economics,” Nigam says. Also, do virtual or celebrity concepts have the demand, lifespan or quality of proven brands? Nobody quite knows just yet.
Franklin Junction takes established concepts that can exist as delivery-only brands and plugs them into host kitchens across the country, like Nathan’s Famous, for instance.
Franklin Junction also has a patent-pending algorithm that generates matches between hosts and brands. The entire process can take less than two weeks to set up a new location.
When it comes to what Franklin Junction looks for in virtual brands, Nigam says it often comes down to quality, variety, consistency, and ease of execution.
“I believe operators and customers often look for the same,” Nigam says. “Proven brands have a story and an emotional connection that people crave access to … They’ve also stood the test of time and have higher customer lifetime value.”
“We believe virtual concepts are too expensive to launch, lack long-term success, and don’t have any barrier to competition,” he adds. “That being said, it is an amazing opportunity for anybody to try their hand at building their own concept and launching it with less capital than building a restaurant.”
By the end of this year, Franklin Junction expects to onboard several new brand partners and larger host chains, expanding reach to more than half the country. The company already has an international presence in Canada and the U.K. as well.
But it’s important to note, Nigam says, the virtual space “should be part of your strategy forever, not a short-term fix for sales.” Virtual should target organic growth, not cannibalize current business. Incremental dollars can solve a lot of restaurants’ payroll issues, he adds.
“People want what they want, where they want it, when they want it, and meeting those demands will only get tougher,” Nigam says.
Chief Creative Officer
It all started with the idea that parking lots could be more than they are. Rather than just taking up more than half of North America’s downtown real estate, REEF foresaw the potential of transaction centers to pop up across the country.
“We believe these landscapes can be transformed into modern infrastructure that serves communities in a more meaningful way,” says Alan Phillips, REEF’s chief creative officer who previously worked at Morgans Hotel Group, WeWork, and Turnberry.
With a distributed real estate network of 5,000 locations and a team of more than 18,000 people in more than 50 cities, Phillips says REEF is transforming urban spaces into local ecosystems.
“Our mission is to make the place you live the place you love to be, by connecting the world to your block,” Phillips says. “Simply put, REEF is building a platform that brings the best goods, services, and experiences from all over the world closer to customers so they can get what they desire very quickly and spend more time doing the things they want to do rather than the things they need to do.”
Specifically, for restaurateurs, operators receive a percentage of every sale while REEF covers all operational costs, including marketing.
“We plan to lead the way in the world of proximity by having the largest and closest network to consumers with the best content,” Phillips says. “We will do this by curating an ecosystem of brands, both big and small, and working to execute at higher and higher levels daily. As modernizersm we intend to help restaurants and brands adjust to this new paradigm, making businesses more efficient, bringing jobs back to neighborhoods.”
REEF provides a physical platform for brands to reach guests via delivery kitchens, like the 700-unit deal it struck with Wendy’s in August. “Why should a restaurateur be limited to her four walls for revenue generation?” Phillips says. “Our platform makes it possible to dramatically increase the profit from your concepts with limited capital expenditure.”
REEF offers a full-stack solution for executing brands at scale unlike a traditional ghost kitchen.
“Why can’t you see a commercial for a burger and then be eating that burger 10 minutes later?” Phillips says. “Or why can’t you be watching ‘Chef’s Table’ and experience ‘Chef’s Table’ instantly in your home? Worlds are converging.”