Owning a digitally exclusive brand may have been inconceivable a year ago, but an increasing number of restaurants are preferring to focus on their online footprint. New York City-based Otto’s Tacos is one brand moving its real estate digital, and is using barbecue restaurant Mighty Quinn’s to help it do so.
“[Otto’s Tacos and Mighty Quinn’s] kind of came up with the idea of bringing back Otto’s Tacos as a delivery-only concept,” Mighty Quinn’s cofounder Micha Magid says. “We didn't really have the bandwidth or desire to open up more brick-and mortar-locations, and we’re lucky in that Otto’s four restaurants were located in areas that we had serviced through Mighty Quinn's footprint.”
Under this partnership structure, Mighty Quinn’s licenses Otto's Tacos name and fulfills orders from its kitchen. Customers then receive their digital order from Otto’s Tacos using first- or third-party platforms.
The roots of this partnership stretch pre-pandemic, as the two brands lived about a block away from each other in New York City’s East Village. When COVID-19 challenged Otto’s Taco’s ability to survive after seven years as a brick and mortar, the two brands kept in contact and developed the partnership.
Otto’s Tacos has served customers for more than a month under this new setup, and Magid says the partnership has gone smoothly.
“Everything is done out of the Mighty Quinn's kitchens. Otto's Tacos is obviously very supportive of what we're doing and are with us to ensure that everything we're doing in our kitchen meets the Otto's Tacos brand standard,” he says. “The food is coming out exactly the same as it was under their locations.”
For Magid, the food itself is one aspect that makes the partnership so seamless. Even though Mexican food and barbecue are two distinct restaurant categories, Otto’s Tacos’ simple menu allows Mighty Quinn’s to step into another food category without expending a significant amount of resources. But this may not be the case for every restaurant collaboration.
“Not all kitchens were set up to do everything. For example, a dumpling shop can't crank out brick-oven pizzas,” Magid says. “I think it's really trying to find where your core competency lives and what your infrastructure will allow you to do.”
For restaurants that do find their ghost kitchen match, there can be big advantages in a similar type of partnership. In Mighty Quinn’s case, working Otto’s Tacos into their earnings didn’t require any capital investment to start. The partnership also allowed Mighty Quinn’s to use available kitchen space due to the lack of catering orders and overall sales shift.
Considering the brutal effects of COVID-19 on New York City’s restaurant industry, finding another source of income may be the difference between sinking or survival. By August 2020, employment in the restaurant industry was still only 55 percent of its pre-pandemic levels in February. And though indoor dining bans have lifted in some parts of New York, New York City had been slow to recover.
Conversely, the pandemic brought flocks of new consumers to the digital scene. According to a survey from market research group Morning Consult, more than 25 percent of people are willing to wait at least six months before eating in-person at a restaurant or cafe.
This shift wasn’t a problem for Mighty Quinn’s, which had already developed its off-premises system when indoor dining shut down in March. Magid says the restaurant industry’s move to the digital space was something years in the making.
“This trend towards digital and off-premises consumption was obviously a very strong growth driver before the pandemic,” he says. “COVID just accelerated that trend probably by about three or four years, and did it in three or four months. So we were already going there—we just got there quicker.”
But while technology has made partnerships like this a new money-making opportunity, Magid wants to continue focusing on Mighty Quinn’s growth. He doesn’t anticipate the need to work with other restaurant brands in the ghost kitchen capacity as it looks to expand.
Magid instead sees the second source of income as a way to stay profitable while it finds franchisees in new markets. As New York City’s fickle restaurant restrictions keep Mighty Quinn’s in a wait-and-see mode for growth, working with Otto’s Tacos gives the barbecue brand’s strategy a reliable source of revenue.
“This [partnership] is really something that wasn't really part of our plan necessarily at the start of the year. It was just an opportunistic thing to pursue,” Magid says. “For us, we just continue to focus on our core restaurants. This is something we were able to supplement what had already been on the plan for 2021.”