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Dog Haus embraces delivery-only kitchens as a pathway to growth

The fast-casual hot dog chain explains why it has partnered with virtual kitchen startup Kitchen United to add 25 “ghost” units by the end of 2020.
Photograph courtesy of Dog Haus

Six months ago, Andre Vener, partner with the Dog Haus fast-casual chain, was at a dads outing for his kid’s school in Pasadena, Calif. Turns out, the dad on the next barstool over was Michael Montagano, CFO for the fast-growing, delivery-only kitchen startup Kitchen United.

After a quick chat, Vener realized the virtual kitchen model would be a good fit for the 35-unit hot dog concept as it looks to expand to new markets and build its off-premise business at existing locations.

“It just really made sense,” Vener told Restaurant Business. “Our kitchens were built to accommodate the seating capacity of that restaurant and not think about delivery.”

Plus, Vener said, the partnership will allow Dog Haus to minimize the risk of testing its concept in new markets.

Since that conversation at the school mixer, Dog Haus has partnered with Kitchen United, committing to operate its gourmet hot dog concept out of the next 25 virtual kitchen locations slated to open by the end of 2020. The first such unit is scheduled to launch next month in Chicago, with operations in Atlanta; Austin, Texas; Columbus, Ohio; Houston; Los Angeles; New York City; Phoenix; San Francisco; and Washington, D.C., also on tap.

Kitchen United’s rapid growth is fueled in large part by a $10 million investment last fall from a venture capital group that includes Google’s parent company and CaliBurger CEO John Miller.

Kitchen United, which currently has centers open in Pasadena, Calif., and Chicago, builds delivery-only operations with 10 to 20 kitchens available for operators to lease. The company recently added The Halal Guys and Wetzel’s Pretzels at its Pasadena location, as well as a Kitchen United-created Italian concept, Fresgo.

The concepts, which pay rent each month to Kitchen United, staff their own kitchens. But the virtual operator handles everything else, including kitchen build-outs, tech infrastructure, front-of-house staff, marketing and operations. Third-party delivery services ferry the orders. Kitchen United takes a small commission from walk-up orders, Vener said.

Dog Haus, which is largely franchisee-run, will have franchise owners run the Kitchen United operations in their territories, he said.

The company has said it intends have a total of 12 to 15 Kitchen United operations open by the end of the year.

“We’re building a business for our restaurant members that allows them to solely focus on what they do, which is make the food,” Anthony Green, Kitchen United’s vice president of sales, told RB.

When selecting concepts, Kitchen United looks for those that are growing, serve high-quality food, have a sophisticated digital presence and are already at least exploring delivery, Green said.

“If they’re all of those things, they’re scratching their heads to figure out, ‘How are we going to scale delivery?’” he said.

Dog Haus plans to test new menu items at its Kitchen United units, about half of which will be in new markets for the chain.

Chicago’s first Kitchen United location, which is slated to be fully booked and operational by the end of June, will include a mix of major national brands, regional players and local concepts, Green said. A few of the restaurants will be delivery-only. Names of all of the concepts have not yet been released.

“Who knows who’s going to end up being more successful,” Green said of the delivery-only versus traditional concepts. “We’re learning some of this as we go.”

The partnership with Kitchen United will nearly double Dog Haus’ unit count, but with less risk than going the traditional route, Vener said.

“It’s a lot different than signing a 10-year lease and spending $2 million to open a brick-and-mortar,” he said. “If in nine months, it doesn’t work out, you move on.”

 

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