3 things plaguing headless restaurants
The wave of headless or “ghost” restaurants has been rolling into the off-premise ecosystem. But the recent closures of early entrants Sprig and Maple indicate that the waters are not calm for operators diving in. Still, it’s premature to declare their demise, says Joe Pawlak, managing principal at Technomic. He suggests the model needs improvement in the following areas.
1. Cost management
Though the delivery-only structure requiring only a kitchen would seem a cost saver, “Sources say that Maple at one point was spending over 60% on food costs,” says Pawlak of the NYC concept. “Add to that labor, significant marketing costs, delivery costs and overhead, and that is a formula for disaster,” Pawlak explains.
High-cost models like Sprig and Maple need to have significant scale to offer their food and service at a reasonable price, Pawlak says. Sprig CEO Gagan Biyani spoke to RB in July 2015 about Sprig’s struggle with scalability. “There’s not a whole lot of people making consistently good food to scale,” said Biyani, citing it as an issue that slowed down partnering.
3. Menu variety
“One of the biggest disadvantages of many ghost restaurants is a limited menu,” Pawlak says. Sprig boosted its daily offerings from five to 20 just before its demise, but it was too little, too late. Newer concepts are thinking more broadly: ClusterTruck in Indianapolis offers over 100 items spanning multiple dayparts. Young Fava in San Francisco offers a rotating menu of upscale, seasonal items.