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Amid pandemic, ghost kitchens get even hotter

Gaining popularity pre-coronavirus, virtual kitchens are seeing increased interest as operators look to make up for lost dine-in revenue.
Photo courtesy of Kitchen United

Executives at full-service barbecue chain Famous Dave’s had been talking about launching an off-premise-only ghost kitchen for about a year. And then the coronavirus hit.

Rather than put the brakes on a new initiative, one of the chain’s franchisees thought now would be as good a time as any to roll out a store designed solely for off-premise. After all, with most dining rooms shuttered to slow the spread of the pandemic, virtually every restaurant is a “virtual” kitchen right now.

Famous Dave’s first ghost kitchen, a 200-square-foot operation in a shared kitchen in Chicago’s West Loop, opened late last month and is “exceeding our expectations,” Al Hank, the chain’s senior vice president of operations, said.

“It has proven to us that this model can be extremely successful,” Hank said. “We’ve already begun expansion efforts.”

Ghost kitchens were a hot topic well before COVID-19 completely upended the restaurant industry. Operators first started trying them out a couple of years ago as it become clear consumers were increasingly looking to have their food delivered. Many of those initial attempts, often created by brands that only existed in the virtual space, didn’t succeed. But then larger players began giving ghost kitchens a go, frequently housing multiple concepts in one shared space like the model popularized by Kitchen United.

Southern California-based pizza brand Fresh Brothers debuted its first Pasadena location earlier this week, inside the Kitchen United Mix there. The shared kitchen space opened two years ago and now has nearly 20 concepts under its roof, from big chains such as Wendy’s and The Halal Guys to delivery-only concepts such as Plant B from the team behind Dog Haus.

Gourmet hot dog brand Dog Haus accelerated its ghost kitchen plans early on in the pandemic. It added several delivery-only concepts at about 20 of its 50 units, including restaurants selling chicken sandwiches, plant-based burgers, breakfast wraps and “better burgers.”

“We studied the market on what people are searching for for delivery,” Dog Haus co-founder André Vener said in late March.

As further evidence of the growing interest in virtual kitchens, ghost kitchen provider Zuul Kitchens earlier this month announced the launch of a consulting firm with delivery consultancy Figure 8 Logistics focused on the delivery-only spaces. The consulting firm, Zuul Studios, will help operators navigate technology, create virtual brands and minimize operating costs, the group said.

Miami-based barbecue chain Smokey Bones opened its first virtual kitchen earlier this month, inside a Chicago Kitchen United space. The brand is also planning two virtual-only concepts, a burger concept and a wing-focused one, slated to debut in July.

For Smokey Bones, the ghost kitchen menu will include the chain’s best-selling menu items along with some of the most highly searched dishes in the Chicago area, including wings, burgers, salmon and salads.

“That we can open a new urban point of distribution during an economic downturn speaks to our confidence in this strategy and the strength of our partnership with Kitchen United,” Smokey Bones CEO James O’Reilly said in a press release.

Famous Dave’s is currently eyeing ghost kitchen possibilities in California, Texas, New Jersey, New York, Arizona and Minnesota, Hank said. The chain expects to open six to 12 ghost kitchens in the next year.

“It’s going to change the pattern of growth for our brand,” he said. “It’s going to provide us unique opportunities to grow at a faster pace.”

The chain is using paid social media campaigns to spread the word about its virtual unit, especially as it looks to expand into new markets, he said. Like others, the company also has plans to roll out delivery-only concepts centered on existing menu items, such as a Burgers and Sandwiches by Famous Dave’s operation after testing it in three locations.

“It’s barbecue, it’s celebratory,” Hank said. “People don’t think of barbecue every day. We came to realize we don’t necessarily get caught by these algorithms, even though we have a great burger.”

The Minneapolis-based chain is talking with landlords who have spaces where a restaurant tenant has been forced to shutter because of the pandemic.

“It provides us a unique opportunity to further expand in a certain market,” he said. “You can go in and pop up four of these in 60 days. … You’re not necessarily saying it’s a long-term solution. We’re not going to pay rent for the full space. But if we can rent out some kitchens and work through distribution channels already set up, you can prove out that market or not. And then you can find a permanent solution.”

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