The world of virtual restaurant brands and ghost kitchen operations has had mixed results of late. But Gregg Majewski says he has created a model that works.
Majewski is the former CEO of Jimmy Johns who later bought Genghis Grill, BD’s Mongolian Grill and Flat Top Grill. Last year he launched the portfolio company Craveworthy Brands, which now includes those legacy operations, and he has added several more, including the young concepts Budlong Southern Chicken, the wings concept Wing It On! and Krafted Burger Bar + Tap.
Last year the group also added the brick-and-mortar Mediterranean concept Soom Soom, in partnership with another virtual brand creator, C3. And Craveworthy also has the (mostly) virtual poke brand Lucky Cat, which has one brick-and-mortar location in Oak Brook, Ill., but is operated as a secondary brand out of 55 of his other restaurant kitchens in about 20 markets.
Now Craveworthy is leaning hard into the virtual brand side of the business.
This year, Majewski plans to roll out what he is calling the Craveworthy Kitchen, and, along with it, a number of new virtual brands.
Restaurants operated within the portfolio that take on additional virtual brands—and Majewski believes all of them in time will do this—will be designated Craveworthy Kitchens, with specific signage, in addition to the primary brand.
A Genghis Grill, for example, might also serve the Lucky Cat menu out of its kitchen, primarily for delivery but guests will also be able to order the poke at the restaurants. That restaurant’s signage will indicate it is a Genghis Grill, but additional signs will also mark it as a Craveworthy Kitchen.
The goal is to create secondary brands that offer his franchise operators an additional revenue stream without the need for more space, new equipment or even separate back-of-house operations. Orders for both (or multiple) brands come through the POS system and can be executed seamlessly, he said.
This is similar to what companies like Virtual Dining Concepts (the company behind MrBeast Burger), C3 and the ill-fated Nextbite have done as a third-party add-on offering, but there is a key difference:
Craveworthy keeps control of the entire “virtual experience,” Majewski said, as well as the related royalties.
“Virtual brands have a horrible connotation right now. Ghost kitchens have a bad rap,” said Majewski.
At a Craveworthy Kitchen location, however, “We control the food quality. We control the branding, the atmosphere and the fun,” he said.
A mock-up of branding for the new Craveworthy Kitchen. | Image courtesy of Craveworthy Brands.
In tests last year at two locations, Majewski said the units were able to drive between $150,000 to $200,000 in incremental top-line sales from the virtual brands alone.
That’s significant, he contends, even though about 30% was lost to third-party delivery fees, it still left enough to, say, cover rent.
Another way Craveworthy Kitchens will be different from other virtual brand creators: its brands can only be operated by those in the Craveworthy family.
“You have to be part of the Craveworthy family to get our Craveworthy Kitchen,” he said. “That was extremely important to us to be able to offer our franchisees something that nobody else has.”
Not all of Craveworthy’s virtual brands will be available at all Craveworthy Kitchen locations, but that’s part of the fun, Majewski said. Guests will hunt for them.
And there are more virtual brands coming. Lots more.
So far, Craveworthy has launched two new virtual concepts: Pastizza offers pizza-by-the-slice and freshly cooked pastas, for example, and Scramblin’ Ed’s is a hand-held breakfast menu that will also be offered for late night.
Coming down the pike is a new Mediterranean option (that will not be the same as Soom Soom), something Asian/Chinese, a slider brand, and another with empanadas.
If any of the virtual brands become a hit, there’s also the option of rolling it into a brick and mortar within the Craveworthy portfolio, he adds. “It’s the perfect testing ground.”
Craveworthy Brands, of course, is also franchising brick-and-mortar locations of the Genghis Grill, Budlong and Wing it On brands, along with the potential virtual add-ons, and Majewski said the company has $3.3 million in deals that are scheduled to close earlier this year.
And the portfolio will continue to grow, he notes.
With rents going up, the group’s multi-brand model allows operators to do more out of the same space.
“We feel that our virtual brands and our Craveworthy Kitchens complete the G&A of a restaurant. And these restaurants are extremely profitable for our franchisees,” he said.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.