Thinking innovatively, Kitchen United reached a strategic partnership with Kroger that led to its opening inside locations, in two supermarkets in Dallas and one in Houston. Montagano notes, “Kroger locations are ideally located for easy pickup or delivery, and it’s a great made-to-order food offering for Kroger to bring to its customers. Their guests can pick up groceries for the week and dinner tonight.” It also aligned with one Ralph’s supermarket in Los Angeles.
Sam Nazarian, founder and CEO of C3, started virtual kitchens in 2019 because, “We saw an opportunity to bring added revenue to underutilized restaurant kitchens and real estate space.” He describes his goal as “reimagining the foodservice industry.”
Nazarian’s virtual kitchens yield “added efficiency. Staff are cross trained to prepare menus from all C3’s brands and our menus feature shared ingredients between brands.” He says his partners can generate $1 million per kitchen.
The pandemic taught C3 that “ordering is here to stay. We found that when brick-and-mortar restaurants re-opened, delivery orders were only impacted for a short period of a week or so,” Nazarian says. “The pandemic helped make ordering common place.”
Always thinking out of the box, Nazarian sees growth in the future working in partnerships with top digital creators, YouTubers and gamers, such as Matt Stonie with Stonie Bowls, a collection of poke, salad, and rice bowls. He’s also licensing C3’s brands in airports across the country. He projected to have more than 1,000 digital brand locations by end of 2022.
Also in the vanguard was REEF Kitchens, which started out as a Miami-based parking lot company focused on ways to “making parking lots more efficient in their neighborhoods,” says spokesperson Mason Harrison. And that came to include developing ghost kitchens on their land. As far back as 2016, it launched a ghost kitchen in a carpark in London, which then developed into REEF’s operating the kitchen and restaurants of many startup chefs and operators.
Knowing how real-estate costs usually constitute about a third of operating a restaurant, REEF recognized curtailing those fees gave eateries a much higher chance of succeeding, Harrison says.
So DJ Khaled, well-known record executive and producer, could inaugurate 150 branches of Another Wing, which specializes in wings, jerk chicken, and fried snapper, through REEF; all of which were digital ghost kitchens, opened at a cut-rate cost compared to brick-and-mortar units.
REEF operates its restaurants and functions like a franchisee, paying royalty fees. It began with in-house brands and then created its own concepts such as Rebel Wings and American Eclectic Burger.
Despite the fact that the pandemic is subsiding, REEF’s ghost kitchen business continues to have a place in the industry’s trajectory, Harrison says. “Delivery became a need to have, not a nice to have,” he says.
“Ordering in has replaced going to the grocery store and making your own food. It hasn’t replaced dining out or its quality of food and added service,” adds Rishi Nigam, CEO of Atlanta-based Franklin Junction.