Ruby Tuesday, which has permanently closed several restaurants in recent months, has found a new way to generate revenue during the pandemic: sell hot dogs from Nathan’s Famous.
Dozens of Ruby Tuesday restaurants are acting like host, not ghost, kitchens for the iconic hot dog chain, as well as other brands looking to expand their delivery-only reach in the United States. The companies were brought together by Franklin Junction, a marketplace platform that matches restaurants with spare kitchen space with brands that want to expand their delivery-only reach.
Aziz Hashim, founder of Franklin Junction, says his company is a cross between Airbnb and Match.com for the restaurant industry.
But don’t call it a ghost kitchen operation. He refers to restaurants like Ruby Tuesday as “host kitchens” looking to earn money off their excess kitchen space.
Hashim says Franklin Junction acts more like Amazon by providing a marketplace for restaurants who want to generate new revenue by selling food from other brands using third-party delivery companies like Grubhub. Franklin also uses proprietary data to ensure restaurants like Nathan’s are matched with host kitchens that are in the right market, where there’s known demand for their menu as a delivery product.
“There is no one doing what we are doing,” said Hashim, who has trademarked the term “host kitchen.”
Franklin Junction also ensures brands are matched with host restaurants that have the correct kitchen equipment needed to cook products. For example, Ruby Tuesday restaurants are using “spare” ovens and flat grills in their kitchen to cook signature items from Nathan’s. Ruby Tuesday cooks prepare the meals.
This allows each brand to benefit because there are no startup costs to launch the partnership, Hashim said.
“Franklin Junction is a marketplace platform that puts excess kitchen capacity together with brands that want to expand,” he said. “There’s no capital expenditure.”
In the case of Nathan’s, the brand’s ready-to-cook meal kits and signature menu items are prepared and sold in host kitchens across the country, including Frisch's Big Boy and Ruby Tuesday restaurants. The brand is betting on delivery-only marketplace to build its brand. Earlier this year, it began working with ghost kitchen operator Kitopi.
“Restaurant delivery sales have seen incredible growth during these unprecedented times,” James Walker, Nathan’s senior vice president of restaurants, said in a statement. “The idea around delivery-only kitchens is something we began researching and implementing many months ago. When we came across this unique opportunity, we jumped at the chance to partner with Franklin Junction and collaborate on making New York favorites more accessible to Nathan’s enthusiasts around the country.”
Frisch’s and Ruby Tuesday, as host kitchens, collect revenue from selling a secondary product for delivery only. They, in turn, pay Franklin Junction a fee per transaction. From that fee, Franklin pays Nathan’s.
Hashim declined to discuss the exact cost structure, as every agreement is different, he said.
For Ruby Tuesday, a new revenue channel is needed. The company has closed dozens of restaurants since the start of the year, according to various media reports.
The company could not be reached immediately for comment.
However, in early July, the company told Business Insider that they had “made the decision to close select locations in an effort to better position our restaurants for future business.”
Hashim said Franklin Junction is a platform designed “to help as many retail locations and brands thrive in this uncertain restaurant reality.”
Besides brokering deals among Nathan’s, Frisch’s Big Boy and Ruby Tuesday restaurants, Franklin Junction has also created its own delivery-only brands: The Captain’s Boil and Order XOXO.
The company declined to reveal the names of other brands and host kitchen partners it is working with.
Franklin Junction said its partner concepts will be deployed across a network of about 550 host kitchens. It expects to have 1,000 facilities join the platform by the end of 2020.
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