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“You can't open a delivery-only restaurant in one day. It just cannot be done,” said Paul Kalms, a partner with Virtual Restaurant Consulting

Is now the right time to start a virtual restaurant? It’s complicated

Like the rest of the restaurant industry, ghost kitchen operators are trying to figure out how to run a business in the time of coronavirus

Paul Kalms, a partner with Virtual Restaurant Consulting (VRC), fields about 70 calls a day these days. Many are from operators desperate to get into the ghost kitchen game. Fast. 

As states across the country have mandated restaurants only provide delivery and takeout, launching a ghost kitchen operation or starting a new virtual brand increasingly seems like a smart move. It’s not so simple, though.

Operating out of a ghost kitchen facility or dark kitchen facility, which is a bit like a commissary kitchen, would give operators another location to work from and potentially a wider delivery or pick-up radius. A new virtual brand could entice new diners or help a restaurant offer a new off-premise-friendly menu without alienating regular guests. 

“You can't open a delivery-only restaurant in one day. It just cannot be done,” said Kalms. And it’s harder than ever to get a restaurant listed on third-party marketplaces, like Grubhub and DoorDash, his clients have told him. 

Kalms runs his own virtual restaurants as a partner at Bytetobite, consults restaurants on operating ghost kitchens and started an all-day breakfast virtual restaurant brand, Two Hens, which he franchises

Across the board, off-premise orders are up, he said. “It’s not compensating restaurants that have shut their dining room, but [a virtual restaurant brand] was never designed to do that.”

For the moment, he's not planning on opening any new Two Hens operations. “It’s just too much noise, too much concern. This, in our view, is not the time to market a new restaurant,” he said. 

At least one ghost kitchen facility has decided it isn’t the time even to run a ghost kitchen. Zuul Kitchens, which operates in New York City, has closed temporarily, stating: “The health and well-being of our extended Zuul family is our top priority.”

Nathan’s Famous, which was set to work with ghost kitchen facility Kitopi for delivery across New York City beginning Wednesday, has paused the rollout. James Walker, VP of Restaurants at Nathan’s, cited concerns over travel and quality of implementation under current conditions as the reasons for the delay. 

But Kitchen United, one of the most prominent ghost kitchen facilities, is going strong. CEO Jim Collins has seen increased interest in his space. “Unfortunately, our kitchen centers are full,” he said. A new location has been delayed due to the pandemic. (Collins later clarified that he has limited openings in in Chicago and Phoneix.) 

But there are other ways to adjust your restaurant for the off-premise pivot, he said. Offering family-style meals and cocktails to-go (where allowed) and adding household and grocery items, like chicken and eggs, to the menu, are some ways. Collins, who owns a traditional restaurant of his own, Town Kitchen and Grill in Montrose, Calif., added toilet paper to orders. “"Whoever new that a roll of toilet paper would be a great promotional device.” he said. 

Collins is also doing work with Dog Haus, a hot-dog focused brand based in Pasadena, Calif. The company has rolled out a lineup of virtual restaurant brands called Absolute Brands. These virtual brands are meant to complement the Dog Haus menu on third-party marketplaces. Most of the dishes are already available at Dog Haus locations, but each virtual restaurant has a different focus, such as chicken or plant-based or breakfast. 

Absolute Brands was something Dog Haus was working on for a while, said André Vener, a partner at the 50-plus location restaurant brand. Absolute Brands was intended to launch only in ghost kitchen facilities, like Kitchen United. But as Dog Haus restaurants were forced to close dine-in operations due to the coronavirus, franchisees began to ask Vener for menu alternatives. 

Now many Dog Haus franchisees are operating virtual brands like Bad Mutha Clucka, Absolute Brands’ chicken brand, from their locations. Because most of the menu items are already available on the full Dog Haus menu, these brands help customers locate the menu items they’re looking for on a third-party marketplace app. For example, consumers looking for fried chicken might not see Dog Haus on DoorDash’s app, but there's a better chance they'll see Bad Mutha Clucka, which is focused on chicken. 

The brands were created based on consumer search research performed by Dog Haus and Kitchen United. Although off-premise sales are up at many Dog Haus locations, those sales have not made up for dine-in dollars, said Vener.

“There’s a lot of these franchisees that are not making money right now, but we feel like it’s our obligation to be doing this for our community and fans,” said Vener. “It’s more like survival mode right now.”

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Contact Gloria Dawson at [email protected]
Follow her on Twitter: @GloriaDawson

TAGS: Coronavirus
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