Ghost kitchen or QSR? – Food on demand

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You start a restaurant. Then you notice that you are missing delivery slips overnight, so you leave the kitchen open 24/7 to fill the delivery slips. This business works, so you launch a bunch of different brands and start opening delivery-only locations. Then you realize you’re leaving money on the table by not offering takeout, so you add pick-up windows, digital ordering kiosks, and even a few tables.

What does that leave you? A ghost kitchen? A state-of-the-art QSR? It’s unclear. But according to Marc Choy, president of Ghost Kitchen Brands, that’s what Ghost Kitchen Brands is. This company started in 2015 in Toronto as Bite Me Diner and now operates 25 multi-tenant ghost kitchens across Canada and the United States.

“There’s a certain type of consumer that likes to come in and pick up,” Choy said. He is one of them. Although he runs a large ghost kitchen business, he said he prefers to pick up the food himself and often forgets that delivery is even an option. Pickup customers like Choy are a boon to the business, “the average ticket is about 50% more” on pickup orders, he explained, and they don’t have to pay commission or delivery charges to an aggregator to make the sale.

The only operational difference between takeout and delivery that Choy identified was juggling wait times. “You have a 15-20 minute window for delivery orders,” he said, but with takeout, the customer is just waiting there. You need to go faster and prioritize this take out order.

While the operational difference between a QSR and a take-out ghost kitchen may be negligible, the difference in attitude is obvious. “There’s no customer service,” Choy said of GKB’s restaurants. Customers order through a kiosk and are notified by text message when their food is ready. Compare this attitude to restaurants, which often see hospitality and service as a key part of their value.

Figuring out how to describe GKB is more than a theoretical challenge. Choy said customers “usually have follow-up questions” when they hear about the concept. “Once they see it, they love it,” he said, but explaining it to customers and even more sophisticated stakeholders like landlords and vendors takes time.

The company is preparing for a major expansion. Choy said GKB has set a “lofty” goal of opening 150 new kitchens in Canada and the United States this year, mostly inside Walmarts. But “obtaining restaurant vents, hoods and equipment is becoming an increasingly difficult challenge” due to supply chain challenges, he added. The delivery time for an oven used by the company is currently 22 weeks.

Learn more about Ghost Kitchen Brand’s partnership with Walmart here.

According to Susi Graf, director of marketing for GKB, the company works with Walmart-based locations as far away as Texas and California, and closer to home in states such as New York and Illinois.

Choy sees Ghost Kitchen Brands, and companies like it, as an ideal partner for a company with strong brand recognition and weaker distribution channels. He cited Quiznos, a large sandwich chain that has lost thousands of units over the past decade, as a prime example, as well as Ben & Jerry’s, a company whose consumer brand image is well ahead. on its network of glaciers.

The company is attractive compared to more conventional franchisees because of its existing network, Choy said. Brands “can either find a franchisee and make one [location]or sign with us and be in 25 [locations] next month,” he explained.

Licensing deals like the ones GKB has with brands can be great in other ways too. In a recent earnings call, Wendy’s CFO Gunther Plosch noted that the company takes a 6% royalty on sales from Reef-operated ghost kitchens, compared to 4% at a traditional franchise location. .

The process also works in reverse. Graf said the company is looking for partners and investors to open and operate ghost kitchens under the GKB umbrella. For these people, the main draw is GKB’s roster of more than 20 domestic partners, including Cinnabon, Wow Bao, and Taco Del Mar.


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