Operators need new revenue sources to offset sales declines from all off-premises mode.
Operators faced with turning their businesses into takeout-and delivery-only models are finding ways to create additional revenue with little extra investment.
Many are going the grocery route, tapping their supply channel for commodity goods to sell to their restaurant customers, everything from proteins and produce to high-demand items, like cleaning supplies and toilet paper.
Others are teaming up with restaurants that serve complementary menus — adding Asian items to non-Asian concepts, or pizza or wings to burger chains — turning their operations into ghost kitchens from which they sell their main menu and more to capture third-party delivery app orders.
Add Asian, anywhere, anytime
Even before COVID-19 hit, Chicago-based fast-casual Asian concept Wow Bao was in the process of developing a new business model to expand its reach. It set out to license its products to restaurants looking to diversify or add to their online menu offerings.
For $2,000, Wow Bao provides four pieces of plug-in countertop equipment and access to online training videos that walk employees through the preparation process. The fee also covers marketing costs to promote the menu option on the third-party delivery apps.
Licensees purchase the ready-made bao buns, pot stickers, and ingredients for rice bowls, which all ship frozen. All any restaurant would need to do to add the Asian specialties to its menu is steam/cook the items and package them to-go.
Wow Bao President Geoff Alexander says the new business venture could be a good option for restaurants suffering financially from the pandemic because it enables them to add a popular brand of Asian specialties to their menus for a small investment. The company projects an operator could collect 40% profit on weekly sales.
The concept, he says, is unique because it sets up in minutes, is ready to sell within hours and doesn’t interfere with the host restaurant’s operation. Wow Bao is currently partnering with ghost kitchen concerns A la Couch in San Francisco and Los Angeles, and Miami, Fla.-based Reef Kitchens. It also is working with independent restaurants Martinelli’s in Salinas, Kansas, and Gooey’s American Grille in Wake Forest, N.C.
Fatburger and Hurricane Grill & Wings
Fatburger parent FAT Brands acquired Hurricane Grill & Wings in 2018, with the idea of integrating the wing concept’s menu into 25 Fatburger stores, but only for off-premises business. The company says the plan was essential to recruiting new customers without requiring them to build a new brand or build brick-and-mortar stores from scratch.
Fatburger says 70% of its third-party app users were new to the wing brand when it first started promoting it, and that adding it as a ghost-kitchen concept has been a “game changer.” The company has since converted 15 Fatburger units in Los Angeles and one in Chicago to double as Hurricane Grill ghost kitchens, and plans at least 20 more over the next two years. The brand’s wings, fries, and onion rings are available on Grubhub, Uber Eats, Postmates, and DoorDash.
Four concepts, three virtual from one kitchen
In another example, Ricky Lopez, owner of San Francisco’s Top Round Roast Beef, is known for his stacked roast beef sandwiches. But online customers can also order Red Ribbon Fried Chicken, TR Burgers and Wings, or dessert from Ice Cream Custard, from his three online-only concepts that come out of the Top Round kitchen.
You may be able to increase your online orders with complementary menu items from other concepts as well. Consider natural pairings like desserts from a famous local bakery or batch cocktails from a popular local bar. Get creative.