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I've been thinking more about this and, while this is the most interesting angle on ghost kitchens yet, I don't think is the next big thing and it's for an unexpected reason.
With the massive caveat that we're in unexplored territory... I think there's a supply problem. https://twitter.com/MrBeastYT/status/1340425884344463360
With the massive caveat that we're in unexplored territory... I think there's a supply problem. https://twitter.com/MrBeastYT/status/1340425884344463360
Quick context: I have been a ghost kitchen skeptic for a long time, particularly of the professionalized commercial kitchen infrastructure that you'd think would support a MrBeast Burger https://medium.com/@JeremyDiamond/feeding-the-rebels-6d748b8cfc58
One of my big issues with delivery-only restaurants was demand. They're trading rent for performance marketing.
But if you're a celebrity or an influencer with MrBeast's level of reach, that's not a problem at all. So that's a huge obstacle removed.
But if you're a celebrity or an influencer with MrBeast's level of reach, that's not a problem at all. So that's a huge obstacle removed.
Another big issue is consistency in the product. This deserves its own deep dive so I'll just note for now that they haven't solved it.
(On the other hand, McDonald's solves this every day, so it is not an issue for Travis Scott-like promotions.) https://twitter.com/emey_carol/status/1340437508161634304?s=20
(On the other hand, McDonald's solves this every day, so it is not an issue for Travis Scott-like promotions.) https://twitter.com/emey_carol/status/1340437508161634304?s=20
Now... supply.
@thenewb quotes @deliboyswag that 98% of restaurants have spare capacity.
I don't think this is the full story. https://medium.com/hngry/celebrity-virtual-brands-create-boon-for-battered-restaurant-industry-ace1e2012c2a
@thenewb quotes @deliboyswag that 98% of restaurants have spare capacity.
I don't think this is the full story. https://medium.com/hngry/celebrity-virtual-brands-create-boon-for-battered-restaurant-industry-ace1e2012c2a
1. The standard isn't "extra capacity." It's "enough extra capacity that it's worth ordering more ingredients to turn this on."
During the pandemic, a lot of restaurants meet this bar. Nightclubs and hotel restaurants might fill certain day parts in the future. Who else?
During the pandemic, a lot of restaurants meet this bar. Nightclubs and hotel restaurants might fill certain day parts in the future. Who else?
2. Pre-pandemic, fast casual concepts with tight, specialized kitchen ops were on the rise. Restaurants supported by general-purpose kitchens were declining.
There's reason to believe supply may SHRINK over time.
There's reason to believe supply may SHRINK over time.
3. Let's say this works. How much virtual business can any one restaurant handle before they need to adjust their fixed cost base (i.e. hire more folks) to handle it? What happens if it interferes with normal service?
Which brings me to another issue: Per @thenewb, Virtual Dining Concepts pays out 55% of the gross to the kitchen. Assumes 25% goes to food + packaging.
This is substantially WORSE than the ~70% DoorDash et al pay out.
(Its saving grace is that it's true incremental revenue.)
This is substantially WORSE than the ~70% DoorDash et al pay out.
(Its saving grace is that it's true incremental revenue.)
On paper, if you assume zero change to the restaurant's cost structure, the economics barely pencil out.
In addition to having to meet a minimum bar of capacity to turn this on, there's a practical limit past which you'll turn it off.
In addition to having to meet a minimum bar of capacity to turn this on, there's a practical limit past which you'll turn it off.
Contrary to the assumptions baked into Nextbite and Virtual Dining Concepts, supply for the entire business model across all players -- MrBeast, Tyga, anyone else who does it in the future -- might be hard capped.
Having said all that...
We're not close to that saturation point yet. And celebs and influencers will make $$$$ getting into this while the getting is still good.
We're not close to that saturation point yet. And celebs and influencers will make $$$$ getting into this while the getting is still good.
Oh, one more thing: there might be a way to remove that cap, especially if you’re doing a pizza concept https://www.geekwire.com/2020/pizza-making-robot-startup-picnic-raises-3m/
