"Confidence! Machismo! Futurism!" | spooky kitchens #30

August 20th, 2022. A modern food hall, a digital food hall, and a rebooted app walk into a bar…

Happy Saturday y’all,

First thing’s first: hey, sometimes a Friday newsletter is just not in the cards. And sometimes it’s not in the cards for…a month (we’ll be back to the normal delivery time soon).

And as a quick reminder, all green text is linked.* (*not always to anything important)

So what happened this week? (TL;DR)

• A modern food hall, a digital food hall, and a rebooted app walk into a bar…

(an awkward first date’s table full of) sides

👍 A refreshing catch-up with the CEO of Nimbus Kitchens (“Nimbus is the New Cloud in Ghost Kitchens” Tom Kaiser, Food On Demand). I’ll freely admit that a big part of the reason I enjoyed reading this interview was nostalgia. CEO Camilla Opperman’s recounting of the Nimbus Kitchen’s early days of hourly kitchen rentals for food businesses of all stripes, and somewhat random pop-ups and partnerships, are straight out of the first volume of Kitchen United. Also like KU, the model seems to be beginning to sort itself out. Yet unlike KU (so far), she has not felt the need, or apparent desire, to bring national brands into Nimbus’s local spaces.

That is, believe it or not, what we wanted to do with Kitchen United, in the early days — elevate favorite local operators and newcomers with exciting ideas. But standing in the way of that goal was a major, major obstacle: no one, not the customers nor the investors nor the restaurants, knew what the hell a ghost kitchen was. And once we told them, we were often met with disbelief that this model had any legs to stand on (the industry was still being stupid about delivery convinced that food delivery was a fad). Kitchen United, Cloud, and other early ghost kitchens ultimately realized that they needed big brand buy-in to survive; both to draw in customers as well as signal to the rest of the industry that this weird to-go-first model was a real thing.

Nimbus benefits from the fact that the ghost kitchen model was fairly well established with all parties by the time it got rolling. Regardless of that slight step-up, though, it has done an admirable job of realizing that affordable-neighborhood-commercial-kitchen vision of early Kitchen United, in its own way. Like San Francisco’s La Cocina, there’s a focus on supporting women & minority-led businesses. And similar to fellow counter-model New York operator Hungry House, there’s also a conscious effort to keep the kitchen grounded in neighborhood roots. I’m not even sure I would call Nimbus a ghost kitchen, a commercial kitchen, or a virtual food hall (the closest term for a ghost kitchen/dine-in blend we have); but simply a delivery-optimized local food hall. Even a “modern food hall.”

Whatever you call it, Nimbus is doing things with a ghost kitchen once thought (or that once were) unsustainable and impossible. It feels more than anything like the natural next step for ghost kitchen-type concepts; what they can be without the need to prove the basic concept to the market and consumer. Here’s hoping they keep it up.

❓ Waitr rebrands its ASAP rebrand announcement (“Waitr app rebrands to reflect ‘deliver anything’ business model” C.C. McCandless, KNWA Fox 24). According to Waitr, this week the company officially rebranded to “ASAP” to better reflect its expanded delivery model, that now includes practically anything under the sun that can fit inside a vehicle. While ASAP is an objectively better name, let us not forget the original announcement back in December 2021, in which Waitr was actually forced to rebrand per the settlement of a lawsuit from Waiter.com. Not quite an all-out success for the early third-party deliverer.

That said, Waitr is indeed a survivor. The company, while never truly competing with the US’s big delivery providers, has always managed to carve out space for itself in smaller markets, niche goods (cannabis), and partnerships like their recent stadium deals. Papered-over rebrand or not, don’t count this scrappy deliverer out.

🤢 It’s not that people distrust virtual brands, it’s that they don’t reorder crappy food (“Why consumer trust is a make-or-break differentiator for virtual restaurant brands” Joanna Fantozzi, NRN). Practically gone are the days of the shocking virtual brand bait-&-switch like the kind attempted by Chuck E Cheese & Applebee’s in the early months of the pandemic. Consumers don’t know (or don’t care) which restaurants on their delivery platforms are traditional brick-and-mortar and which are coming from a ghost kitchen (or elsewhere). Where their trust may be broken with virtual brands is not in false branding, but false marketing. Virtual brands (rightly) spend a pretty penny on marketing their goods and polishing their delivery marketplace presence. They look good. But the reality rarely lives up to the mouthwatering photo that catches your eye as you scroll through DoorDash. It’s not the lie of the brand that breaks consumer trust with a virtual restaurant; it’s the lie of the product.

🙄 Replacement theory is as silly in business as it is in culture (“The Metaverse Will Enhance — Not Replace — Companies’ Physical Locations” Vladislav Boutenko, Richard Florida, and Julia Jacobson, Harvard Business Review). As I’ve mentioned before, blustery, absolutist statements are a big turnoff for me (…business-speaking). Cookie-cutter, so-called visionary startup CEOs are forever in the news dropping statements like “We are poised to completely take over the [X] industry,” or “In 10 years, [X facet of daily life] will be obsolete.” But not even Uber eliminated the taxi industry (it disrupted, and took a major share of the transportation market — but taxis still drive everywhere they once drove). These beyond pie-in-the-sky projections (Baked-Alaska-in-the-sky?) are flat out stupid, and unachievable; yet the business world still loves to hear it. “Confidence! Machismo! Futurism! These ingredients will make the next billion-dollar disruptor! What’s that? Because of you and only you, no one will be cooking in 7 years? Take my $5M for your Series B, you son of a gun!”

The article itself is a good read on replacement theory as it comes to the metaverse (a burgeoning industry chock-full of people claiming to be outdating the physical world, piece by piece). It serves as a great reality check for any tech-disrupted market; that the grand promise of ubiquitous change is a fallacy for which only the most-gullible fall.

🤖 So you want to be a virtual food hall (“Byte Kitchen Raises $6M For Digital Food Halls” Joe Guzkowski, Restaurant Business). Virtual food halls are the hotness in ghost kitchens today. What makes them different from a regular ghost kitchen is a bit unclear, depending on the kitchen in question. REEF’s RDU airport “get REEF virtual food hall” location, for example, does offer food from multiple restaurants, like a food hall — as do many other ghost kitchens — but it lacks a dedicated dine-in area. To me, a virtual food hall is essentially a small regular food hall with a little less dine-in space and a little more kitchen space, purpose-built to serve each channel equally. A traditional food hall, on the other hand, puts far more emphasis on the dine-in experience, and if it even offers food to-go, it is a tangential channel at best. And to complete the spectrum a ghost kitchen makes to-go food it’s main emphasis with dine-in perhaps available, but an afterthought.

While Kitchen United is frequently credited with popularizing the current virtual food hall trend with their downtown Chicago location (which was a traditional food hall previously), the truth is that all of their locations going back to the first in Pasadena would probably meet the VFH criteria. Compared to other ghost kitchens, KU has always designed its locations for an omnichannel approach — though in earlier days reporters would often ignore our stats on pickup to focus on delivery, a sexier topic at the time. I’m not saying this to build up KU, but let’s get our story straight, ghost kitchens gang: the trifecta of dine-in, pickup, and delivery has been a healthier path for this concept from the beginning.

Anyway, Byte Kitchen looks a lot like Kitchen United; which makes the fundraise no surprise, as the investor math is simple: Kitchen United raised a lot of money. Byte Kitchen looks similar enough. Get in while the virtual food hall is hot.

The twist? Kitchen United is signaling a turn towards tech over purpose-built kitchens. Maybe the virtual food hall, or at least, the self-run virtual food hall, isn’t quite the be-all end-all ghost solution it seems today.

🚫 CloudKitchens shuts down in Buffalo (“CloudKitchens shutdown leaves some tenants out thousands of dollars” Tracy Drury, Buffalo Business First). Could Cloud actually be…consolidating? The famously spendy ghost kitchen operator closed its Buffalo ghost kitchen, leaving already-struggling operators at a loss — one $10K in the hole, another $25K. According to the article, services that were promised were not delivered, including marketing assistance and cleaning, and bad signage made the building difficult for drivers and customers to find (from the corporate perspective, these were probably cost-cutting measures instituted when they likely made the decision to close this facility months ago). The location’s 30 kitchens(!) were apparently hardly filled. Those interviewed said they had trouble communicating with the company.

Now, I’m no business genius, but even if your whole thing is stealth, it’s probably not a good idea to be stealthy from your own paying clients, right?

But hey, it’s Cloud, and they’re going to do what they’re going to do, and God help the small businesses and cities that get anywhere near them.

🎉 C3 unveils…another app? (“C3 Unveils Mobile Ordering App & Tech Platform” Press Release, FSR Magazine). This week, C3 announced the launch of GO by Citizens, their mobile ordering app. This would be super interesting if they hadn’t launched it over a year ago. The angle of this press release — which is really about the upgrades that C3 has made to the platform since launch — trying to reboot the launch of this app is a truly wild one. Maybe they’re hoping that no one notices the difference? Or perhaps few enough people have used the app that they thought they could get away with just announcing it now? Either way, you’re not getting it past this spooky detective.

The app does indeed do a lot of nifty new things that it couldn’t before. But it still doesn’t solve the platform’s biggest, most glaring problem; its absolutely mind-boggling name. What the hell is a GO by Citizens? GO where? Who are the citizens? You’re telling me this is a food delivery app?

I’ll tell you what GO by Citizens delivers: a hearty guffaw, to me, every time I read about it. Oh, C3. I have to respect your dedication to utter naming insanity. What would I poke fun at if not for you? (...REEF, of course.)

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That’s spooky kitchens.

Boo ✌️,

Mitch

P.S. If you’re just jumping into ghost kitchens and want to learn more, check out my ghostly glossary and spooky kitchens ghost kitchen cheat sheet. They’re there to help make sense of this weird and wild west.

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