"scapegoat" | spooky kitchens #22

June 10th, 2022. REEF's leadership change, Ghost Financial's new offering, & Virtual Dining Concepts' *game-changing* rebrand.

Happy Friday y’all,

First thing’s first: you can also read this on the web, with slightly better aesthetics than your inbox. Just FYI.

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

So what happened this week? (TL;DR)

• With another slow-ish news week, we are clearly into summer (although next week we’ll have some juicy tidbits from this week’s Ghost Kitchen & Virtual Restaurant Conference to discuss). We may be in need of a few summer featurettes to help tide us over until the news feed picks up again. TBA!

Now fire baby news…again!

🐐 REEF picks its scapegoat (“SoftBank-backed ghost kitchen startup Reef Technology quietly ousts key exec responsible for signing deals with top chains like Wendy's” Nancy Luna, Insider). Fresh off speaking appearances at Food On Demand in May, (former) President Michael Beacham informed Insider that his employment with REEF had been terminated “before I was able to fully accomplish the mission I came here to achieve.” On the one hand, that mission’s success was dubious. Since this newsletter began in January 2022, there has been a nearly nonstop string of snafus at the seemingly misfortune-prone (or simply mismanaged) company. Giant, triple-digit-location deals with major brands (as well as Beacham’s history in Big Restaurants) have buoyed REEF’s image in the industry — but the reality is that layoffs, alleged operational hazards, and petty moves like stiffing vendors drag down both the corporate office and the individual, regional operators of their kitchens. What is telling is not only the number and variety of scandals that have plagued the company, but the willingness of so many employees to go (anonymously) to the media with their complaints. On the other hand, REEF’s problems go far beyond its President; as stated by the nameless operations manager in the article, “...until Reef starts cleaning house at the leadership level, we will keep seeing the same issues.” Firing one man is extraordinarily unlikely to alter the company’s wibbly-wobbly trajectory.

☮️ Reconciliation has always been one of the big headaches of ghost kitchens (“Why Off-Premises Reconciliation is Suddenly Such a Big Deal” Nick Upton, Food On Demand). ItsACheckmate and Nextbite haven’t suddenly invented reconciliation; they just finally added it to their roster of offerings, after years of demand from restaurant & ghost kitchen clients. These companies that aggregate orders from third-party deliverers have long known that lining up numbers between all the order channels with their varied & sundry fees and commissions on top of the usual taxes is a huge pain-in-the-ass for individual operators, much less chains; a job I’ve seen drive multiple genius-level people mad with frustration. That’s because every dollar counts in ghost kitchens & virtual restaurants, with their often razor-thin or negative margins as they’re ramping up, but with dollars coming from and going in so many various digital (and in-person) directions, even the sharpest accountants can miss a spot, or forget a percentage, or leave out a comped order for a late delivery. It’s a victory for all that there are finally (functional…hopefully) tools to make that process simpler.

📈 Checking in w/ Meituan Danping (“Meituan is having its cake and eating it, too” Reuters). Meituan’s an interesting case. To some degree it’s what many deliverers want to be but could never achieve outside China: a (near) state-sanctioned monopoly that serves about, hm, let me check the numbers here… oh right, 50 million orders per day. Currently Meituan is growing the scant profitability of its food delivery business (though hey, profitable is profitable in delivery), losing money on grocery (on trend), and preparing for headwinds of yet more COVID lockdowns in China’s major metro centers. There, at least, is one part of operating in China that the US’s Big 3 do not envy.

👩‍🏫 Ghost Financial offers marketing classes for ghost kitchen operators (“Ghost Financial wants to reverse ghost kitchens’ low success rates” Julie Littman, Restaurant Dive). As per usual, I am skeptical of Ghost Financial’s offering (and underlying assumptions – ghost kitchens average low-$20 tickets? Hm.). But I do think they are, more or less, on the right track to providing useful tools & services to ghost kitchen operators who have the spare time and resources to invest in their growth. Marketing – especially digital marketing – is a shortcoming of many restaurant operators. The industry is still moving past the idea that “a sign is enough,” and owners are long-scarred from being constantly pushed worthless Yelp & third-party delivery advertising. Plus, many simply don’t have the time or energy to bother with extra marketing. An online course could help ghost operators start to see their numbers move in the positive direction they thought they’d be making from the start; or better prep potential ghost operators before they jump into the kitchen with both feet. However, $1000 for an online class (or even the discounted $250) is going to be a real steep sell for restaurant folks. I’m sure the net will snag some enterprising, tech-oriented young entrepreneurs who will go on to start their own “Insert Trend Here (sic) Kitchens” – but the vast majority of restaurant runners will likely remain aloof. (Also frankly, aside from running one ghost kitchen in one market, Ghost Financial has not really demonstrated greater “expertise” in the field that I’d pay 4-digits for).

🥒 Dubai’s Pickl goes meta (“Dubai burger joint Pickl steps into the metaverse” Arabian Business). It’s a meta restaurant — you pretty much know how this goes. So just two quick things: (1) WTF is the point of listing the square footage of your virtual store (there is none) and (2) an “area for delivery riders” where customers can place orders for delivery is a strange way to honor delivery workers…but it’s the thought that counts? What’s most important about Pickl’s meta-store is that meta-customers can place real orders for delivery, a capability that escapes many US metaraunts (due to differing functionality between the myriad metaverses, and the overwhelming popularity of the metaverses that do not support direct orders).

🥣 Virtual Dining Concepts guarantees its future success with a stunning rebrand! (“Virtual Dining Concepts Launches Full Rebrand” Release, QSR Magazine). Criminy Jickets, gang, this one’s a doozy. “VDC believes that the new look, website, and communications will attract new operators, brands and creators that align with their ambitions. Additionally, the company hopes the rebrand will attract high-level talent from product, tech and management sectors.” …This release reads like VDC took their branding agency’s bloated rebrand pitch exactly at face value, down to the hyperbolic expectations. Surely our new logo will drive exponentially increased business with operators & consumers alike? Such will be the excitement around “the universally-recognized shape of a bowl, while evoking the letter “V”, for Virtual” that Virtual Dining Concepts will soon be seen by everyone in food as the name in one-off celebrity dining brands, now elevated by Robert Irvine’s American Heroes (a restaurant name, I guess?) and…Pardon My Cheesesteak…! Here is a prime example of why everyone involved with a branding exercise (any branding exercise) needs to chill. Out. In my experience, unless the original brand was truly awful or unfitting, a rebrand is simply a desperate and futile exercise in getting something, anything, to change for the better.

If you want to see the rebrand, by the way, the logo’s here. The best part? They’ve made “the universally-recognized shape of a bowl” unrecognizable. But, you know, see for yourself.

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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.