"the metaverse, tomorrow" | spooky kitchens #16

April 29th, 2022. Imagining what's next for the metaverse, and ghost kitchens' place in it. Also 550 Davids vs 3 Goliaths, Hungry House's next steps, and Cloud's latest city.

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)

• The metaverse, tomorrow: oh, the possibilities.

• A Local Delivery competitor arose, Hungry House aired Season 2, and Grubhub commissioned an optimistic report.

Now fire the future verse!

the metaverse, tomorrow

“What is the metaverse, exactly?” (Eric Ravenscraft, WIRED)

Now this is the exciting part. Or, it will be. Might be. Could maybe, probably, hopefully one day be — if Big Tech doesn’t screw it up.

The metaverse of tomorrow wants to be everything today’s metaverse isn’t: more unified, more streamlined, and more universally accessible. People will move around various rendered spaces (some realistic, others decidedly not) in their avatars — digital embodiments representing each user — chatting, making purchases, working, and/or engaging in entertainment & recreation activities (to put it in the most fun way). Mostly, the metaverse wants to fulfill its definition: to be a true, seamless virtual universe. Complete with games, stores, game stores, and of course those pillars of modern culture… restaurants.

Whatever the shape and number of the verses, they will most likely fall into one of two forms, or categories: virtual reality (VR), or alternate reality (AR), each with unique prospects for ghost kitchens.

The VR-verse, in which users access a completely virtual world:

• How it’ll work: Much like the real world, but with infinitely more possibilities. In that there can be full, standalone restaurants — drive-thrus, casuals, diners, Michelin-star experiences — that customers go to and interact with. There, in many cases, they will play games and goof around — or even simply meet & chat with other users in a unique environment (thus, futuristically achieving the integral social aspect of a restaurant). But they’ll also be able to place orders, that will be rendered in ghost kitchens (or nearby brick-and-mortar locations) and delivered to the user IRL.

• Opportunities: Like I said last week: go nuts. Restaurants that lean into the most fun, desirable parts of their brand (or expand their brand to allow fun & desirable parts) will hit. But to build loyalty in a market of far greater possibilities and constant excitement & enticement, brands will have to keep iterating and become not just trusted for their product, but for being curators and purveyors of consistently radical virtual experiences.

  • That, and rewards, both digital and real. Selling or winning virtual gear for personal avatars could very well be an attractive reward in the metaverse — as will be earning the digital currency of the verse, or the currency specifically of your brand in the verse.

  • If that all sounds like a significant investment; it will be. Brands that piddle-paddle around before investigating the metaverse will face a steep learning curve, and cost.

The AR-verse, in which users interact with digital elements superimposed upon the real world:

• How it’ll work: You have a device, perched on your ear like an earbud, or sitting elsewhere on your face. This device broadcasts virtual stuff onto the real world that you see with your real eyes. It’s great. Customers could potentially go to restaurants and order at the register, but they’re not limited to that — and restaurants aren’t limited to the restaurant, either. While at some point there will almost certainly be regulation around this, there could well be fully virtual storefronts…anywhere in the real world. Much like Pokemon Go’s gyms that caused Poke-fans to invade random front yards (though thankfully not North Korea) restaurants could establish virtual stores, kiosks, carts, or other rendered points of interaction — all of which, like the above VR restaurants, could easily offer food rendered and delivered from a nearby ghost kitchen.

• Opportunities: With AR, restaurants can add art, movies, games, or actual secret menus to their storefronts that are visible only to their AR-enabled customers. Outside the store, scavenger hunts and treasure maps can lead users to hidden stores scattered around their town or city. Look over there, it’s the Hamburglar! There, on the Empire State Building, is that King Kong holding…Wendy? Down that alley is that… oh f*** it’s Sneak King, get outta here.

  • AR is ultimately all about adding excitement and a sense of discovery onto the real world…safely, of course.

BTW: Why the metaverse and not just the Internet? Because the big selling point of the metaverse is that it’s where people — one day, as many as use the Internet — will be. That doesn’t mean that people will stop using the Internet; just that they will also be in the 3D virtual world as much as the 2D, and always, inevitably, in the real one. A little like how people didn’t stop dining in for delivery, as many were eager to predict — they just also order delivery.

Other metaverse headlines:

• Quiznos & Taco Del Mar prepare metaverse “digital master franchises” for NFT owners (“Quiznos, Taco Del Mar launching in the metaverse,” Fast Casual). Get in while the toasted subs are hot.

• 50% of people don’t know what the metaverse is, and the 50% that say they do also actually don’t (“New survey finds almost 50% of consumers are unfamiliar with the metaverse” BusinessWire). Only 5% considered themselves “enthusiastic users” of it.

sides

🤝 Is there potential for a nationwide local delivery platform? (“Look out, DoorDash: Local meal delivery companies are teaming up” Sean Captain, Fast Company). “LocalDelivery” pitches itself as a better alternative for restaurants and ethically-considerate customers than the Big 3 food deliverers by offering exclusively small, locally-operated food delivery options. Fees for restaurants are said to be lower, prices for customers about the same, driver earnings are TBD (but estimated to be equal or better) and customer service can only be exponentially more helpful than what the Big 3 provide (have you ever tried to get customer service on a delivery order? A living nightmare). And these companies are *whispers conspiratorially* profitable? The platform is still in early stages, but we (I, at least) would love to see these 550+ Davids go up against the 3 Goliaths. LocalDelivery’s website is currently functional and its app is set to launch sometime soon.

😋 Better-ghost Hungry House teases “Season 2” (“Ghost Kitchen Startup Hungry House Partners With JOKR, Omsom and Others For Season Two” Michael Wolf, The Spoon). Borrowing the idea of rolling seasonal updates from entertainment media (especially video games), Brooklyn-based Hungry House has announced their “Season 2” slate. This includes new partnerships with JOKR (a rapid grocery deliverer), Omsom (DIY Asian cuisine kits), and new chefs, as well as a new location in West Village that will function as a ghost kitchen (possibly a food hall?) by day and a cocktail bar by night. The latter is opening with the help of No Thing Group, “nightlife experts” (who have, per my searching, zero Internet presence) who will presumably operate the bar (if they exist).

🥶️ Cloud gets a warm Boston welcome (“Ex-Uber CEO Travis Kalanick is bringing his controversial “ghost kitchen” startup to Boston” Anissa Gardizy, Boston Globe). With its high real estate costs, labyrinth of one-way streets, and miserable highway system, Boston makes for a tough town for delivery. Your 15-minute radius might as well be 5 blocks. But also: colleges. So. Many. Colleges. Cloud is finally biting the bullet and attempting to get a ghost kitchen going in Roxbury, adjacent to (yours truly’s alma mater) the populous Northeastern University. The inscrutable ghost kitchen company’s welcome in other cities has been frosty at best, and downright hostile at worst. With their name in the Globe, I imagine we’ll discover how Boston really feels about Cloud shortly.

🤥 “41% of restaurants use virtual brands and 90+% loooove Grubhub” says report commissioned by Grubhub (“Report: 41% of independent restaurants use virtual brands” Aneurin Canham-Clyde, Restaurant Dive). Self-commissioned reports are dodgy at best. On the one hand, Technomic is a reliable source for solid restaurant data. On the other, commissioned reports tend to be sculpted in a way that yields real data…but also the preferred results the client is looking for. For a steeper cost, the client can provide direction not just on the report subject, but the questions that are asked as well as the methodology, down to the cities where respondents are surveyed — some of which could be more or less partial to Grubhub. (I looked to see where restaurants were polled from, but the “Region” pie chart on the “About the report” page is broken, with “Midwest, Northeast, South, Midwest” representing, apparently, 27% of restaurant respondents each.) Not to say that Grubhub did provide that extra direction, but they certainly have the motivation and the funds to do so.

(Also unhelpful is the choice to cite many results as “Nearly X in 10,” phrasing that skews findings to a higher number to look more impressive. Smh.)

I’ll say this, though: 41% of any restaurants surveyed using virtual brands is still a lot, and indicates the growing prevalence of virtual brands in spite of their dubious success rate. But I don’t think a sample of 350 restaurants with mystery regionality can quite extrapolate to “41% of all independent restaurants use virtual brands.”

If you’re someone who builds a lot of decks about delivery, this report will be helpful for you. Just take it with a big asterisk of salt.

🍕 REEF envelopes 800 Degrees Go in its loving arms (“REEF Joins 800 Degrees Go Board of Directors As Part of Expanded Partnership” PRNewswire). 800 Degrees x Piestro spinoff 800 Degrees Go (a real 6 out of 10 name) is spinning right into REEF’s embrace. A senior REEF leader is set to join the board of the new fast casual concept, and the ghost kitchen itself is looking to go further and acquire an ownership stake (though hasn’t yet). REEF needs dedication and consistency from its partners to maintain more stable revenue (and also make opening new kitchens easier), and this is one way for them to ensure that stability.

• Related: “Potbelly initiates virtual restaurant partnership with REEF” (NRN). “Much like its signature A Wreck paired with a freshly baked Oatmeal Chocolate Chip Cookie, Potbelly and Reef are a great combo,” chimes the extremely natural-sounding president of REEF on the partnership.

📈 Local Kitchens expands within The Bay (“Local Kitchens adding 3 micro halls to Bay Area” press release, Fast Casual). Aside from the title information, what’s most notable is the lack of any brands specifically mentioned in the announcement – there are always brands in new location announcements (unless the location itself is a highlight, like in a downtown Manhattan opening). Mum’s been mostly the word for Local Kitchens – which last raised $25M in 2020 – which bills itself as a “micro food hall” similar to Kitchen United, except that Local Kitchens licenses and renders the food itself rather than leasing space to restaurants to operate themselves.

😬 Diners’ easily anticipated excitement to dine-in stuns unprepared food delivery sector (“Food-delivery apps lose steam as people return to in-person dining” Rob Wile, NBC News). The pendulum was always going to swing back towards dine-in as more restrictions fell away and variants subsided. This is that. I do think delivery will tick back up eventually (though possibly not until the fall with what is likely to be a busy getaway summer for ‘22) as a new equilibrium is established. Ghost kitchens will need to focus on their ride-or-dies and find new ways to incentivize takeout & delivery now that those channels are once again options rather than necessities for consumers.

❗️ A virtual restaurant got a *gasp* good review! (“Review: Funeral Potatoes, a virtual restaurant, is redefining modern Midwestern food and hospitality in Chicago” Louisa Chu, Chicago Tribune). Virtual brand purveyors, take note (although there is little here that is replicable for you). Funeral Potatoes is essentially a one-day-a-week, mom-and-pop operation that constantly updates its menu of different takes on the eponymous funeral potatoes (a Midwest classic) and other regional comfort foods, such as “kimchi ranch funeral potatoes” and “pepperoncini pimiento mac and cheese.” The Tribune’s lead critic “kicked [herself] for not ordering extras of everything.” I’d order the hell out of that, too. But B-List Celebrity’s Wings? Not so much.

🙅 MrBeast Burger = “In-N-Out of the East Coast”? (“In-N-Out of East Coast” opens Hudson Valley, New York Locations” Bobby Welber, Hudson Valley Post). I cannot and will not begin to bridge the chasm of difference between MrBeast Burger and In-N-Out. So I’ll just leave it at: “No.” There’s no further news here.

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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 (and frequently updated) to help make sense of this weird and wild west.