"Welcome to the Wendyverse" | spooky kitchens #12

April 1st, 2022. Happy April Ghoul's Day, fools. A spooky shutdown, a chilling cyber-raunt, and petrifying permitting stories inside.

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.

So what happened this week? (TL;DR)

• A ghost grocer suddenly shutdown in the Bay. We’ll consider some takeaways (and past precedents) of the collapse of Zero Grocery.

• Wendy’s opened a real(ish), actual(ish) meta restaurant (not just a trademark!), Reef worked on its permitting, DoorDash soured on ultrafast delivery, and you’ll never guess who opened a new virtual restaurant.*

Now fire unpaid bills!

what ghost startups can learn from the sudden demise of Zero Grocery

Bay Area Businesses Left With Unpaid Bills After Startup Zero Grocery Shuts Down (Stephanie Magallon, NBC).

Earlier this month, a ghost grocery startup operating in the Bay Area suddenly shut down, leaving many of its local supplier and restaurant partners in the hole on unpaid bills. According to its CEO, it was a case of being “chronically underfunded.” It happens.

However, being underfunded doesn’t totally excuse leaving your partners in the dust; it doesn’t excuse a sudden and poorly-communicated shutdown of all services; it doesn’t excuse announcing an LA expansion and then leaving 250 employees without a job.

This isn’t a first for the ghost business. Those of us with more white hairs (I’m 29, practically in the coffin) might remember the implosions of Pilotworks, a commercial kitchen-turned-ghost kitchen that rapidly overexpanded before rapidly collapsing; as well as Munchery, a meal delivery company that seemed to be pivoting towards more of a virtual brands model before its own sudden shutdown; and Zume, a Softbank darling on a blisteringly-fast pace to become a major mobile ghost kitchen competitor (and pizza company), mitigated disaster months after raising over $375M by dropping its pizza and mobile kitchens business entirely — laying off 53% of its staff along the way — and focusing instead on a product it had until that point predominantly mentioned as a bonus feature: packaging.

Look, obviously running a startup isn’t easy; these decisions don’t come cheap to a conscience. You’re operating on a knife’s edge until the day you aren’t, and the amount of funds you’ve raised is no guarantee of stability — there are companies (very famous companies!) that have raised tens or hundreds of millions of dollars that are still operating on the edge. Over the edge, even. In today’s world of funding, you have to not only conduct a functional business on thin or nonexistent margins, but practically scream in everyone’s face that you’re going to infinity and beyond with your concept (Zero Grocery claimed a goal of becoming “the single behemoth of all sustainable shopping”). It’s a leap of faith, where you are either saved by serious-faced, stingy men who’ll hand you a few thousand or million dollars at a time, rarely enough to succeed completely but just enough to buy yourself some hangtime; or you fall, shouting “I’m flying! I’m flying! No really, I’m flying!” all the way down.

The tragedy being that all of your employees and partners, even your investors, fall with you, echoing the chorus, none the wiser. So if you’re going to fail, do us all a favor; give everyone a heads up (or at least take care of your people), will ya?

Related: here’s a story of one startup that didn’t run around and desert anyone.

sides

🏀 Welcome to the Wendyverse (Chris Kelly, Marketing Dive). Opening to all 10 people who own a Quest 2 VR headset in just 1 day(!), “Wendyverse” is Wendy’s first official metaverse restaurant. It is also a more fully-realized meta-raunt than others to date; where many brands have been quick to lock down trademarks, Wendyverse offers visitors not only the full Wendy’s in-restaurant experience (whatever that means to you), but a March Madness-themed extravaganza inside their Buck BiscuitDome, a basketball stadium complete with activities like storming the court (yay!), half court shots (fun!) and cutting the net (huh?). Not specifically outlined in the article; whether this Wendy’s can fulfill orders. We’ll find out on April 2nd!

📝 Reef starts to get legal (Joanna Fantozzi, NRN). Beginning in the company’s headquarter-town of Miami, Reef is working with cities to create expanded regulations that officially encompass their relatively new and unorthodox operating model (semi-permanent kitchen trailers in parking lots making food for delivery). They’re not a restaurant, not a food truck, not in a permanent building; Reef’s mobile kitchens are tougher to define. Notable details among Miami’s new regulations are that the kitchens obtain city permits (read: be legally inspected and permitted, aka ‘the bare minimum’), provide real information about number of active sites and employees to the city (which could conceivably become public knowledge, a rarity among ghost kitchens), and refrain from providing customer takeout or dine-in service. This last point is quite interesting: the dine-in I understand, but no direct pick-up? I wonder what exactly makes a location okay for delivery drivers to visit and congregate around, but not regular to-go customers who would be performing practically the same actions (check in, wait, get food, leave)?

Reef is looking to expand these regulations as a sort of template for other cities of operation, with no specific news or progress to offer yet — Dallas, cited in the article, is also working to allow food trucks and trailers to more freely conduct business, but is an unrelated effort to Reef’s.

🐌 DoorDash is not feeling too hot on ultrafast delivery (Jackie Davalos, Brad Stone, Bloomberg). In a quick follow-up to last week’s focus on Zomato and ultrafast (10-15 min) delivery — DoorDash offered a pretty milquetoast update on their own pilot program launched in December. Essentially, while achieving 10-15 minute delivery would be great, in the words of DoorDash COO Christopher Payne, “It’s probably not 15-minutes, it’s probably 30-minute delivery that you can make the math work.” Which is basically Silicon Valley-speak for “IT DOESN’T WORK.” Honestly, good on Mr. Payne for being straight up about it (perks of being a public company, perhaps).

🍜 Sodexo partners with tech to bring more of the same food to college kids (Patricia Cobe, Foodservice Director). “College students want convenience, choice, and quality—often in that order.” That quote, from Sodexo *takes deep breath* Global Vice President of Innovation and Digital for Universities Kevin Rettle *exhale* is missing the key factor for college kids dining choices: affordability. But lacking any improvements in that, if we’re going to be expanding food offerings to our smartest, boldest population, quality seems to be the most underserved piece of the puzzle; which leaves this announcement a little disappointing (none of the partners seem particularly focused on “quality”). Our next generation of bright young minds will continue to eat corner store pizza, burgers, and subs and also Taco Bell and cafeteria food; they’re close, they’re fast, they’re filling, and they’re tasty. And I would be lying if I said I wouldn’t be completely hyped to hear that a ramen vending machine was coming to campus back in my college times. An absolute game-changer for those long library nights. Just wish there were also, perhaps, more affordable and quality food options made available to students of today and tomorrow. (God, I sound like Alice Waters.)

Aside from that, the reason this article is in this ghost kitchen newsletter: Virtual Dining Concepts is part of this team of tech partners, contributing such quality brands as MrBeast Burger, Mariah’s Cookies, and Buddy V’s Cake Slice to campus kitchens for delivery. Because you just know our Gen Z kids these days love old YouTube stars, Mariah Carey, and Buddy V (the last of whom I actually had to look up to discover is/was Food Network’s Cake Boss).

😂 Dessert: Nothing really food-related for dessert this week, so for a little joy instead, here’s “Muppet outtakes.” You’re welcome.

*No, he didn’t actually open a restaurant. You just got rickrolled, in 2022. Wait…rickroll…Rick’s…Rolls? Excuse me, I’ve got some calls to make-

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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.

*If you got rolled, don’t take it too hard. You’re just a damn fool.