"NF(please)"| spooky kitchens #3

NFTs, digital marketing opportunities, and Instacart's "war on restaurants"

January 21, 2022

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.

To quickly recap what’s going on here: this weekly ghost kitchens newsletter is in “soft launch” mode through January. Then starting in Feb, we’ll shift gears to a paid subscription (for $5/monthly or $3/month annually) for the weekly issue, with a monthly issue for free subscribers. That’s the plan at least — we’ll see how it all shakes out as we go.

In the meantime, general feedback on the content, design, and any weird email hiccups you encounter is appreciated…

…to an extent. 👻

Now, to the news:

So what happened this week? (TL;DR)

Before we dive in, if you need a refresher on who the major ghost kitchen players are and how it all works (or you just want to know what “mis-en-place” is), take a look at my spooky kitchens industry cheat sheet and ghostly glossary.

Ready? Great. Fire NFTs!

but I don’t wanna talk about NFTs :(

I didn’t want to read this article. But I did, because I trust Jenn Harris (who, to be clear, I do not know, but at least has never lead me astray with her Instagram’d chicken wing recs). And that trust was not broken — the article starts with the NFT-laden launch of a hyped-up burger restaurant in LA (which does feel extremely LA). She goes on to cover more NFTs in restaurants and even restaurants preparing for the Meta-verse (I want to ask them: have you even seen the Metaverse?) such as Chipotle’s recent dip into Roblox. It’s a robust piece that pokes thoughtfully at these potential new directions for restaurants, and does a great job walking the fence between the two most common, passionate feelings on NFTs and the Metaverse; that is, intense skepticism bordering on manic hilarity (where I reside) and, you know, the usual tech-bro NFTs-to-the-moon, Meta-to-Mars chest-thumping.

A begrudging admittance that there might be something here. The most interesting aspect of the piece may be that NFTs do sound like a viable way to fund a restaurant (or anything, for that matter). The owner doesn’t get a stake in the business, per say, but in the case of many of these restaurant NFTs they do get perks like discounts to the virtual restaurant and access to pop-ups, in addition to their completely-fiat, high-value, vast-amounts-of-energy-consuming, artificially-scarce resource. And ultimately, owners can resell their little digital screenshots, likely at a steep profit. I can see how the math works.

NFT stands for “Not For This-guy” *two thumbs pointing at self*. Despite that glimpse of positivity, I will not be participating. Mostly on principle. The principle being, “What, actually, the hell are we doing here?” Also because, optimal profit math or not, there are very, very few restaurant experiences — combinations of singular flavors, stunning locales, and just the right places and times to share with good company — that I would shell out hundreds or thousands of dollars for. They do exist. But none of the value of those experiences, for me, is derived from a digital stamp that gives me bragging rights.

…plus the “restaurant guy” in the article said he wants people to “focus less on the plate and more on what’s around the plate.” Dealbreaker.

More on (sigh) NFTs:

  • New York’s First NFT Restaurant Is Coming Soon (Rachel Sugar, Grub Street). I know I let myself get a little positive about NFTs up above, but let’s be real: there is no way that access to this restaurant is worth thousands of dollars…on top of the meal. Anyway, this one’s a fun read.

  • Colicchio’s NFTs (Felix Behr, Mashed). Tom’s really got his fingers in every last part of the restaurant business, doesn’t he?

  • More on restaurant NFTs (Kristen Hawley, Expedite). Also just an excellent all-around food tech newsletter.

digitize!

A real cyber opportunity. Now that most restaurants have at least a basic digital infrastructure (read: online ordering), they’re ready to spring off that foundation to experiment and discover new and exciting avenues of growth through digital marketing and other activations — essentially, finally finding out how “digital” can uniquely fit to restaurants (as seen in the NFT feature).

Were it so easy. Yes, there’s opportunity on the board. But restaurants have to find a way to realize that in the midst of the pandemic, continued supply chain pressures, inflation (that customers are having less patience with), shrinking marketing teams, third-party delivery-exclusive data, and also third-party delivery’s incentive to promote loyalty to their platforms over any brand.

Not a great industry track record. I think there are lots of smart restaurant marketers out there; but the companies with the most $$$ to potentially spend on marketing tend to be the slowest to the draw in this space. To demonstrate, here’s a quote from an “expert” that doesn’t give me much confidence: "The next phase of all of this is earning your loyalty points at McDonald's while you're playing Candy Crush.” The next phase? Who TF is still playing Candy Crush in 2022??

More on digital:

  • Delivery firms are offering more flexibility to retain partners. Will it work? (Julie Littman, Restaurant Dive). A “dive” (eh?) into how third-party delivery companies are expanding their product suite and opening up their data hoards (slightly) to entice restaurant partners to stay, as restaurants face *everything else* and finally have alternative off-premise alternatives to the third-parties (e.g. better online ordering, white label delivery, local delivery partners, direct delivery ordering with white label fulfillment, etc).

  • McDonald’s stock: the fast food giant has a secret weapon (Daniel Kline, TheStreet). Double-digit sales increases (12.7% globally) across a variety of metrics are nothing to sneeze at for a large (the largest) company. The secret? Technology. Ronald’s investments in kiosks, app development, drive through tech, and loyalty programs have all paid dividends (literally) for the big M. Add that to a menu that hardly changes and you get the rare restaurant chain that is actually…innovating? And not even in a “Introducing the Thanksgiving Dinner Blizzard!” kind of way!

sides

⚔️💥 Instacart picks a fight with restaurants (Joe Guzkowski, Restaurant Business). I was ready to take issue with the headline for making a fight out of nothing…but the ad for Instacart’s new “Ready Meals” (grocery prepared food items) literally features copy proclaiming, “Break up with takeout.” You’re right on the money, Joe, them’s fightin’ words. It’s pretty wild for Instacart to so aggressively distance themselves from takeout when, in reality, there is nothing whatsoever different about the product except its origin; and with Kroger both participating in this and opening with Kitchen United — a company that we all know operates specifically for takeout and delivery — even that isn’t different. I suppose consumers should just be happy that they can order pizza and a hot dog for takeout and a soooo not takeout hot rotisserie chicken, all from their local Kroger. We’ll leave it to the big K to sort out this internal identity crisis.

5⃣0⃣0⃣ Marco’s Pizza plans to add 500 stores this year (Marianne Wilson, Chain Store Age). If it accomplishes this expansion, that would mean the predominantly Midwestern, Toledo-based pizza chain is growing by 50%. In the year of our Lord 2022, that almost certainly means a heavy reliance on ghost kitchens (REEF in particular is the industry favorite for hundreds-of-locations deals).

🥇 7-Eleven Launches 7NOW Gold Pass™, featuring Waived Delivery Fee and More (PR Newswire). The kind of person you need to be to sign up for a 7-Eleven delivery subscription is exactly the kind of person that I want to be…friends with. I am not that person. But if you are, I love you. Anyway, seems like a white-label delivery situation.

☕️ Starbucks expands coffee delivery and services in China through tie-up with Meituan (Arjun Kharpal, CNBC). Most restaurant/food delivery partnerships are ho-hum news nowadays. Not Starbucks + Meituan. As one of China’s select (state-approved) super-apps, Meituan is the delivery app of choice for all of its 660 million transacting users. Compare that to Doordash’s 20 million monthly users and, um, haha, hahahahaha, oh Doordash. You wittle tiny baby, you. A big deal for the ‘bucks in increasing its international business.

…660 million. Sheesh.

🍹 Tropical Smoothie Cafe is eyeing an IPO, Bloomberg reports (Aneurin Canham-Clyne, Restaurant Dive). Why!

who’s the spook?

The hood is pulled back, the snarling, grotesque mask torn away, and the Mystery Team reveal — me! I’m Mitch.

The TL;DR version of my story is: I worked in the ghost kitchen space since nearly its American inception, and now I write distilled summaries of the weekly industry news — the best possible use of all the incredibly niche knowledge stored up in my head.

And that’s spooky kitchens.

See you on Fridays.

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.