"Smackadillas" | spooky kitchens #11

March 25th, 2022. The myth of 10-minute delivery continues, some ghost kitchens will do anything in the name of growth, and the WWE launches a virtual brand.

March 25, 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.

So what happened this week(ish)? (TL;DR)

Now fire 10-minute delivery!

the myth of 10-minute delivery inspires Icarus after Icarus in food-tech

You hit “Place Order,” and the clock starts running. In a kitchen within five miles of your location (probably closer if you live in the city), chimes start going off on a cluster of tablets and screens, because despite the promises of so many online ordering aggregators, the tablet farm still exists (teams have just learned to manage them better). The cooks glance up, ingesting the order in seconds – short or long, modifiers and all – and go to work, dropping another basket in the fryer, another pan on the burners, another screaming-hot skillet into the oven.

From here on out, timing is tricky – on busy nights for restaurants with dine-in, takeout, and delivery all firing, your delivery order is likely shoved to the back of the line (because dine-in > takeout > delivery is often the hierarchy of priority). It could take 30 minutes to render your meal, or longer. Once it’s ready, if the driver is there waiting for the pickup, then final delivery is probably an additional 10-15 minutes away. The whole process normally takes about 30-40 minutes. Again, on busy nights during peak hours, a delivery could run double that. This is mainly from (a lot of) personal experience, so maybe LA is just weird. But I don’t think so.

(Note: there are a couple available studies confirming food delivery times are within 30-40 minutes on average, but they’re about 5 years old now and not, IMO, worth officially citing anymore. I just want you to know I looked. Anyway-)

Can you think of a way to boil that whole process down to 10 minutes from “Place Order” to delivery? Packaged or prepared foods (the hot stuff at the grocery store) seem like the obvious answer. But that’s pretty much it. When you’re promising the customer a 10 or even 15 minute delivery, obviously every minute counts — regardless of what the fine print says about orders going over time. You don’t want a Spider-Man 2 situation. 10 minutes is practically a marketing guarantee, and thus establishes a hard delivery radius. The best way to maximize that radius to reach the greatest number of customers possible (and limit the need for additional real estate acquisition to gather back up those missed customers) is to get orders out the door seconds after they are placed.

The trick is that anything requiring more than zero seconds to render shrinks the delivery radius. Food delivery companies know their distances and drive times during all day parts in every city of operation to a T; so they also know the distance, customers, and dollars lost per minute of wasted time. Depending on where the kitchen/fulfillment center is located, that might mean a block of high-rise apartments (ghost kitchen moneymakers) falling outside the zone. A 5-minute dish (which would be lightning for most restaurants) cuts your delivery radius in half. Even fast food, notorious for its, you know, fastness, takes a few minutes to put together. With such a tight service area and tighter margin of error, does it make sense to attempt delivery on this short a clock at all? Maybe in the biggest, densest cities in the world…but almost certainly not outside of them.

I’m trying to puzzle this out because tech companies seem determined to achieve that consistent, so far unattainable 10-minute delivery (both for grocery and for food in general), so these headlines aren’t going away. They also appear determined to underestimate the restaurant business time and time again as they attempt to outsmart an industry that stubbornly refuses to accept shortcuts.

10-minute delivery would be a game-changer, yes. New attempts will inevitably score headlines (even the ill-fated Gorillas in NYC was lauded before its backslide). I personally would love it…on the odd late nights I’m stumbling back in from the bar(s), haven’t eaten enough, and just need something hot, salty, and/or ice cream-y at my door ASAP. Aside from that specific instance, I can wait 30-40 min for the good stuff.

Lastly, Zomato (back to the article in reference), one of India’s biggest food delivery services, claims to be offering the “world’s first 10-minute delivery service,” but this is obviously untrue. A single Google search, or any knowledge of the delivery industry for more than a month, would tell you as much; as well as give you the most recent example of a 10-minute delivery fail. Judging from the follow-up outcry from India’s restaurant community (even the ones partnered with Zomato), Zomato still has a long way to go before they really get to celebrate.

sides

👿 The hubris of ghost kitchen startups (Nancy Luna & Meghan Morris, Business Insider *paywall*). This reads like a laundry list of the despicable, the arrogant, and the pointless. From Reef mobile kitchens without running water to Cloud-sponsored political attack ads on a Chicago alderman, the article illustrates the win-at-any-cost (at billions funding and billions more in valuation, literally any cost) strategy of ghost kitchen startups as they open locations regardless of safety, quality, regulation, local sentiment, or often, good sense. It is disturbing, fascinating, and for someone who has been around the industry for years; totally unsurprising. It’s a relief, actually, that these stories are seeing the light of day.

  • I loved this quote from former Red Robin CEO Denny Marie Post: "Everybody looks at restaurants and says, 'How hard can it be?’ It's the hardest thing in the world. It's a deceptively complex business."

☁️ GoPuff Kitchens hires a new head…also, wait – GoPuff Kitchens? (Grocery Dive, Jeff Wells). I missed this last year, probably with my head fully submerged in signage projects (a tip: don’t get into signage) – but apparently GoPuff, the primarily convenience-delivery company, is also delivering prepared foods from some of its ghost locations with plans for much broader expansion (much like regular grocers). Instinct says this is probably along the lines of 7-11’s prepared food offering (not to be conflated with 7-11 Hawaii’s incredible food lineup), but who knows? One thing we know they’re serving, in Florida at least, is burgers.

😯 WOWorks and Qdoba on growing through ghosts (Nicholas Upton, Food On Demand). When I hear Combo Kitchen, I think “Zombocom.” That can’t just be me; surely the Venn of ghosties (ghost kitchen heads) and early Internet goof appreciators overlaps somewhere. Anyway…the short of it is, WOWorks (Simple Greek, Saladworks, Garbanzo Mediterranean, Frutta Bowls) is expanding their ghost branches through primarily host kitchens, facilitated by Combo Kitchen, a middleman company that connects restaurants with extra capacity to virtual brands that can fill that gap. Qdoba on the other hand is going the “shotgun” route with REEF; not the full-spread 300-location package of C3 or Wendy’s (yet), but a tight cluster of 20ish locations to test three market scenarios based on brand recognition. That is, markets with lots of Qdoba, markets with medium Qdoba, and markets with baby (or zero) Qdoba. Here’s hoping they find their Goldilocks market so they can spread the good queso news across the country.

🥞 IHOP has had two kitchens this whole time, and will now actually use the second one…more often (Joe Guzkowski, Restaurant Business). As written inside, “Today I learned that a majority of IHOP’s 1,650 restaurants have two whole kitchens, which it apparently needs to handle the mad rush for pancakes on weekends.” Me, too! Long story short; now they’ll fill the often empty kitchen with virtual brand production, in one case of virtual brand implementation that actually makes complete sense to me. But deciding to launch virtual brands is not the finish line; marketing them effectively has proven to be another hurdle (or another race) entirely.

🪙 Deliveroo loses money YOY; not as much as some thought they'd lose, but still a lot (Ivan Levingston, Bloomberg). The headline and sub-head of this article work together as a fantastic anti-climax, while still being technically accurate: “Deliveroo’s First Year After IPO Marked By Widening Losses”… “London-based firm’s losses narrower than expected.” Are they wide or are they narrow?? Here are the basics: Deliveroo lost 134M pounds in 2021. A lot, by any standard. Over 10x more than they lost in 2020 (11M pounds), but not as much as analysts thought they would lose (projected -150M pounds). So really it’s…as much of a win as a loss could be? Head of Deliveroo Will Shu said the company faces macro headwinds from inflation and global instability, which makes sense for a globally-scaled company (versus companies that use macro events as a convenient scapegoat for deeper problems). They do not expect to fundraise any more before reaching breakeven in the next couple years. 

❓ Keeping up with Kitopi (Patrick Ryan, The National). Kitopi has consolidated itself to the UAE since closing down their New York location (and attempted foray into the US market) in 2019; but seems to be gearing up to expand again. As a refresher, Kitopi is an earlyish-era ghost kitchen company based in Dubai that operates like REEF – striking deals to license brands and menus, where they do all the cooking – but inside of more standard ghost kitchens than REEF’s pods/trailers/food trucks. Today Kitopi stands at a $1B valuation, seeks $5B with the expansion of 100 kitchens, and aims to be a competitor to Deliveroo once at their goal scale.

🦍 There’s a f***ing Bored Ape virtual restaurant in Long Beach UGH (Nicolaus Li, HypeBeast). This man (Andy Nguyen, most known for co-founding Afters Ice Cream, and now this) dropped over a quarter of a million dollars on a ape picture (sic) and then opened a ape pop-up (sic) called Bored & Hungry. There are “free meals” for other Bored Ape owners (just a huge, huge perk for those who’ve already spent hundreds of thousands of dollars on a ape (again, sic)) You know what the worst part is? This is LA. It’s going to be an absolute hit. UGH.

🚐 Delivery robots are remotely piloted; but no, this young woman does not think she is the robot (Ronald D. White, LA Times). Okay, first thing; some pretty good information in this article on the operations side of delivery robotics, and how various companies in the space (Starship, Kiwibot, Coco) handle remote piloting, security, and monitoring of their trundling little boxes-on-wheels. Second thing: boy, wow, there’s a lot of language in here winking at how apparently strange, kooky, and disconnected the younger generation is. When one of the robot pilots talks about dodging obstacles on the sidewalk (“Someone will open [the door] just as I’m passing by and they could get me”), the author writes that she’s “speaking as the robot,” and later after another quote he says she’s “doing the bot meld thing again.” He later compares another pilot who has played video games for a long time (as have millions of others) to Tom Brady.* It’s just…not that weird, man. This is the world.

Dessert: “Smackadillas” (Christine Strubel, Fansided). The first WWE virtual restaurant is opening soon, in a partnership between WWE and Nextbite (the belt-holder of virtual brand partnerships). It’s called Smackadillas, and they serve quesadillas. That’s it. Stay tuned for the inevitable “Knuckle Sandwiches,” “Pie-L Drivers,” and “RAW (food)” coming down the line.

  • Uh-oh! The reviews for Smackadillas are coming in and they are unsurprisingly… “unremarkable.”

That’s been 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.

*Dumping the remainder of this rant on the LA Times article down here: My good sir, here’s something I’ll clarify regarding the robot pilot’s use of first-person “I” perspective to describe her piloting experiences: if you’ve ever heard anyone, ever, in the whole world, talk about video games, they don’t say, “Mario wall-jumped over that Goomba” or “My character in Elden Ring got beat up by a guy with a hundred arms and a dragon head stuck to his body.” They say, “I wall-jumped over the Goomba” and “I got beat up by a guy with a hundred arms and a dragon head stuck to his body.” The controller is in my hands – therefore, “I” am operative in the following description of my remote-controlled experience. I think this most certainly includes robot piloting. Military drone pilots describe their experiences in the same first-person perspective. But it’s implied here that because she’s Gen Z, she is blurring the line between her and Cocobot without even realizing it. Sigh. That is all.