QSR January 2023

and the food quality consumers expect from an on-premises dining experience. By examining the approach of the tech-focused entrants into ghost and virtual, OOMI carefully avoided some pitfalls to the under lying initial strategy for ghost kitchen and virtual brands. The lower real estate costs can be a benefit, but also a weakness that gener ates the need to increase marketing spend that will drive brand awareness. Rather than pay into the marketing rabbit hole, Pineyro and his cofounders instead decided to build their Digital Kitchen in a high-density, urban-residential area in the middle of the hustle and bustle of downtown Dallas. “We believe the optimal place to build and locate a ghost kitchen is smack dab in the middle of where our target demographic resides—and in an area that is familiar and easily located by both our on-demand workforce of delivery drivers and our customers. With cheaper out-of-the-way buildings, drivers often have a hard time

success is that they haven’t yet focused on the customer or on cre ating a consistent quality food experience. Pineyro believes that his approach considers all the facets of the nuanced hospitality busi ness that need be addressed to be successful for the next incarna tion of ghost kitchens. Pineyro open-sourced his strategy playbook so that other opera tors can benefit from this wait-and-watch approach to building a successful off-premises business. 10 Imperatives for Ghost Kitchen andVirtual Brand Success 1. Leverage asMuchData as Possible: Hire outside support to uncover customer habits within your delivery radius that zero in on the foods your potential customers want to buy and when. Use travel pattern data, urban planning data, geo fencing cell data, gap analy sis, and even SEO search analysis to uncover insights into what sells. 2. Partnerwith or LicenseCompelling Brands: Don’t just partner or license any given brand; choose brands that have built in customer awareness and affinity and create virtual brands that compliment them. Better yet, find brands that have a cult following and an avid influencer base that will magnify your marketing reach organically. 3. Eyes Drive Buys: Reducing costs by procuring hidden real estate is a mistake; find a location that is convenient for both your customers and your drivers to locate, engage with, and keep top of mind. This will optimize both your delivery and your carry-out business, as both are equally important. 4. Centralize Production: Business models that rely on a patchwork of labor resources in a disparate set of kitchens will see this result in inconsistent product. Keep production in one location to capitalize on product consistency and food quality. 5. Oversee Your OwnOperations: Don’t trust unproven entities with your brand, your recipes, your reputation. Having a dedicated opera tions manager onsite where your product is being made is key to quality and cost control. 6. Vary Revenue Streams: In addition to just a basic delivery model, set up catering partnerships with workforce food program compa nies, offer brands and menus that will generate revenue during vary ing dayparts and have a robust offering of marketplace products that can be added on for delivery. 7. Cross-Utilize but Don’t Cannibalize: When matching licensed or virtual brands to your ghost kitchen try to overlap and use each inventory SKU across brands and menu items to limit cost and waste and to optimize inventory throughput. At the same time, still be cre ative enough to utilize unique SKUs to form interesting builds that vary from menu- to-menu and item-to-item to retain consumer inter est and excitement. 8. Provide theConsumerwith a Holistic Experience: Focus on each step along the food procurement journey to provide a thorough and thoughtful convenience solution for your customers. Make discovery, sales, order, pick up/delivery, eating, and feedback processes simple, intuitive, efficient, and experiential. Focus on both the food product and the hospitality experience, end to end. 9. Conduct Ongoing andConsistent Quality Control: At each point on the product to consumer journey regularly check for points of failure and opportunities to improve. Preparation, order accuracy, production, make line processes, packing, pickup, and delivery stage gates should each be evaluated and monitored frequently. 10. Invest in Pickup Technology: Food integrity is a key element to food quality. Pick up tech helps to keep food safe, held at the proper temperature, and makes it convenient to access for the delivery driv ers who are stewards of your product. Invest in great packaging and locker pods. q LizMoskow is an F&B industry expert with a Culinary Institute of America pedigree and over two decades of brand, culinary, hospitality and CPG experience. Moskow is considered a global leader, trend spotter, and trend setter in the food industry. She is based in Denver and is Principal of Bread & Circus Ltd, a consultancy focused on the future of food.


locating ghost kitchens; this frustrates and alienates them as they want to pick up and deliver food as quickly as possible to optimize their tips. We’re also focused on providing customers with the short est delivery times possible to enhance the quality of our product and the entire customer experience, something our V1 ghost kitchen predecessors grossly overlooked,” Pineyro says. When the preparation facility is located far from a delivery cus tomers address, there’s a cost to both alienating the people respon sible for delivering your food and to providing a poor customer expe rience from long wait times and/or delivering cold or soggy food. OOMI Founders never really believed the “zero front of the house costs” proposition touted by early ghost kitchen entrants either. “Zero front of the house costs are never really zero, they’re just re-allocated into other unforeseen expenses; expeditors, order packers, and even greeters who direct delivery drivers all need to be hired to produce and deliver a quality product for delivery. There seems to always be a cost, both direct and indirect, to each decision you make when deviating from the traditional restaurant model,” Pineyro says. Veteran hospitality operators like Pineyro know that beyond just location and service, to be successful in any restaurant business, there needs to be a focus on the menu and the food product. The menu needs to be both operationally optimized for efficiency as well as appealing to the customer. One of the main reasons that many of the current ghost kitchens that offer virtual brands aren’t finding


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