QSR September 2022

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it did recently sign its first multi-unit agree ment. There are also operators who have expanded and purchased additional terri tory and vans. The chain manufactures and ships its product from Mobile, Alabama, so the brand intends to grow in concentric circles in the Southeast. With that said, Roth says frios is opportunistic, and when a prefer able candidate in a distant market comes along, it will send a case of popsicles for a test run to make sure it can predictably transport the frozen items. Distribution depends on what state law mandates. In some markets, operators are required to have some type of commis sary; the company helps franchisees along with understanding the permitting, licens ing, and statutes when they f irst sign up. Oftentimes, because frios isn’t prepping or making anything, it can skirt much of the requirements. Several just use their home to store popsicles in deep freezers and plug in their van. “We don’t want someone to go out and have to find like a storage facility or a commissary or spend money right away,” Rother says. “We want them to be able to generate some revenue and then as the business grows, really grow into a space as they need it.” Frios prides itself on having diverse franchisees, and Rother attributes that to the brand’s lower initial investment. The biggest cost is the van and customiza tion, but beyond that, the executive says the franchise fee is one of the lowest in the industry and royalties are a f lat fee each month. Some—nurses, doctors, engineers, and teachers—use the popsicle vans as a side hustle and keep their day jobs. Others dive fully into the business and buy multiple locations. The reason it works for somany is because of the sheer simplicity, Rother says. She adds that it takes hustle and work on the front end to raise awareness and show case differentiation, but afterward, success is quickly within reach. Minimal hospital ity experience is required because operators aren’t cooking; they’re just handling inven tory and giving customers a prepackaged product through a window. Rother says people from all walks of life have transferrable skills, and frios’ train ing program fills in the gaps. q

increase in our menus just because the cost of everything has gone through the roof.” Like others, Omar grappled with price increases at Atomic Wings. In late spring, a French fry manufacturer raised prices on them 65 percent. The explanation given was that during the height of the pandemic, the company did not plant enough crops of potatoes, so as demand stayed high and supply was low, prices went up. “Now they’re playing catch up, and it’s hard to play catch up,” Omar says. “They’ve had to raise their prices because the price of wheat has gone up, the price of transportation has gone up, all these exter nal factors. We used to pay about $17 for a jug of oil for filling our fryers. Today, we’re paying $43 for that same jug. There’s only so much a store owner can bend, right? These are franchisees, and I’m not only talking about my brand. I’m talking about any mom-and-pop shop out there, any diner that you go to, any restaurant that you go to. Consumers really need to be mindful that this isn’t Target, Walmart, or Amazon.” Packaging costs have gone up, and with a lot of packaging originating overseas ( like plastic goods and Kraft boxes) there was a big bottleneck that built up. “They were six months delayed [ in getting items into warehouses], so the price of packaged goods, the price of just putting the food in the containers, has shot up astronomically,” Omar says. “Restaurant owners are getting hit from all angles.” Omar says Atomic Wings has tried to be as innovative as possible. Since Q1 2022, its thigh wing now comes in two variations, a breaded thigh and a traditional naked thigh wing. He says the chain is profitable for franchisees and cost effective for cus tomers. “We can sell that as a combo for less than $10, and it’s a filling meal,” Omar says. Atomic Wings has also tried to work out innovative pricing. “Let’s say we were selling 10 pieces for $12.99. We can make an 8-piece combo or a 7-piece combo for $12.99,” Omar says. Tough economic times call for creative measures. But ultimately, something is going to have to give. “What we’re going through right now is very unsustainable,” Wattir says. “It can not be like this for a long time.” q

give them a leg-up when it comes time to open up shop or expand, whereas those services are simply not available to smaller operations. “We want to see these folks succeed,” says Meyer, who estimates current ghost kitchen failure rates are roughly 35 percent. Orsbourn believes independent ghost kitchen operators can succeed in a space where larger brands and chains have started to f lex their muscle. “It’s really difficult for independents to win in this particular environment because they don’t have the means to scale or the resources that an enterprise brand might,” Orsbourn says. “But I do think indepen dents have a chance of success, I really do. I know that because I know independents that are doing really well in this environ ment.” To help educate operators about the dos and don’ts of the ghost kitchen space, Meyer and Ghost Financial launched online platform GhostU. “I want to ensure that with proper edu cation, the industry sees failure rates drop to 5 percent or lower,” Meyer says. The GhostU program will consist of at least 12 MasterClass-style videos, which will cost $1,000. They’ll pair with step-by step worksheets and three months of access to Ghost Financial’s Ghost Kitchen Com munity, a forum where owners can share their experiences and access interactive workshops. Topics covered will include how to max imize profitability, build a powerful team, secure financing and investors, and get the most out of delivery apps. Additionally, Ghost Financial struck a partnership with Maker Kitchens, which operates commercial ghost kitchen facil ities in major metros across the country. The partnership will see Ghost Financial become the preferred insurance and loan partner for Maker’s 300-plus tenants. Meyer says the deal withMaker is hope fully the f irst of many with ghost kitchen real estate firms. Like Meyer, Maker wants to maximize profitability for ghost kitchen operators. Tenants under the Maker umbrella will have quick and streamlined access to Ghost Financial’s margin-boosting products, and Ghost Financial will be able to reach more ghost operators.  q

BenColey is Food News Media’s content editor. He can be reached at Ben@QSRmagazine.com .

BryanReesman is a regular contributor to Food News Media and is based in New York City.

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SEPTEMBER 2022 | QSR | www.qsrmagazine.com