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Wendy's new slate of ghost kitchens will be spread across densely populated urban areas in the US, Canada, and the United Kingdom particularly among regions where the company has fewer physical operations in place; with the virtual offering even being the company’s first franchisee in the UK. Todd Penegor, CEO of the fast food chain, predicts that each unit could see between $500,000 to $1 million annually in sales. The ghost kitchens will be delivery-only and dedicated to fulfilling orders placed through third-party food delivery apps like Doordash, GrubHub, Postmates, and Uber Eats. The first 50 of the planned 700 restaurants will open this year. REEF Technology, which helps restaurants with virtual kitchen logistics and currently operates around 5,000 delivery kitchens in 30 cities worldwide, will build out the new Wendy’s locations through 2025, as well as hire the ghost kitchen staff, while Wendy’s will receive royalties of around 6% of sales.
The virtual expansion comes after a successful pilot of 8 delivery-only Wendy’s locations in Canada; and the fast food company is far from the only restaurant experimenting with ghost kitchens, which have grown in popularity as a result of both the COVID-19 pandemic’s effect on delivery and customer dining habits as well as the changing landscape of the restaurant industry’s business practices. Both the Halal Guys and Chick Fil-A offer delivery-only ghost kitchens, as do Red Lobster, Qdoba, Wow Bao, Chuck E. Cheese, and Nation’s Giant Hamburgers, among others.
A new category of virtual-only restaurant brands with no prior brick-and-mortar footprint have even entered the delivery dining landscape. These include YouTube star MrBeast’s MrBeast Burgers, Chili’s virtual-only concept It’s Just Wings, and offerings from celebrities who are using virtual-only restaurants as a new way to monetize their audiences and take advantage of their own brand presence, such as Tyga Bites from Hip Hop star Tyga, the Instagram platform @FuckJerry’s @Pizza @Pizza concept, rapper Wiz Khalifa’s HotBox by Wiz, singer Mariah Carey’s Mariah Cookies, and many, many more from well-known names across a variety of industries. Often these virtual brands are powered by turn-key offerings like NextBite, which is behind Wiz Khalifa’s HotBox by Wiz restaurant, and which provide their clients with partner kitchen operators and plug-and-play delivery-only branded menus.
The shift by operators to delivery-focused, contactless options is part of a larger trend PSFK researchers have noticed around at-home dining. Powered by changing consumer behaviors and preferences coming out of the COVID-19 pandemic, restaurants are shifting their business practices as they look to cut real estate and labor costs, while also addressing the growing demand of their customer base for off-premise dining in new and innovative ways.
This article originally appeared in PSFK’s research paper, Restaurant CX Innovation: Delivering Value Through Elevated Services, Hyper Convenience & Curated Recommendations