The New York Times article You’ve Heard of Ghost Kitchens. Meet the Ghost Franchises covers the growing number of companies franchising food concepts to existing restaurants.
The restaurants that take on these franchises continue to serve their regular food and make the franchise food for delivery only.
Key quote from the NYT article on the burger franchise MrBeast Burger, which takes its name from the well-known celebrity YouTube star MrBeast:
MrBeast Burger is not quite what most of us think of as a chain, or even a restaurant. In exchange for a cut of sales revenue, the brand supplies the name, logo, menu, recipes and publicity images to any restaurant owner with the space and staff to make burgers as a side hustle. When a customer orders from the MrBeast Burger in Midvale, Utah, the food is prepared at a location of the red-sauce chain Buca di Beppo, following a standardized MrBeast recipe.
And yes, we've never heard of MrBeast.
And after looking at his videos, we don't get why he's a star.
But his burger target market (teenagers and young adults) loves his videos. So they buy his burgers.
Or we should say they buy the burgers from the franchise company, Virtual Dining Concepts.
MrBeast's contribution is his name and his promotional activity.
Virtual Dining Concepts has 9 different restaurant concepts, including, of course, MrBeast Burger.
The franchise fees are not cheap. Most ghost franchises charge 35%-45% of sales.
But in most cases, the fees include delivery charges, which can be as high as 30%.
The franchising companies also spend a lot of money getting good placements on the delivery apps and search engines. This is something a small restaurant chain would be unlikely to accomplish on its own.
Ghost kitchens have been around for several years and the pandemic has accelerated their growth.
Since food delivery will likely continue to grow post pandemic, we expect ghost franchises to continue to grow.
