The art and posters on the walls of Keystone Bar & Grill in Hyde Park are covered in holiday wrap, but there are no customers inside enjoying the festive touches. It’s lunchtime the Monday before Christmas, a time the restaurant would normally be open, but COVID-19 has sidelined lunch service.
In the kitchen, though, a cook busily prepares food. He’s making Keystone orders for delivery, but he also cranks out retro style burgers, fries, and milkshakes under the Danny Boy Burger brand and fresh salads and homemade soups under the Leaf + Ladle brand. As the dining room sleeps, Keystone is in the ghost kitchen business.
“This was a year of survival,” says Dan Cronican, cofounder of Four Entertainment Group (4EG), which owns three Keystone locations and Mac Shack, a quick-serve Keystone offshoot, as well as a slew of other bars and restaurants in Cincinnati, including The Righteous Room, Rosedale, The Lackman, and Igby’s. “We’re just trying to keep our doors open until this storm passes.”
Virtual ghost brands are the company’s COVID pivot, Cronican says. Customers can find them on DoorDash or through social media accounts on Instagram, Facebook, and Twitter. When someone orders a Danny Boy burger, she probably doesn’t know it’s coming from Keystone. After furloughing more than half of Keystone’s employees and watching sales dive amid stay-at-home orders, long stretches of 10 p.m. curfews, and strict capacity rules, the company had to do something when the end of patio season approached in the fall, Cronican says. He also wanted to continue supporting local growers and vendors who supply his restaurants.
4EG wasn’t alone. The Tavern Restaurant Group—operators of Nicholson’s, deSha’s, and locations of The Pub in Ohio, Kentucky, Tennessee, and Florida—launched two ghost concepts at the end of 2020: The Pub Fish and Chips and Nick’s Southern Kitchen. Hootie’s Bait & Tackle and Hootie’s Burger Bar come out of regional Hooter’s locations. Kroger and Frisch’s, powerhouse local brands, have found a corner of the ghost kitchen market, too.
“We used to say, Location, location, location, that your business had to be in a place with high drive-by or foot traffic,” says Christopher Muller, a restaurant and hospitality expert and former dean of the School of Hospitality Administration at Boston University. “Now, it’s what your icon looks like on a cell phone.”
Delivery-only virtual concepts have been around for years, with early versions created by venture capitalists like Uber cofounder Travis Kalanick, who launched Los Angeles–based CloudKitchens in 2016. But COVID has accelerated their propagation as a survival tool for hobbled restaurants, muddying the waters a bit on their definition.
Initially, the “ghost” or “cloud” kitchen industry was fueled by consumer trends favoring food delivery, which grew 300 percent faster than dine-in experiences from 2014 to 2019, according to a report from L.E.K. Consulting. With the creation of third-party delivery services such as DoorDash, Uber Eats, Grubhub, and Postmates, Americans (and other first-world citizens) could suddenly get whatever they wanted delivered. Today, nearly every restaurant is available on a third-party delivery app, from fast food chains to fine dining establishments.
There are some arguments as to what defines a ghost kitchen in 2021, but everyone appears to agree on two factors: You order the food online, and it’s available only for delivery and sometimes pick-up. Ghost brands could be coming from a rented warehouse or kitchen trailer. Or they might be made in a brick-and-mortar restaurant like Keystone or even your neighborhood Frisch’s Big Boy.
Consultants are calling ghost kitchens the “secret sauce” for restaurants to stay in business. Food service vendors such as US Foods are creating ghost kitchen programs that vow to help struggling restaurant operators launch a ghost brand for less than $5,000 in less than three weeks and reap a 30–35 percent increase in profits. Meanwhile, three-quarters of Ohio restaurant operators reported sales dropping between 20 and 70 percent in December 2020 compared to December 2019, according to a survey by the Ohio Restaurant Association.
The result is a flood of new choices when you open your delivery app of choice. But are they any good? Do they hurt existing restaurant businesses? Will they dampen our desire to eat out?
Americans now report eating about half of their meals in a restaurant of some sort, says restaurant and hospitality expert Christopher Muller, but more and more they want their food to come to them instead of going to the food.
Society’s expectation of food service and relationships with restaurants are changing, says Muller, and that trend will continue after the pandemic passes. “It’s not good or bad; it’s inevitable,” says Muller. “Just as fast food was inevitable.”
Parts & Labor, a Cincinnati ghost concept, doesn’t really consider itself competition for other restaurants. “We see ourselves competing with the grocery store purchase,” says Jeffrey Miller, one of the chef partners behind the small-batch seasonal comfort food that’s available in individual, two-person, and family sizes. “Our customers might be tired of cooking and want a new experience, but they aren’t going into restaurants right now.”
Miller had imagined opening a brick-and-mortar restaurant before the pandemic but decided instead on a virtual service, first out of a kitchen in Over-the-Rhine and now operating at Oakley Kitchen, a new incubator and shared kitchen space. Parts & Labor produces fresh entrées and side dishes such as chicken schnitzel and chipotle-roasted carrots; the meals are developed to be eaten that day or the next day. “It’s an exciting opportunity, but it’s a whole different ‘restaurant’ vibe,” says Miller. “Virtual brands are slowly growing in the Midwest but have been around for a while on the west and east coasts. It could end up saving a lot of restaurants.”
Deciphering what is a ghost brand these days can be tricky. Some, like Danny Boy Burger and Nick’s Southern Kitchen, communicate directly that they’re from an established kitchen. Others don’t or won’t disclose their kitchen location.
P.Za Kitchen, which makes Roman-style individual pizzas, is delivered out of Buca di Beppo in Rookwood Pavilion, but we know this only because the restaurant address is listed. At least two other ghost brands—Tyga Bites (boneless chicken nuggets and tots) and Wing Squad (wings, sides, desserts)—are also being delivered from the same address on Edmondson Road. They represent the franchise segment of the ghost kitchen market; they’re ready-made national ghost brands, not created in Cincinnati like Danny Boy or Parts & Labor.
Tyga Bites, for example, was founded by rapper and songwriter Tyga. In a video clip of an interview with TMZ, he says, “If you own a restaurant and you want to make extra money every month, you basically franchise Tyga Bites. We teach you how to make it. It’s oven-baked, there’s 12 different sauces, and you can basically make it in your kitchen and make extra money.”
Tyga Bites, P.Za, and Wing Squad are connected to Virtual Dining Concepts, founded by father and son Robert Earl and Robbie Earl. The elder Earl is the former CEO of Hard Rock Cafe and founder of Planet Hollywood International and Earl Enterprises, which specializes in restaurant and hospitality branding and marketing and operates several brick-and-mortar restaurant chains, including Buca di Beppo. Virtual Dining Concepts promises, “Same Kitchen. More Profits. Zero Upfront Fees.”
An employee at the Rookwood store declined to discuss the restaurant’s ghost operations and referred Cincinnati Magazine to the corporate office, where a request for comment was not returned.
With that, we’ll start with a quick—but certainly not exhaustive—review of our ghost kitchen experiences.
First, Tyga Bites, which got the lowest marks. We ordered two eight-piece bites from Grubhub, one with black garlic dust and one with Peri-Peri dust. Each came with two dips; we chose General Tso, Garlic Parm, Mango Habanero, and Chunky Bleu Cheese. We ordered another sauce, Spicy Honey, for good measure.
The food arrived lukewarm and with just one dip. The chicken didn’t taste high quality and was burned in places. Not counting a $3 discount, the 16 nuggets with one sauce cost $28.90. We didn’t finish the food.
P.Za was also disappointing. An individual Sausage Bianca arrived cold and looked nothing like the picture on the app. The crust had an odd, flaky texture and the cheese, or maybe it was alfredo, created a laminated look. Toppings were scarce. The Caesar salad was decent and the Cajun wings, which came in completely different Wing Squad branding, weren’t bad. Total: $32.80.
We’d order Danny Boy Burger again, but here, too, we were a bit let down. The burger was legit. Cronican was right about the quality of that Kentucky-sourced beef—delicious!—but the fries were oversalted, and somewhere in the process my chocolate milkshake didn’t make it. Total bummer. I paid $22.08 for the three items; going through the rigmarole of getting a refund was not worth the $5.
Parts & Labor was on a brief hiatus during our reporting, as it was moving between its OTR and new Oakley locations. Leaf + Ladle was not yet available to our address. And, honestly, we weren’t dying to try any others.
Such pitfalls can be avoided when creating a ghost brand, says Laura Kron, a restaurant operations consultant with the Cincinnati division of US Foods. As one of America’s largest foodservice distributors with more than 250,000 customers, US Foods created a ghost kitchen program and playbook last year to provide a lifeline to suffering clients.
Ohio reported the loss of 49 percent of its restaurant jobs in March and April 2020; as of November, the loss was still at 17 percent.
Kron says she took desperate calls from restaurant owners suffering through COVID shutdowns. Ohio reported the loss of 49 percent of its restaurant jobs in March and April 2020; as of November, the loss was still at 17 percent. Sixty percent of the respondents to an Ohio Restaurant Association survey said in December that if pandemic conditions didn’t improve they’d be out of business in three to six months.
Kron helped US Foods design and launch its ghost kitchen program and says dozens of clients in the Cincinnati region have engaged with it, which starts with a consultation. US Foods shares a local market demographics report with the operator and analyzes his or her kitchen capacity and other business details to begin to determine which ghost concept could work best. The company offers branding and digital marketing support and tested in-house recipes to establish the best action plan. There are about a dozen turnkey concepts to choose from, or Kron can help an operator create an entirely new brand.
“It’s not just a template to use, but a very individualized process,” she says. “We create a brand that can be profitable and carry well.” Kron declines to name the local clients she’s working with, because their ideas are still in development.
Franklin Junction, a startup out of Atlanta, also offers complete, ready-made virtual concepts. It’s in the “host kitchen” business, dropping the “g,” and the combinations of host restaurants and brand offerings are endless and a bit dizzying.
For instance, last spring Franklin Junction rolled out a Nathan’s Famous concept via host kitchens within Frisch’s Big Boy and Ruby Tuesday locations across the U.S. Both Big Boy and Ruby Tuesday are owned by NRD Capital Partners, founded by Aziz Hashim, who also founded Franklin Junction. As of January, OrderXOXO, another company concept, was being delivered out of the Frisch’s on Fifth Street in Covington to addresses in the urban core. Still another concept, WingDepo, is being delivered from Frisch’s kitchens in Ohio.
Rishi Nigam, who says he doesn’t have a title because Franklin Junction is a startup, says they’re bringing food options to the Midwest by introducing concepts like The Captain’s Boil, Fuzzy’s Taco Shop, and Wow Bao, an Asian street food concept. We couldn’t find those in the area yet, though Clifton Heights has a freestanding Fuzzy’s store.
Nigam says those delivery concepts and others could be coming out of a Ruby Tuesday or a Frisch’s near you, but Franklin Junction doesn’t disclose the locations. Some are also housed in grocery stores, hotels, convention centers, and universities.
Chris Baggott, an Indianapolis tech mogul, created the ghost kitchen business ClusterTruck five years before the pandemic. He’s perhaps best known as cofounder of the digital marketing firm ExactTarget, which was purchased by Salesforce in 2013 for $2.5 billion. Food-conscious Baggott, who owns several Indy restaurants and a working farm, says he was disappointed in the quality of food and service available through delivery and was sure he could do better.
ClusterTruck is a virtual food truck concept whose menu has more than 100 items, from breakfast sandwiches to pizza to Pad Thai, so every individual in a family or at a work meeting can get exactly what they want when ordering. Delivery times average 22 minutes, Baggott says, and the food arrives five to six minutes after it was finished being cooked, with no delivery fee.
How? Vertical integration and technology, says Baggott. ClusterTruck owns every part of its operations, including its own delivery driver system. Delivery zones are all within a seven-minute drive of the kitchen hub. It’s currently available in Indianapolis and Columbus, including inside a Kroger store in each market.
Ghost brands will come and go just as restaurants have through the years, Baggott says. He knows the following statement won’t be popular, but says it anyway when asked if he feels bad competing with struggling restaurants. “Have you ever read Kitchen Confidential? I was re-reading it the other day. Anthony Bourdain was writing about how awful the restaurant industry is and that 60 percent of restaurants fail, and that was way before COVID. This social concern for restaurants is a new thing. We compete with restaurants, so if we say our food is good, it better be good.”
If you browse consumer reviews for ghost kitchens, you’ll notice some pretty bad ones, and that’s what gives restaurant expert Muller pause about their long-term impact on food service businesses. “I still think the restaurant industry was in a race to decline before COVID, because of the delivery system,” he says, noting that consumer trends clearly show that convenience has overtaken experience for the first time in history.
Cronican wants Danny Boy Burger and Leaf + Ladle to excel in both. “We were very adamant that we had to execute at the highest level,” he says, “because your only opportunity to impress that customer—to win that customer—is for them to open the box and look inside and be happy with what they got.”
While it took a little while for Keystone’s ghost brands to gain traction, Cronican says by the end of December he was “definitely encouraged by the sales,” so much so that Keystone is beginning to cultivate new ghost concepts. More than anything, though, looking around the empty bar and dining room on this less-than-festive weekday, he can’t wait for a full house again.
When his restaurants are back humming at capacity, Cronican says he and his partners might stick with their ghost brands, depending on where demand is for delivery options. He isn’t scared to try new ideas; the only thing he’s afraid of is disappointing a customer.