Ghost Kitchens and Virtual Brands

Tim Fulton 00:08Welcome to the Confluence Cast, presented by Columbus Underground. We are a weekly, Columbus-centric podcast focusing on the civics, lifestyle, entertainment, and people of our city. I'm your host, Tim Fulton. If you're ordering food on a delivery app, you may not know precisely where your dinner came from. Columbus Underground Associate Editor Susan Post went down the rabbit hole of ghost kitchens and virtual brands in the restaurant industry. In today's episode, we explore the burgeoning scene of ghost kitchens in Columbus, unraveling their advantages and the complex challenges they bring to the table. But it's not all about convenience. We'll discuss the transparency issues these virtual brands pose, how they can be misleading to customers, and the implications for food-origin disclosure. You can get more information on what we discussed today in the show notes for this episode at theconfluencecast.com. Enjoy the interview. Sitting down here with Susan Post, the Associate Editor of Columbus Underground and the Metropreneur. Susan, how are you?

Susan Post 01:22I'm great. How are you, Tim?

Tim Fulton 01:23I'm good. We are here talking — we're trying to be a little timely with our podcast today. We're talking about ghost kitchens. We anticipate this is going to be coming out right before —

Susan Post 01:35Should have done it on —

Tim Fulton 01:38Yes, indeed. Are ghosts real? First of all — tell us, you say you did a long piece for Columbus Underground about ghost kitchens: how they permeated Columbus, what they are, why you did this, what are the benefits, what are the drawbacks. So let's get into it. First of all, what is a ghost kitchen?

Susan Post 02:00So there are a couple of definitions that people typically use for a ghost kitchen. I typically see a ghost kitchen as, like, a large commercial kitchen facility that has, like, lots of little individual kitchen bays in it, that primarily caters to delivery and pickup brands, but can also be utilized by, like, food trucks, caterers, other food-based businesses. There are a couple of examples of that in Columbus. There's the CloudKitchens facility called the Columbus Food Hall over on Essex Avenue. And then there's a newer facility in Clintonville, called High Street Kitchens, that just opened up on High Street from Maker Kitchens.

Tim Fulton 02:41And this category — so longtime listeners will be familiar with ECDI, and they're like, "Yeah, commercial kitchen, the Food Fort." That is different. That is different, primarily for businesses that are —

Susan Post 02:55They primarily serve food trucks that use that space, like, as prep and stuff like that. So, yeah, different from that. And then some folks also call ghost kitchens restaurants or brands that are operating out of existing restaurants. So, for example, the Buka, over in the Arena District — if you zoom in on that on Uber Eats or DoorDash or whatever, there's Buka, but then there's also three or four other brands that are operating out of that same kitchen. So some people call that a ghost kitchen. Which also brings me to virtual brands, which kind of goes hand-in-hand with all this, and you can't really discuss one without the other. And those are brands that exist, like, solely in the confines of the internet. And I think one of the most well-known examples is probably MrBeast Burger. So he launched during the pandemic, launched 300 locations, all in one day, which is absolutely unheard of in the restaurant world.

Tim Fulton 03:55For those that aren't familiar — and, frankly, I just became familiar with MrBeast three weeks ago, maybe — he is a very famous, very popular YouTuber, and, based on your article, lent his name to this burger franchise.

Susan Post 04:12He partnered with this business, or this organization, called Virtual Dining Concepts. And so they create these virtual brands. A lot of them have, kind of, like, pop-culture, celebrity references. So they create these menus and these brand standards and everything, that then they dispatch out to other existing restaurant kitchens.

Tim Fulton 04:34So MrBeast Burger could be produced — and, in fact, is, according to your article, produced by, like, Red Robin. And it is — am I getting that right?

Susan Post 04:43Right. Red Robin has its own virtual brands. So what it did is, it segmented out its menu, so it took all of its, like, salads and chicken sandwiches, and kind of siphoned it off into this other brand called Fresh Set. So it all just kind of keeps compounding on each other, because it's like, there's this example and that example.

Tim Fulton 05:03So let's walk through it real quick. I guess I want to take the perspective of, I own a restaurant with a fairly expansive menu. The suggestion would be for them — based on, again, this is all from your article — like, "Hey, if you want to generate more business, yes, you should have your pre-existing menu all in one spot under your previous — let's just call it Tim's Restaurant. Tim's Restaurant has all of these things. But also, let's say Tim's Restaurant offers pizza. There should be a Tim's Pizza." Exactly. "And there should be a Tim's Chicken Wings." Yep. "And there should be Tim's Salads."

Susan Post 05:51Yeah. So platforms like DoorDash and Uber Eats, they're, like, encouraging this for restaurants, to say, "Hey, here's your main menu, but break it out into three or four other brands." And DoorDash even said, in some of their literature, it's like having a product in a grocery store displayed on two or three shelves instead of one. So they're just trying to get you to kind of up your search results when people hop on their third-party delivery platform looking for a burger or pizza or whatever.

Tim Fulton 06:22I guess, from a business perspective too — I'm thinking about, okay, what's the benefit to the apps? And it is, from a consumer perspective, "Oh, there's so many different places I can order from." It's not just, "Hey, we've got Pizza Hut, and we've got Wendy's, and we've got these four other mediocre things." They've also got these things I've never heard of.

Susan Post 06:47Yeah. And I mean, that can be a little bit of a double-edged sword, because customers don't like getting duped. And you saw a lot of this during the pandemic. I think one of the most prevalent examples was, people were getting on DoorDash and Uber Eats and ordering Pasqually's Pizza and Wings, and they found out it was Chuck E. Cheese, and they were upset. And so, especially — I think a lot of this was starting to happen before the pandemic, but the pandemic really kind of spurred a lot of growth in this area, because restaurants had to find some way to survive. So platforms have kind of tried to build in a little bit more transparency into these virtual brands. But it can be really easy to, like, order from a place you've already ordered from without realizing it. Going back to that kind of Fresh Set, Red Robin example — if I get on there and I see a salad from Fresh Set that I want to order, and I order it, and I don't like it, then I'm on there again, and next time Red Robin has a salad, and I want to be like, "Oh, gotta have that salad," and I order it, and it's the same thing, right? So it's kind of a little too easy to end up ordering something you don't enjoy over again, in my opinion, if you're not being careful and really paying attention to where you're ordering from.

Tim Fulton 08:10And is that the primary concern for the customer, do you think? Like, I have certainly had negative experiences on DoorDash — and it's normally a chain, right? Where it's like, "Oh, I got this" — I don't want to disparage any restaurants, but like, "Oh, this just wasn't good, and the prep was rushed," and, "Oh, I'm not going to order from there again." But if I'm presented with something that, frankly, I know I want — for example, chicken wings again — it's like, "Oh, I'm being presented with this different option," that's actually not a different option.

Susan Post 08:46Yeah. So I think that's part of it. And I also think there's just kind of the transparency aspect, of, like, people wanting to know where their food is coming from. And if you look closely, it's typically, like, real small at the bottom of a listing on a third-party delivery service, like, "This brand is part of whatever restaurant." But you don't scroll down and see that.

Tim Fulton 09:07But there tends to be disclosure, you're saying? There is, it's normally —

Susan Post 09:11Not, like, super prevalent, but it's there. And that's kind of what I was saying — you know, at the start of the pandemic, it was sort of the Wild West, but as this has been going on for a little longer, there are a few more — I would say built-in, "protections" wasn't the right word, but, like, more transparency into what is and isn't a virtual brand than there used to be.

Tim Fulton 09:30It feels very similar — and we will not go down the legal rabbit hole here, but it feels very similar to Fulfilled by Amazon, right? That, like, I think I'm buying from Amazon, and Amazon is delivering it to me, but it is just something that somebody shipped to Amazon that Amazon then ships back to me. And — sorry, I guess I am going to go down the legal rabbit hole — the liability for that product does not rest with Amazon. It rests on the person who initially sent it in. Interesting. And guess what, if you want — let's choose a terrible example, an electric bike that, like, burns down your garage — you would much rather sue Amazon than you would sue a Chinese manufacturer who's never going to show up in the courtroom in the first place. And so what you're saying is, like, for the most part, we're seeing that there are some disclosures being made. It does say, "Hey, heads up, fulfilled by Red Robin." But it's the fine print.

Susan Post 10:33Well, that makes me think of a really interesting example. So I did speak to Columbus Public Health during this, and the individual I spoke with told me an example of — so say I owned, like, a breakfast restaurant, Susan's Breakfast. Having a really busy Saturday morning, you call in and order pancakes. Instead of filling that request at the restaurant, I dispatch it to a facility that I have inside a ghost kitchen. So the food that gets delivered to you actually comes from that ghost kitchen and not the restaurant. So he cited an example of seeing that happen sometimes. So, I mean, that kind of fits what you were saying about Amazon — you know, do you know where it's coming from? If there's a problem with the food, and you call the restaurant back, that food wasn't actually made there. So, like, what are they going to do about it?

Tim Fulton 11:23I would like to assume — so, there are obviously certifications that restaurants go through. There are certifications that kitchens go through. They are different, first of all. But you'd also like to assume that any legitimate business, if they're not outsourcing, exactly — they're, like, deferring an order to another facility — they are going through it.

Susan Post 11:50And that's exactly what we talked about — like, even though you may not see a lot on the consumer side of these ghost kitchens, each individual kitchen is inspected. Every time a tenant turns over, they're supposed to get re-inspected. They're held to the same standards — you know, restaurants get inspected so many times a year based on their risk level. So it is not just, whatever, no oversight in the kitchen. They are inspected. But, you know, Columbus Public Health also said they don't always know what all brands are operating out of what kitchen, right?

Tim Fulton 12:25Well, so I guess the question would be — the natural conclusion to that is, let's say — I'm having a very hard time just naming restaurants that don't exist — but let's say I order from Restaurant A, and I get sick, and I get sick enough that I'm, like, dropping a dime on Restaurant A. Where's the chain of custody, right? Apparently, this is a legal argument now. Where's the chain of custody for, like, "Oh, I ordered it from this place," and then somebody's like, "Oh, well, it looks like, from your email confirmation, it's actually from this place, and they're actually not licensed," or, "This isn't somewhere where we have jurisdiction." And so there's a risk to the customer, right?

Susan Post 13:15That's a great, great question. And I mean — I was looking at, so, we did our own little experiment, which I can get into in a minute. But I was trying to find contact info for one of the brands or restaurants that we ordered from, and all I could find was, like, a generic number that was from LA. And so it's like, even if you want to get in touch with some of these restaurants, it's probably really difficult. So, I guess I can get into my —

Tim Fulton 13:45And the point of the experiment was mostly to, like, verify and explore the different idiosyncrasies of what this model causes?

Susan Post 13:55Yes, got it. You know, so this whole idea of exploring ghost kitchens and virtual brands — I mentioned it several times, but it kind of started during the pandemic, because my beat is food and restaurants. And so seeing all of these new brands and options popping up, I'm like, "Where is this? Like, I don't see this on a building. Where's this coming from?" And it was coming out of another restaurant's kitchen. So it's something that we've kind of been keeping an eye on and toyed with writing about. And then, earlier this year, it was YouTuber Eddy Burback who did a really interesting video about, kind of, the pitfalls of ghost kitchens. And in that, he ordered, I think, nine different fish sandwiches from nine different restaurants. They all shared an address. And so he went to pick them up, and there was, like, no marking between which sandwich came from which restaurant, but they all looked and tasted pretty much the same. So we decided to kind of recreate that experiment with a local accent. So we ordered from the Columbus Food Hall. And what we did was, we ordered two different dishes from two different restaurants. So we did these chicken curry bowls. And they had just slightly different names from each restaurant, and they were different prices. So I think one of them was, like, $15, and one of them was $13.50. Picked them up — they look exactly the same, they taste exactly the same. And so we did it again, and then we got cauliflower wings from two different restaurants — same order, same everything, same price. Taste the same. So even though we ordered from four different places, essentially, it was all the same. So that kind of just replicated what Eddy Burback had found in his video. And if you looked at the Columbus Food Hall specifically at that time, there were probably at least a half a dozen different restaurants that had some sort of overlap in their menu, with bowls and cauliflower wings and healthy options. And then it started getting into, like, these places that said, like, "Fuck Gluten," "No Fork Carbs," or whatever, and there was more menu overlap with those. So you had, like, 12 different restaurants that all had some sort of shared dishes. So they're very likely coming out of the same kitchen.

Tim Fulton 16:22Maybe different bags, maybe different packaging, but a lot of times, no.

Susan Post 16:27Well, and, like, all of the packaging — so we had to place four different orders to pick this food up, and each did have, like, a stapled receipt on the outside saying what the order was, but the packaging was all the same. There was no kind of indication otherwise of what was coming from what place, besides the ticket stapled on the outside.

Tim Fulton 16:47And so you actually went to — because a lot of these places, if you are selecting, because you're making the determination from the jump, "Is this for delivery, or is this for pickup?" — but you were able to pick up. You went to pick up. But a lot of these places, they won't let you pick up, like, "This is meant to be — you don't want to see behind the curtain."

Susan Post 17:09Yeah. So we picked up from the Columbus Food Hall, and I know that you can pick up from Maker Kitchens on High Street as well. But, you know, going back to the Red Robin example — when I was searching on DoorDash and I zoomed in on Red Robin, when I had pickup selected, only Red Robin was showing up. When I switched to delivery and was looking at options, Fresh Set and Red Robin were showing up. So there definitely is some, you know, kind of trying to hide.

Tim Fulton 17:42Yeah, they're obfuscating what they're doing. And I think, at the end of the day, it does go back to, customers don't want to be duped, right? I'm curious about the pricing, too, but I don't think we really know. Like, why — literally, it's the same person doing the pricing. And why? Maybe one is more of an upscale brand, and one is an "I just want food in my belly" kind of brand.

Susan Post 18:11That's a great question. And, I mean, like, if you look at the article on the site, the front image is a picture of the bowls, and it looks like they've got about the same amount of chicken, about the same amount of vegetables. So I have no idea.

Tim Fulton 18:23So there is some additional — like, these places have websites? They don't exist solely within DoorDash?

Susan Post 18:33Well, it depends. So the interesting thing is, one of the places that we ordered from, it was, like, Thai curry bowls or something. And I mentioned earlier, I was trying to look up contact info for that place, and it was sending me to a number in LA. And so then I started digging into it further, and I kept matching up addresses of other locations of this restaurant, and they were all in other cloud kitchen facilities. CloudKitchens is just very interesting, because they are very, very secretive of what they're doing. I mentioned in the article that I was having trouble getting anyone from CloudKitchens, or that worked out of CloudKitchens, to talk to me. And right after the article published, I had an individual that said they had worked in a CloudKitchens facility reach out to me and say, "The reason you're not hearing from anyone is because everyone has to sign NDAs," or non-disclosure agreements. And so, I looked into that a little further, and, like, seeing that in a lot of places and a lot of other articles — Travis Kalanick, who was at Uber and then was ousted, founded this, CloudKitchens, and he's very, very secretive. He doesn't even want his employees putting that they work there on LinkedIn. So, just kind of a lot of shrouded mystery around the facilities. But it's kind of seeming like they have a lot of these sort of in-house virtual brands that they're encouraging people that are working out of their facilities to use.

Tim Fulton 19:56And so — I'm sorry, what's the name of the place on Essex? CloudKitchens. CloudKitchens not only allows folks to work out of it with their brands, but they also have their own in-house brands that they're replicating, that they're putting on the apps, using these third-party platforms to basically be the road, the path, to their food.

Susan Post 20:20Yeah. That's what it's seeming like. I mean, is it all that? No. And that's kind of what's interesting — like, if you look at the listing on their website, it does seem like there are some, like, genuinely local mom-and-pop brands that operate out of these facilities, and they get a lot of benefits for those types of businesses. But, in my opinion, it kind of gets lost in the noise of all of the other six to 10 brands that look exactly the same. It's hard to sort through it and pick out that one thing that's like, "Oh, okay, I think this is actually, you know, people from Columbus just trying to do their thing."

Tim Fulton 21:00Well, in my head, it goes to — I've been doing a little bit of work in the e-commerce space, and how easy it is to just very quickly design a T-shirt, very quickly throw it on a print-on-demand service, link that up with your Shopify store, and all you have to do is basically pay your $10-a-month subscription to these various services. And, oh, look, I've got a clothing brand, right? And it's not the nicest stuff, it's not Homage, but it's good enough to do a funny T-shirt.

Susan Post 21:33I kind of talked about that in the article with the Ohio Restaurant Association. Again, during the pandemic, this really ramped up, and you had lots of people just kind of throwing together these virtual brands. And a lot of them then subsequently went away really quickly, because it is more complicated than you think. You know, we're talking about — a lot of restaurants thought, "Oh, I serve burgers already. What's the difference if it's to a customer sitting in the restaurant, or putting it in a box to go?" Where there's actually, like, a lot of things you have to think about — food temps, holding times, what you're going to deliver your food in, and how you're going to communicate with the drivers. So there's a lot more to it than I think a lot of restaurants realized. And so you saw a lot come, and then a lot go. And, you know, we were kind of talking about how things I think are going to get to sort of this even-out point, where the bad ones are going to go away.

Tim Fulton 22:25Yeah, well, with any industry — when there is a boom, there tends to be, like, a culling of the field. And it's interesting, just to try to bring it back a little bit more to the Columbus perspective — folks like Northstar, Brassica, they aren't on those apps, but they do a very hefty takeout game, right? And nice takeout containers are not cheap, as somebody who's had to purchase them. And they're not easy to store — like, it's a whole lot of space. Exactly. It's an entirely other logistical problem that, out of necessity, like a pandemic, you may have to solve. But it's just a very interesting perspective. But, like, let's say I owned a Bear Burger type of restaurant, that, you know, I've got 15 different burgers. Why wouldn't I subsect my brand, so that if somebody is on there and searches "vegan," and they see Bear Burger, they're going to be like, "That's not — I'm moving past that." But if they see Leafy Patties as an option, they're like, "Oh, what's that? Oh, it's just vegan burgers. I want that."

Susan Post 23:44And that's exactly what we were talking about earlier. Mikey's Late Night Slice actually did something like that during the pandemic, where — they already had some vegan options, but they sectioned it off into this brand called High Horse Vegan, and ran that for a while. And, you know, talked to Mikey, and he kind of talked about how it helped acquire new customers, because people didn't know they had vegan options. And so that was kind of a really big benefit for them — it helped vegan folks know that they could eat there. And they kept it going for a while, and he said they shut it down probably about a year and a half ago now, because it just wasn't generating enough revenue, the necessity wasn't there. But now they've acquired all these new customers that didn't know that they had vegan options. So that can be a benefit of segmenting out. I guess it just, in my opinion — as I was doing this article and looking at things — it was just so overwhelming. If I searched something basic, like pizza or burger or chicken tenders, there's just literally, like, hundreds, if not, like, a thousand options. So it's like, at what point do you just be like, "Forget this, I give up," or you just stick to your favorite, because you know you like it? It's kind of, when does it start to become this diminishing return of, like, there are so many options?

Tim Fulton 25:02And I think diminishing returns, right? This is another, like — here's how I think about it in my day job. Everybody says, like, "Oh, Threads is here now, we all need to be on Threads." And I'm like, do you really want another —

Susan Post 25:17Thing to pay attention to?

Tim Fulton 25:19The adage I always use is, you can have as many cats as you want, but you have to feed every single one of them. And, like, the argument about whether a restaurant should be on Snapchat is a legitimate discussion to have, but the answer is probably not. Like, what is it benefiting you? What's the virtue in it?

Susan Post 25:43That's a great question. And, I mean, it's ultimately up to the individual restaurant, what their capacity is, and if they can have these multiple brands going at the same time.

Tim Fulton 25:51Yeah. I guess I think that, like, Mikey's did it right. Shout-out.

Susan Post 25:58They tried it.

Tim Fulton 25:58Well, they did it. But they did it for a reason that wasn't specifically misleading. It was just to showcase these options. And it wasn't to, like, hoodwink people who are like, "I didn't like the pizza that one time, so I'm going to go to this High Horse pizza," in order to basically mislead them so that they get a repeat customer that they shouldn't have.

Susan Post 26:24Yeah. He said they only ever really tried it because of the pandemic, so it might not have been something they would have done otherwise.

Tim Fulton 26:31Yeah. And I would encourage anybody to go and read the article. It goes in depth about some other things we don't necessarily have much time for here, like quality-control issues, and legal — more legal representation of names. But I want to wrap up today. You get a special question, partly by virtue of your role, and partly by virtue of when this is coming out. Susan, what are you thankful for?

Susan Post 26:58I am thankful for my job, that I get to do stuff like this. I celebrated 10 years over the summer, which is a really exciting milestone, and it's been 10 fast and fun years. And I also have to say, I'm thankful for my husband. We've just had a great year and have some fun holiday travel planned, and I'm really looking forward to it.

Tim Fulton 27:18What do you not so thankful for?

Susan Post 27:21Ooh. That it's cold outside. Okay. Not into it. Not ready.

Tim Fulton 27:25Susan, thank you for your time today. Thank you for listening to the Confluence Cast, presented by Columbus Underground. Again, you can get more information on what we discussed today in the show notes for this episode at theconfluencecast.com. Please rate, subscribe, and share this episode of the Confluence Cast with your friends, family, contacts, enemies, your favorite gig worker. If you're interested in sponsoring the Confluence Cast, get in touch with us. We can be reached by email at info@theconfluencecast.com. Our theme music was composed by Benji Robinson. Our producer is Phil Cogley. I'm your host, Tim Fulton. Have a great week.