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Nathan’s Famous opens 100th ghost kitchen

Dive Brief:

  • Nathan’s Famous opened its 100th ghost kitchen, which offers both Nathan’s Famous menu and its virtual kitchen concept Wings of New York, on Monday, according to a press release. Both brands have agreements to open another 45 locations in the next few months.
  • The company first partnered with Franklin Junction, which connects host restaurants with digital brands, in April and has since partnered with Reef to expand across the U.S. While primarily located in the New York tri-state area, it has restaurants across the country, from Florida to Nevada. The company release says it plans to expand further in Pennsylvania and California.
  • Nathan’s rapid ghost kitchen expansion began in June and other brands, including Wow Bao and Famous Dave’s, have also partnered with host restaurants to provide an additional avenue for their virtual brands.

Dive Insight:

Since Nathan’s first partnership with Franklin Junction, the chain known for its hot dogs has dramatically shifted its expansion strategy, going from initially offering six meal kit options through Franklin Junction’s host kitchens to launching 100 ghost kitchens. 

The growing fleet of ghost kitchens could help Nathan’s recover lost revenue. Its franchised operations revenue was down about 70{431c92db2ef93c421a350be785d244bd702e2c73a34f2b6f60cd8fd62b61507d} to roughly $1.1 million during the 39 weeks ending Dec. 29, 2020 compared to $3.6 million during the year ago period, according to an earnings release. Many of its franchised locations have been temporarily closed with venues located in movie theaters or in locations with reduced traffic, such as airports and travel plazas.

For brands like Nathan’s, host kitchens can help cut costs because they don’t have to pay real estate or rent at a ghost kitchen facility and instead can rely on other restaurants to use their unused kitchen space to cook and sell the brand’s menu items online. 

The restaurant chain has also made other investments to try to improve its operations, including a technology stack overhaul, which began in 2019 in optimize its advertising and boost customer engagement, as well as increase use of data at the franchisee level. It also partnered with PAR’s Bring POS and Toast to test self-ordering kiosks. This overhaul continued in April 2020 with an agreement with RestaurantMagic to help improve franchisee efficiency with back office software.