Dickey's Barbecue Pit is seeing a faster ROI with CloudKitchens
Dickey’s Barbecue Pit is a family-owned business, with over 80 years of making homestyle Texas barbecue. As the world’s largest barbecue franchise, they’ve got over 500 locations in 44 states and 8 countries.
But when COVID hit, they had to rethink their business model. Customers were fundamentally changing the way they dine with restaurants. With stay-at-home orders in place and restrictions taking their dine-in traffic to a bare minimum, they needed a different way to make sure their customers could keep enjoying their amazing food.
CEO Laura Dickey and Dennis Ju, VP of Franchise Development, were quick to pivot. And their expansion strategy was centered on a new business model for the growing delivery trend: CloudKitchens.
“It was a big headache in terms of trying to get things open in a pandemic. But CloudKitchens was a lightbulb moment for us. It’s been our solution to COVID,” Dennis explained. “The early bird gets the worm, and we wanted to be one of the early adapters staying ahead of the delivery trend.”
But let’s break that down further.
What made CloudKitchens the right fit for their restaurant brand?
Laura and Dennis were keen on how the ghost kitchen model compared to a traditional restaurant. A typical buildout can be upward of $500K-$1M, and can take 6-24 months. But with CloudKitchens, they’re able to see ROI much faster. Plus, there’s no headache of a long buildout process, since it’s move-in ready and plug-and-play.
They've already expanded to over 10 new markets through the CloudKitchens model, with plans for even more locations in the coming months.
Just take it from Laura:
“When you can enter a new market and accelerate profitability, with lower overhead, less complication, in a model that’s already proven successful... that’s an opportunity you want to take advantage of.”
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What is a ghost kitchen?
Ghost kitchens, also known as dark kitchens or virtual kitchens, are commercial kitchens built for food delivery. They’re located within the delivery radius of a high volume of online customers, rather than high foot traffic areas. With ghost kitchens, there’s no physical storefront or dining area, so you only need a few back-of-house staff members to fulfill online orders.
How does a ghost kitchen work?
In a ghost kitchen, your restaurant is focused on delivery rather than dine-in. When eaters order your food online, you’ll prepare it from your ghost kitchen, and hand it off to a fulfillment team to get the order over to the right delivery driver. This gives restaurateurs a low cost, high efficiency model to get the most out of delivery.
Are ghost kitchens profitable?
Yes. Ghost kitchens allow restaurateurs to increase profitability by maintaining the essential elements of a restaurant while cutting costs on labor, overhead, and wasted food while reaching a higher volume of customers ordering online. Plus, you can run multiple virtual brands out of a single ghost kitchen to increase revenue without the extra overhead.
Why are ghost kitchens so popular?
Ghost kitchens are rising in popularity because they’re a lower cost alternative to operating a traditional restaurant. They’re also focused on delivery, which has grown 300% faster than dine-in since 2014. That means restaurateurs are using ghost kitchens to future-proof their business and accelerate growth.
How does a ghost kitchen help your restaurant grow?
Ghost kitchens help restaurateurs grow their business by doing delivery right. The way we dine has changed, and ghost kitchens allow restaurant operators to capture food delivery demand without sacrificing their bottom line. They’re also a great way to expand to new markets without spending time and money on a traditional restaurant buildout. You can easily expand your restaurant brand to different cities across the country such as Los Angeles or New York.
How much do ghost kitchens cost?
The cost of ghost kitchens varies by market, space, and services. Compared to a traditional restaurant, they’re a much lower cost alternative on both upfront capital and ongoing operating costs. You can get started in a ghost kitchen with as little as $30K, instead of $1M+ for brick and mortar buildout.
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