Ghost kitchens are one of the biggest trends in the modern restaurant market, and Wendy's has been among the industry leaders in adopting them. With booming demand for delivery in recent years, many restaurants have experienced trouble as orders flood in at a rate they can't handle and result in slower fulfillment for in-restaurant customers. This is why the future of online ordering rests with ghost kitchens, which have no seating and operate solely to fulfill the need for delivery orders. Thus far, Wendy's has achieved remarkable success in generating profit with ghost kitchens and stands as one of the industry leaders in this field.
Wendy's As a Ghost Kitchen Pioneer
Wendy's is highly notable for their ambitious application of ghost kitchens as they continue to expand globally. As the COVID pandemic intensified in the winter of 2020-2021, they struck a partnership with Indian company Rebel Foods to expand their food delivery in the world's second most populous country. This did not entail launching 50 or 100 ghost kitchens, but an entire 250 new units to fulfill rising demand for delivery in light of the pandemic.
As Wendy's builds ambitious plans in major world markets, it's worth remembering how they've reached this point. Before this major expansion in India, the fast food giant had already successfully tested and refined the ghost kitchen concept in other countries, with a handful of examples across the US, the Philippines, and the Dominican Republic. This experience was foundational for Wendy's next major steps with ghost kitchens, as it paved the way for their strategy of virtual kitchen franchises and partnerships.
From the start, srategic partnerships with startups have propelled Wendy's ghost kitchen strategy forward. Compared to the time and investment it takes to establish a brick and mortar presence, the company has expanded its presence in Canada with unprecedented speed thanks to ghost kitchens operated by startups that pay royalties. Wendy's global expansion is now poised to see the company return to the United Kingdom for a third time, although it stands to be seen what role ghost kitchens will play here.
Expanding to the UK
Wendy's has entered and abandoned the UK market twice in the last three decades, but they've reappraised their strategy for its ongoing reentry to the UK market. In the same way that the brand has gained a reputation for being social media savvy in its marketing, the menu carries classic fast food fare as well as vegetarian food. Several of these items are totally new to the UK market, such as an avocado salad or the meatless Veggie Stack burger.
While there are not yet concrete plans to bring Wendy's ghost kitchens to the UK, this makes sense considering the brand's lack of exposure there. While Wendy's has taken an innovative, unorthodox approach to markets abroad before, it seems that they're waiting to commit more heavily to the UK market. However, if the locals appear to have a taste for Wendy's menu, it seems virtually certain that ghost kitchens would factor into regional expansion plans. After all, Wendy's has already committed to launching 700 new ghost kitchens before the end of 2025.
Wendy's to Launch 700 New Ghost Kitchens Before 2025
While Wendy's has already established or begun establishing hundreds of ghost kitchens in multiple countries, this really is just the beginning. An innovative, ambitious model for ghost kitchens to fit into the company's online delivery strategy underpins a plan to launch 700 new ghost kitchens within four years.
In the same way that the corporation applies a mixed franchse/company owned model to its restaurants, Wendy's is also partnering with companies such as Reef to establish franchise ghost kitchens across the US, Canada, and UK. The ghost kitchens split the savings on infrastructure with corporate by paying a greatly increased royalty fee compared to standard franchises. While every Wendy's restaurant pays 4% in royalty fees, the ghost kitchens pay 6%. As digital orders and delivery continue growing, this strategy could pay off to the tune of billions in sales if Wendy's estimates are on point.
CEO Todd Penegor reported that Wendy's expects each unit to be able to handle $500,000-$1 million in sales. However, corporate leadership also report that they see utility value to ghost kitchens rather than a simple opportunity to increase revenue. By reducing the need for expenses such as real estate and seating space, ghost kitchens may help Wendy's expand into urban areas more than ever before.
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