South Florida Sun-Sentinel Palm Beach (Sunday)
Virtual restaurants satisfy appetite for app delivery
Rising popularity spawns spinoffs tucked inside real eateries, ‘ghost kitchens’
The sweet-and-sour, sriracha and honey-garlic sauces are key ingredients at Hugo Jiang’s two restaurants in Boca Raton. At Chinese eatery Sieng House Restaurant, near Mizner Park, he uses them at lunch and dinner. At his side hustle Boca Wings, he uses the same tangy sauces to coat nine flavors of deep-fried chicken wings.
Jiang’s wing joint doesn’t have a physical storefront, a website or social-media accounts. Boca Wings is what’s known as a virtual restaurant, and the only way to get food from it is on delivery apps DoorDash, Postmates and UberEats.
“[Boca Wings] brings us not much profit, maybe a
couple hundred extra dollars every week,” said Jiang, 31, who has operated Sieng House for five years with his parents. “Most people don’t know about it unless you live near Boca and search ‘chicken wings.’ It costs me almost nothing but it’s worth it because I get more sales and I already carry all the ingredients.”
The rising popularity of fooddelivery apps has spawned two kinds of online eateries. Virtual restaurants, or spinoffs tucked inside real eateries, exist only to deliver hot plates to the growing legions of customers who now depend on the online food courts of UberEats and others. Other restaurateurs — namely Food Network queen Rachael Ray — are opening “ghost kitchens,” where meals are prepared in catering kitchens and food trailers strictly for delivery apps.
Both digital restaurants are poised to usher in the future of food-delivery apps, which are already reshaping the country’s $863 billion restaurant industry, according to an April report by the National Restaurant Association. As more eaters opt for delivery, the online-ordering market is expected to hit $161.74 billion by 2023, up from $34 billion in 2017, according to figures from Adroit Market Research.
Miami chef Michael Schwartz saw the writing on the wall this spring when he called UberEats with the idea to spin off a virtual deli. Dubbed Schwartz’s Genuine Miami Deli, the menu touts overstuffed hot pastrami on Jewish rye and pastrami-by-the-pound. The virtual restaurant launched Oct. 11 and delivers to Miami-area eaters via UberEats, DoorDash and Postmates.
For Schwartz, who fell in love with delis while spending summers on the New Jersey shore, his virtual eatery is both a passion project and a cheap side hustle.
“Opening a restaurant costs millions of dollars in Miami and takes more than a year, so we wanted to stick our toe in,” said Schwartz, who brines and smokes pastrami over seven days at his Miami prep kitchen. “And deli food resonates with people.”
Wi t h v i r t u a l re st a u ra n t s, Schwartz said there’s no need to buy kitchen equipment, sign a lease or hire servers. UberEats charges him a 30% commission per order to host the deli on its app.
“We think of the commission as a delivery cost. There are delivery businesses I could’ve hired instead but that’s more expensive,” Schwartz said. “I don’t even need food inspections because I’m using the same facility to produce the food.”
How virtual restaurants work
UberEats creates virtual eateries based on search-traffic data for popular cuisine. Say searches for “chicken wings” are popular in Coconut Creek. If there’s a pizzeria nearby, UberEats may help that business open a virtual chickenwing joint. In return, the app makes money by charging restaurants commissions of 15 to 30% per order, said Juan Pablo Restrepo, general manager for UberEats Miami.
“We’re creating restaurants to satisfy that search demand, and it’s extra revenue for them,” Restrepo says. “They need us because of consumer trends. We’re seeing more and more appetite for food delivery, and people nowadays don’t have the time go out shopping every night, and restaurants know that.”
UberEats called Jiang a year ago about creating the Boca Wings virtual restaurant inside Sieng House. Now, customers can order delivery from either of his restaurants through apps.
“Eighty percent of my customers won’t come to my restaurant to pick up the order anymore,” Jiang said. “If you don’t do online orders, you’re missing out.”
The state regulates virtual eateries like food trucks, with periodic food-safety inspections by the Florida Department of Business and Professional Regulation. The Florida Department of Agriculture, meanwhile, inspects offsite prep kitchens, spokesman Patrick Fargason said.
Knowing whether you’ve discovered a virtual eatery can be tricky. On UberEats, if the menu
page includes the line, “crafted by [insert brick-and-mortar restaurant],” it’s likely a second business. Restrepo said owning a virtual restaurant requires a separate license, currently $100 plus fees in Florida.
Some examples of South Florida virtual restaurants: Cheesesteak Time, which serves seven types of cheesesteaks, is a side business of Boca Raton’s Rebel House, popping up for UberEats users who live within a few miles of Mizner Park. CocoMex Tacos Grill in Coconut Creek, offering chorizo quesadillas and mixta fajitas, is a Tex Mex-branded offshoot of Caribbean Grill Cuban Restaurant. And Best Stone Crabs, selling claws by the pound along with conch chowder, belongs to Papa Hughies Seafood World in Lighthouse Point.
The rise of ghost kitchens
Ghost kitchens, by contrast, are fully stocked commissary-style kitchens and mobile food trailers, strategically planted near urban hot spots, that pump out deliveryonly orders for UberEats and other apps.
This summer, Restrepo said UberEats struck a deal with Reef Technology to start hosting ghost kitchens on its platform. The company, formerly called ParkJockey
“If you don’t feel like fitting out a $500,000 space, just open with us and there’s no startup capital. It’s a fully turnkey kitchen, and it’s a way for a brand to quickly expand their footprint in a new market without putting significant money down.”
Alan Cohen, Reef Technology’s marketing manager
Global, owns 4,800 parking lots nationwide and rebranded in June with a $1 billion investment from Japanese corporation SoftBank.
Reef works like a restaurant group, renting out food trailers called Reef Kitchens to small restaurant owners. Restaurateurs can then hire cooks or, for a fee, use Reef’s own fleet of workers. Reef Kitchens churn out deliveries from the parking lots Reef already owns, avoiding the need for leasing pricey restaurant spaces, said Alan Cohen, Reef Technology’s marketing manager.
“You save on staff, chefs, servers,” Cohen said. “If you don’t feel like fitting out a $500,000 space, just open with us and there’s no startup capital. It’s a fully turnkey kitchen, and it’s a way for a brand to quickly expand their footprint in a new market without putting significant money down.”
A perfect example of a ghost kitchen is 208 SE Sixth Court in Fort Lauderdale, currently home to three Reef Kitchen trailers operating at least 11 ghost restaurants, including Rachael Ray to Go. At this address – a parking lot across the street from the Broward County Courthouse – cooks working inside the nondescript white food trailers create short-rib bao for the ghost eatery Buns and Bao. Another cook flips grilled hamburgers for American Eclectic Burger, while a third builds a protein bowl of turmeric rice, baba ghanoush and roasted garlic tahini for an eatery called Mediterranean Spice.
Because ghost restaurants live only in apps and not in real-life restaurants, information about them is limited. Records show that Reef Kitchens, which owns many food trailers under the name Vessel FL Operations, LLC, passed its most recent inspections between late August and late September without major violations.
And unlike brick-and-mortar restaurants, there are no Yelp reviews. Only star-ratings, not written customer reviews, are found on UberEats and DoorDash.
Which is fine by Cohen, who acknowledges that ghost restaurant names may be unfamiliar – and even generic – to customers scrolling through food-delivery apps.
“It’s people saying, ‘4.7 out of 5 stars is good enough for me,’ ” Cohen said. “It’s less about knowing brands than looking for good food at a good price that can get to your stomach in 20 to 30 minutes. As Reef Kitchens grow, we’ll be associated with quality, but for now we’re selling proximity.”
Restaurateur Alp Franko depends on urban traffic to survive. His ghost kitchen, the Local Culinary, stacks up dozens of hamburgers and tacos for delivery at a Miami commissary-style kitchen. At his 1,300-square-foot hub, cooks prepare to-go meals for eight restaurant brands, such as El
Loco Taco, the Chef Burger and Mama Roma.
In six months Franko’s kitchen, planted in a dense but lower-cost wedge of downtown, has managed to lure enough delivery customers to merit a big expansion. In November and December, t h re e mo re L o c a l C u l i n a r y kitchens will rise in Boca Raton, Aventura and Coral Gables – this time with 20 restaurant brands, he said.
“It’s challenging to reach new customers to order your burger, but my strategy is transparency,” Franko said. “We’ve got a big marketing budget. Our Instagram shows our chef cutting and preparing food. We’re not hiding inside an app. That’s the best way for customers to trust us.”
Still, the rapid rollout of virtual and ghost kitchens across South Florida has not been without snafus.
On the Let’s Eat, South Florida Facebook group run by the Sun Sentinel, commenter Teri Mujica, a Postmates driver, reported she had trouble finding one Fort Lauderdale ghost kitchen in a darkened parking lot at night, causing delivery delays.
“Now that I know the location, I don’t accept the pick-up,” Mujica wrote. “It’s just too sketchy for me.”
Asked about delivery woes, UberEats spokesman Javi Correoso acknowledged that some drivers have gotten lost searching for ghost kitchens but stressed, “There have been very, very few incidents.” In these cases, he said UberEats reaches out to partner restaurants to resolve delivery problems.
“The fact is, once the drivers have been there, they’re not going to miss the location again,” Correoso said. “We try to make the pickup process as seamless as possible for both parties.”
That did not deter TV chef Rachael Ray, who peeled off recipes from her latest cookbook, “Rachael Ray 50: Memories and Meals from a Sweet and Savory Life,” to create her experimental ghost kitchen Rachael Ray to Go. It launched Oct. 17 on UberEats and delivers to 13 cities including Miami and Fort Lauderdale.
“I always wanted to open my own restaurant, but every time I looked at a property suddenly the terms or the economy would change,” Ray said in a phone interview.
Rachael Ray To Go, remaining open until year’s end, pops up on delivery apps only for Miami and Fort Lauderdale customers living near one of eight Reef Kitchens. Ray said she liked the deal because Reef shouldered the busy work: They took her recipes, hired cooks to prep meals in the ghost kitchens and hitched up with UberEats to handle delivery.
Ray said customers can order 11 items from the cookbook, including pasta dishes such as Bolognese with egg tagliatelle and fettuccine alla vodka; heartier cheeseburgers and fried-chicken sandwiches; and even Sicilian orange and fennel salad splashed in extra-virgin olive oil (that’s EVOO to Ray fans). She tapped chef Andrew Kaplan, vice president of Ray’s culinary operations, to pick dishes that “would travel best to customer’s doors,” she said.
Ray said 250 random orders will receive a free copy of her cookbook. “I’m really hoping this goes well so UberEats expands it,” Ray said. “I would love to have the option to add more seasonal dishes like I do every week for the daytime show and magazine.”
Smaller entrepreneurs also see value in the ghost kitchen trend. After the demise of her hip culinary hub Wynwood Yard in May, founder Della Heiman went scouring in Miami for a permanent home for her food truck, Della Bowls. She visited 100 restaurant storefronts and all were too expensive.
So Heiman set up her vegetarian build-your-own-bowl eatery in a Reef Kitchen. The ghost kitchen launched Sept. 23 and delivers to Miami, Aventura and Fort Lauderdale.
“The way Reef has cornered the ghost kitchen market so fast is impressive,” Heiman said. “Their model is the only one inexpensive enough to let us expand to national markets.”