The hospitality industry has experienced one of the largest business shifts following the COVID-19 pandemic. Known for generally operating in a traditional sense, businesses were shaken up between the forced closures with limited federal and state-level aid to fluctuating safety guidelines imposed by local authorities. To circumvent the unknowns in the industry, came the rise of independent restaurants from top chefs around the globe and creative take-out packages with one goal in mind: Keep the lights on. And above all, the hospitality industry was forced to make a drastic technological shift, leaving outdated and analog systems in the past.
Two years later, we’re seeing fast and fine food industries bounce back, but with a refreshed digital outlook that has forged innovative ways to not only regain what was lost, but to create new opportunities and diversify revenue streams. We’ve seen this with new strategic partnerships among big name celebrities aligning with major fast-food chains, brick-and-mortar restaurants leveraging under-utilized kitchen spaces, and even integrations with tech platforms to scale and launch dark kitchen brands.
Most notably, though, is the industry’s massive rise in new fandom through social media. From viral food sensations to celebrity-driven food concepts, like Chain, content creators big and small connected through their phones to share their love for good food. It’s the rebirth of America’s restaurant industry and it’s here to stay.
At the forefront of this digital wave was the rush of foodies swarming fast food lines to get the meal they just saw advertised across Instagram and TikTok. From entertainment industry deals—think Travis Scott and McDonald’s, Megan Thee Stallion and Popeyes Louisiana Chicken, or even Mariah Carey’s own Mariah’s Cookies — to leveraging some of the biggest names on TikTok—Charli D’Amelio and Dunkin Donuts—fast-food chains turned to big name celebrities to increase traffic, both online and in-person.
Taking the internet by storm, these specialty meals were seen on all major social media platforms garnering the attention of one of the most mature digital audiences today - Gen-Zers. According to a study by TheStreet.com, Millennials and Gen-Zers are the main users of third party delivery providers – DoorDash, Grubhub, Postmates, and Uber Eats – where all orders are placed digitally. In fact, studies show that up to 54% of customers aged 18-34 are a monthly active user of at least one of the Big 4 delivery platforms. As a result, the global fast food industry generated $797.7 billion in revenue throughout 2021, showing just how powerful kitchen real estate can be when utilized to its full potential.
Brick-and-mortar restaurants adapted quicker than any other food establishment in the last two years. Whether it was opening their doors to share supplies with those in need or expanding beyond the traditional menu to create more variety, restaurants responded quickly. While many may not be recognized, these innovative and agile kitchens have been at the forefront of expanding their underutilized kitchen for what’s now known as last-mile or local hub delivery.
Through data collection and analysis, restaurant brands around the country joined forces to expand offerings and accessibility in the communities that are craving them most. Offering digital ordering options and fast-delivery service, these restaurants are populating well-known kitchens to offer expansive variety at affordable costs. A perfect example of this can be seen in the work digital restaurant brand, C3, has implemented with brick-and-mortar restaurants, TGI Fridays, and Chowly alongside concepts, like Chain, that opened the reach of signature dishes from California Pizza Kitchen and Chili’s to an exclusive menu.
With a digital first approach, dark kitchen brands have popped up around the country with limited-edition menus, affordable pricing, and fast delivery options. Accessible through all third-party delivery apps - DoorDash, UberEats, Postmates, C3’s Go by Citizens - these new-wave restaurant brands have given significant rise amongst the Gen-Z and Millennial audiences, creating a $10 billion market opportunity in 2021 alone. Without traditional storefronts, these digital restaurant brands have captured customer attention with enticing photographs and Instagram-able presentations bringing the traditional dining experience to kitchen tables. Including a who’s who of top-tier chefs alongside some of their most notable dishes, brands, like Top Round Road Beef and Sa’Moto, have created fandom through this business model.
But who’s cooking if these kitchens are “dark?” Here’s where the story comes full circle.
The robust real estate - between brick-and-mortar and hotel kitchens - has been tapped by several brands to cook up the food today’s consumers desire most. At the height of the pandemic, hotel kitchens alone were experiencing a lull in servicing, operating at a mere 15-20% efficiency. Combine this with the lull of foot traffic to brick-and-mortar restaurants, an opportunity was created to utilize furloughed staff and unused kitchen space to build a vast cooking network with extraordinary potential.
As a result, these restaurants are now providing top-notch cuisine to local communities in record time ensuring freshness is rarely compromised. This network expands from house-hold restaurants including Wendy’s, Applebee’s, Chick-fil-A to notable hotel chains including Westin, Highgate and Graduate.
As the pandemic takes yet another turn and patron volume increases again, these dark kitchens are expanding their serviceability. From in-room dining and on-site catering services at hotels to a growing delivery range, the dark kitchen network has forever impacted the hospitality industry we see today.
And this is just the beginning…
As we continue to see the pandemic take shape on this industry, digitally enabled brands will have to rely once again on their brick-and-mortar footprint.
With more than a decade of diverse experience and a drive to revolutionize the restaurant hospitality industry, Pasha Mehranserves as Chief Strategy Officer of C3 by sbe,the fast growing food tech platform. Following his previous position as the Head of Dark Kitchens for Uber Eats, creating a $1T market opportunity by 2030, Mehran leads C3's strategic mission to become a household name. In his role, he will oversee joint ventures with celebrity and chef-driven restaurant brands, top digital creators, culinary markets around the world, and hotel partners with the goal of expanding the brand’s footprint across Gen Z and Millennial audiences. Prior to these positions, Mehran served as the Vice President of Strategy & Business Development for Uproxx Media in addition to leading channel partnerships at Google.