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10/29/2021

Host Kitchen Opportunities Deliver Impressive Revenue for Hotels and Restaurants

However, brands must first ensure compatibility.
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a person cooking in a kitchen preparing food

During the pandemic, some restaurant and hotel operators have managed to offset what would have been devastating revenue loss by increasing the return from their operations, primarily through the better utilization of their kitchens.

Operators are finding major success by enrolling in host kitchen partnerships, where they leverage their kitchen facilities to serve another restaurant's menu exclusively online.  Host kitchens boomed in popularity over the last year and are finally creating a permanent solution to the age-old problem of restaurant capital inefficiency by using the rapidly growing power of e-commerce.  Euromonitor estimates the restaurant delivery industry could be worth more than $1 trillion in revenue globally by 2030.

The benefits of the host kitchen model have not been limited to the traditional restaurant, either.  Many hotel kitchens are oversized, and at the same time, underutilized, so they are ideal candidates to host additional brands.

Host Kitchen Matching

While appropriately matching host kitchens with additional restaurant brands can be complicated and require deep analysis to ensure compatibility, it is absolutely critical.  Ideal host kitchens tend to be those that can support a handful of additional menu items within their existing layout, equipment package and team structure.  With the National Restaurant Association reporting 78% of restaurants experiencing a decline in dine-in business as of September 2021, there is an even more pressing need to ensure that the “heart of the house” is maximizing its off-premises revenue opportunities.

Beyond the Pandemic

Host kitchens are a welcome development for restaurants and hotels looking to recover from pandemic losses, a solution that has proven fundamental to many hosts’ permanent revenue strategy.  Selling multiple brands out of a single property is a sensible risk mitigation strategy for the majority of hotel restaurants.  In fact, it’s difficult to think how restaurants can survive relying on a single concept for dine-in only, in our new business environment.

As the demand for food delivery continues to increase, the host kitchen model creates even greater organic revenue growth opportunities for restauranteurs. Operators facing rent and labor challenges can leverage incremental revenue to improve fundamentals such as sales-per-square-foot and sales-to-labor-hour. An astute operator with an eye towards the future can use opportunities for off-premises revenue as a way to balance the ROI on a current or future investment.

Host kitchens are tech-smart and nimble, qualities operators and consumers both appreciate.  For many restaurant brands, host kitchens are the most realistic option for rapid future growth given the rising price of real estate, ongoing supply chain and labor disruptions, and the high cost of constructing brick-and-mortar locations.  Host kitchens offer a superior and practical avenue for brands to reach additional customers in new geographies quickly and profitably.

The host kitchen strategy gained tremendous validation during the pandemic. Host kitchen partnerships present ample room for streamlining, growth, and profit for restaurants and hotels looking to the dawn of a new future in foodservice.

ABOUT THE AUTHOR

Rishi Nigam is a Georgia native with over 20 years of hospitality and retail experience.  Rishi is the CEO and co-founder of Franklin Junction, an innovative global e-commerce platform that pioneered the Host Kitchen® model, allowing any kitchen to optimize excess capacity in existing infrastructure by serving as a host for other proven restaurant brands.

Prior to the launch of Franklin Junction in 2020, Rishi helmed the turnaround efforts for an award-winning airport concessions firm as they achieved record profitability and completed a successful management-led buyout of the founders.  The foundation of Rishi’s career comes from non-traditional hospitality operations.  Rishi led the rebuilding of the concessions, hospitality, and retail lines of business as a Vice President with NASCAR, where he also contributed to business development and corporate partnership efforts in securing new and innovative revenue streams.  Rishi’s roots in sports and entertainment began with spearheading the execution of premier large-scale events at world-famous venues with Aramark.  During his career, Rishi has designed and executed innovative and acclaimed concepts through renovations, new builds, and repositioning of assets totaling over $1 billion in construction.

Rishi completed his BS in Hospitality and Tourism management from Purdue University and earned an MBA in Finance and Entrepreneurship from the Kelley School of Business at Indiana University.  He resides in Duluth, Georgia with his wife and serves on the boards of Make-A-Wish Georgia and TEAM Coalition.