Smashburger's president explains why the company is shunning ghost kitchen and instead focusing on prime real estate

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Smashburger's president explains why the company is shunning ghost kitchen and instead focusing on prime real estate
Smashburger
  • Smashburger plans to open more than 40 new restaurants in 2021.
  • This includes more drive-thru options – but the company has no plans to open ghost kitchens.
  • It will "aggressively" open new restaurants in busy suburban areas of Chicago, New York, and Washington DC.

Fast-casual chain Smashburger is planning to utilize a range of delivery aggregators, new technology, and busy suburban locations to scale up its operations and reach new customer segments. Ghost kitchens, the company said, are not part of its current growth plan, though.

Smashburger will open more than 40 new restaurants in 2021. Although the chain has focused on a dine-in model in the past across its more than 250 corporate and franchised restaurants worldwide, it plans to pivot to offer more takeout and collection services, a trend accelerated by the pandemic.

The focus is on replicating a dine-in style experience even for customers who choose to dine at home, Carl Bachmann, Smashburger's president, told Insider.

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Smashburger's president explains why the company is shunning ghost kitchen and instead focusing on prime real estate
The restaurants will offer a range of collection and delivery options as well as traditional dine-in.Smashburger

The chain aims to "create comfort in uncomfortable times," he added.

More and more customers are eating at home during the pandemic, and not always because of government-mandated restaurant closures. Smashburger now generates around 2% of its revenues from dine-in service, Bachmann said. Before the pandemic, this was 60%.

Digital and call-in orders have increased more than five-fold, he added.

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Though the new restaurants were planned before the pandemic, they'll offer customers contactless ways to collect food. This includes using food lockers, which the company calls "cubbies," to keep food hot until customers collect their meals. These are also in the works for other fast-food chains including KFC and Burger King.

Smashburger's president explains why the company is shunning ghost kitchen and instead focusing on prime real estate
Customers will be able to collect their orders from heated food lockers.Smashburger

But despite the push for drive-thru and collection options, Smashburger is currently shunning the idea of opening designated ghost kitchens, which have no dine-in areas and cook food solely for take-out and delivery.

Instead, the company can opt to build smaller restaurants in areas where orders are heavily digital, take-out, or delivery, Bachmann said. Most ghost kitchens in the US are located in industrial areas away from where customers actually live, he said, which means that take-out orders have to travel too long which affects their quality.

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But in the future, the chain may consider ghost kitchens in bigger cities or dense residential areas where the population or foot traffic is really strong, he said.

The company also plans to assess its real estate portfolio and focusing on "aggressively" opening new stores in busy suburban areas of Brooklyn, Chicago, New York, and Washington DC.

The new restaurants won't only have enhanced collection options. The dine-in experience is getting a make-over, too.

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This includes open kitchens, so customers can see their orders being cooked, and restaurant interiors that are specific to the city.

Smashburger's president explains why the company is shunning ghost kitchen and instead focusing on prime real estate
The restaurants will have open kitchens.Smashburger

While some chains are seeing orders surge thanks to delivery services aggregators like Uber Eats, DoorDash, and Postmates, Smashburger is expanding sales through its own digital proprietary channels while also using multiple aggregators to "cast a wide net," Bachmann said. This means that the chain can reach new customer bases through the aggregators, he said, while noting that margins are higher when it sells through its own channels.

To drive increased sales, Smashburger launched a new website and app during the pandemic, Bachmann said. Through its app, the chain can use AI and geotargeting to track customers' locations so that their orders are ready as they arrive for collection, and produce personalized recommendations based on their order history.

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The chain, which launched in 2007, was acquired by Filipino fast-food giant Jollibee Foods Corporation, in 2018.

Smashburger has a mixture of around 116 corporate and 145 franchise restaurants. Currently, the chain has some franchise restaurants in international markets, but it plans to scale this up from the end of 2021, and is considering South and Central America, Europe, the Middle East, and parts of Asia, Bachmann told Insider.

Other fast-food chains are also redesigning their restaurants as demand for drive-thru and digital ordering continues to boom during the coronavirus pandemic. Shake Shack is opening its first-ever drive-thru in Orlando, Florida, later this year, and plans to debut new delivery and collection methods, too.

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Burger King is also rolling out new-look stores that will open in Miami, Latin America, and the Caribbean in 2021. The new designs provide multiple ordering and delivery options for customers. Customers can collect from a food locker or have your order delivered to your car, either by a person or a conveyor belt.

And Mcdonald's is revamping its drive-thru service to make it quicker and more convenient after 70% of its sales in its top markets between March and November were drive-thru orders.

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