Back in late 2008 — in the midst of the Great Financial Crisis — Travis Kalanick had a brilliant idea.
Lower the cost of transportation, for everyone, by democratizing the taxi industry so that anyone with a car could provide a ride for anyone needing to go somewhere.
And so, the concept of ride-sharing was born.
Over the next decade, Kalanick’s company — Uber (NYSE:UBER) — went from idea to multi-billion-dollar disruptor of the transportation industry.
Today — amid another enormous financial crisis — Kalanick has, of course, come up with another brilliant idea.
Lower the cost of doing business, for all restaurant owners, by creating a new class of super-small, delivery-only restaurants that eliminate everything but the kitchen.
And so, the concept of ghost kitchens was born — a concept that has taken off amid the Covid-19 pandemic as more and more consumers have leaned into delivery channels, and as more and more restaurant owners have had to tighten their budgets and close stores.
Over the past year, Kalanick’s new company — Cloud Kitchen — has raised more than $400 million to help turn this idea into a ubiquitous reality.
Make no mistake. That’s exactly what will happen.
Super-small, delivery-only ghost kitchens represent the future of the fast-casual restaurant industry, because they:
- Better align with shifting demand (U.S. meal delivery sales have risen ~300% since 2018)
- Dramatically lower recurring costs (lower labor costs, lower rent costs, lower decoration costs, etc)
- Provide significantly more flexibility (traditional restaurant locations operate on 5+ year leases, whereas ghost kitchens are typically rented out monthly)
- Allow for more rapid, cost-effective geographic expansion (traditional restaurants cost upwards of $250,000 to open, and such openings take several months; ghost kitchens cost about $20,000 to open and open in less than 90 days)
Thus, over the next decade, ghost kitchens are going to disrupt the several hundred-billion-dollar global food industry, much like ride-sharing has disrupted the several hundred-billion-dollar global transportation industry over the past decade.
One way to play this emerging fast-food megatrend is by buying a micro-cap fast food stock that is leveraging ghost kitchens to execute what is shaping up to be an enormously profitable turnaround.
Using Ghost Kitchens to Turn into a Delivery-Focused Health Food Brand
A tiny fast-food company that was on the brink of extinction last year, $16 million Muscle Maker Grill (NASDAQ:GRIL) appears to be on the cusp of a huge ghost-kitchen-powered turnaround that could turn the stock into a multi-bagger during the 2020s.
Here’s the story.
Muscle Maker Grill is one of those health-conscious fast-food chains that is trying to win by selling affordable, healthy foods in an on-the-go format, with the company’s core offerings being protein-rich burgers, sandwiches, wraps, and shakes.
Cool concept. But management hasn’t done a great job of executing over the past few years.
The menu and brand have grown stale. The food quality has dropped. The stores aren’t up-to-date. Revenues — which had been booming