How to Save Restaurants? Meet "the Airbnb and Match.com of Food"
It's called Franklin Junction, it's rethinking what a restaurant kitchen is for.
Let's say you go onto Grubhub, see that there's a new franchise in town called The Captain's Boil, and order a shrimp basket for delivery. Score! But here's what you don't see: Your lunch was actually made inside a Nathan's Famous.
This is the magic of Franklin Junction, which bills itself as a mixture of Airbnb and Match.com — but for restaurants. The platform finds kitchens with extra capacity and matches them with brands that want to expand into new locations. It was conceived by Aziz Hashim, founder and managing partner of NRD Capital, which owns several restaurant brands including The Captain's Boil and Fuzzy's Taco Shop. Hashim originally intended Franklin Junction for his own stores — but once COVID hit, he opened it up to any brand.
Today, CEO Rishi Nigam says, the concept has broadened even further. "We have expanded beyond restaurants to include grocery partners and hotels," Nigam says. "We have proved the concept that any qualified operator with a licensed kitchen can be on our platform. Hotels had a hard time with COVID. Grocery stores did well, but ended up with extra kitchen capacity because people were cooking at home. If there are no hot bar customers, what do you do with that kitchen space?"
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Here, Hashim and Nigam discuss the project and what's changed since 2020.
Why did you create Franklin Junction?
Hashim: The world has too many restaurants and not enough people. We've seen the rise of delivery and other forms of food service, like food courts in Whole Foods, and more and more restaurants. Yet the demand for restaurants stays constant, or even goes down. If you look at net sales over the past few years, you don't see a lot of growth.
How is Franklin Junction a solution?
Hashim: Restaurants are very expensive to build. There's a natural tendency to ask, "How can I raise sales?" One way is through discounting, but this is ridiculous, because all your expenses have gone up — labor, insurance, rent. Then there's product innovation. Can you come up with new products people want to buy? These strategies have been tried and tried, and they're difficult.
I've got restaurants that were operating at 80% or 85% capacity [before COVID-19]. In the retail business, it's all at the margins. If you fill up that last 15% or 20%, you make a lot of money. All your fixed costs are covered already. So, can I sell food for other people, too?
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That makes sense, but it's a big change from how restaurants operate. Do you think COVID made restaurateurs more open to this change?
Hashim: Significantly. During the heaviest time, with dine-in basically closed, a lot of restaurants were down 50%, 60%, or 70%. The need for sales was tremendous. People needed revenue, and they needed it today.
Nigam: I think what's been interesting is that delivery — if you live in New York, San Francisco, Chicago — you could get anything you wanted delivered. Now, the rest of America is seeing that. People who live 30 miles away from a city can get anything they want, whether it's groceries or something else.
You're talking about a host kitchen concept, which is different from a ghost kitchen that involves building a new brick-and-mortar space.Nigam: We own that term now: Any existing restaurant can host another concept. We have another trademarked term, cloud concepts, which means you're not building brick-and-mortar. We're putting you in the cloud, to be fulfilled by one of our host kitchens.
So now, a physical restaurant can get a larger share of demand — because it's offering more options?
Hashim: Exactly. We like to try new stuff, but in the past, for you and me to try new stuff, some poor entrepreneur had to spend $2 million to build a restaurant. Then, if you and I decide we don't like that food, that guy is out of business and he's lost his life savings.
The first thing people tell you is the old adage "You've got to spend money to make money." We're going to spend no money, and we're going to make money. We've got extra kitchen capacity. Let's go sell some other people's stuff, you know?