'Ghost kitchens' and 'virtual food halls' might be the next frontier in Twin Cities dining

Sandwiches had been on Carrie McCabe-Johnston's mind for two years.

Ever since a family vacation to Florence, Italy, where labyrinth stone streets teem with purveyors of freshly baked bread stuffed with salami or roasted porchetta, she'd been thinking about opening a Florence-style sandwich shop back home.

The founder and chef of Bonafide Hospitality, which includes Nightingale in Minneapolis, McCabe-Johnston was searching for a place for the shop last fall, but put the idea on hold when she didn't find the right fit.

Then came COVID-19, and as her other dining rooms and bars temporarily closed to customers, sandwiches came to mind once again. Only this time, finding a space wasn't necessary.

McCabe-Johnston launched Lake City Sandwiches last month as an evening-only, delivery-only business operating out of Nightingale's kitchen. "It's our little ghost kitchen," she said. "Complete with its own branding."

By starting a new restaurant within a restaurant, albeit one without seats and servers, McCabe-Johnston has latched on to a rising trend of using pre-existing businesses to house new takeout ventures.

With virtual happy hours and virtual meetings now the norm, it was only a matter of time before virtual restaurants took off, too. Call them ghost kitchens, cloud kitchens or dark kitchens — basically any kitchen that's already in motion can be leveraged to power more than one food business. Especially an underused kitchen, as the coronavirus keeps would-be customers home.

In the Twin Cities, some restaurateurs are going virtual as a way of branching into different cuisines, testing future brick-and-mortar ideas, or just keeping the lights on during a tumultuous year.

"The whole point of us doing it right now is for an additional stream of revenue," McCabe-Johnston said. "Lake City Sandwiches is going to help what could be a tough winter for Nightingale."

New brands a lifeline

It's been about a month since takeout-only Moonflower Pizza opened in the alley behind breakfast-and-lunch-spot The French Hen Cafe in St. Paul's Cathedral Hill neighborhood. "And on a lot of days now, we're [earning] with both services what we would have done before COVID," said chef and owner Madeline Rivard. "Which is almost heartbreaking, because it takes twice as long."

Still, the new evening-only pizza business covers the morning restaurant's overhead.

"It's giving us somewhat of a lifeline here," Rivard said.

Though the coronavirus pandemic "forced our hand," said Rivard, it's not the only factor that has led restaurants to diversify their offerings.

The restaurant business has notoriously slim profit margins and high operating costs, and many restaurants were already struggling before the pandemic. Enter the side hustle.

Last fall, Geoff Alexander, president and CEO of the Chicago chain Wow Bao, had a plan to help restaurants bring in extra cash while raising the profile of the 17-year-old brand. Wow Bao would ship its Chinese-style bao buns and dumplings and the necessary steaming equipment to existing restaurants; they would prepare the food and send it out the door via delivery apps. The goal is for restaurant operators to bring in approximately $100,000 a year, and keep 40% of the profits.

Wow Bao was in only a handful of restaurants before the pandemic. Now, it's in 100 locations around the country and available locally through various delivery apps.

"We found a way to help restaurants pay for their manager, or pay rent, keep staff. We've added to the supply chain, we've helped save jobs — from the delivery drivers all the way through to the farmers and butchers who create food for us," Alexander said. "We've taken on this responsibility to help the industry survive."

Another reason restaurants are diversifying: Food delivery was on the rise well before it became a matter of safety.

Almost eight in 10 restaurant customers order delivery at least once a month, according to a 2019 National Restaurant Association report, many placed on third-party delivery apps such as Door Dash or Bite Squad.

"Pre-COVID, there was a lot of growth in food delivery, but a lot of restaurants hadn't cracked it," said Robert Earl, founder of Virtual Dining Concepts, which operates the delivery-only Wing Squad from the Minneapolis kitchen of another of Earl's businesses, Buca di Beppo.

Now, with even more demand for food to be brought to customers' doors, "delivery is the buzz word," Earl said.

In February, Wing Squad started delivering in Minneapolis, and in other cities, by taking up residency in the kitchens of Earl Enterprises' many chains. "Then, the light bulb went off for me," Earl said, and he began partnering with other restaurants to make Wing Squad's chicken wings in their kitchens, too. Now, his 17 virtual brands are operating in "hundreds" of locations across the country.

"There's a whole new industry there," Earl said. "It's beneficial to everyone."

But why create new brands, when restaurants could simply add pizza, wings or sandwiches to an existing menu?

For some, it's about preserving the image of the original business. "Nothing about The French Hen really fits into a pizza place," Rivard said.

For others, it's about offering something new to catch customers' attention on delivery apps.

Famous Dave's, the Minnetonka-headquartered national barbecue chain, added fried chicken sandwiches and wings to its menu, while also spinning off a virtual concept, Hayward's Hen House, last month.

A family that orders Famous Dave's one day might not want to order there again the next day, "but it would be perfectly OK to order Hayward's Hen House," explained Famous Dave's CEO Jeff Crivello. "It's just to pick up a wider universe of guests."

Importance of familiarity

Despite the potential in adding virtual brands, some restaurateurs may have been hesitant to embrace the "ghost kitchen" — a kitchen without a restaurant. Blame the spooky name.

"At first, a lot of people wanted it to be this anonymous thing, almost like a speakeasy. You didn't know where it was, couldn't find it unless there was a secret code," said Luke Shimp, who owns Red Cow and Red Rabbit restaurants in Minneapolis and St. Paul.

Now, the ghost kitchen is in.

Shimp collaborated with the national distributor US Foods to put together the "Ghost Kitchen Playbook" as a resource for restaurants. That partnership led to Kenwood Food & Beverage, Shimp's new "virtual food hall," which opened Sept. 30. Four takeout-only concepts are utilizing the otherwise dormant kitchen in Red Cow's Uptown location; three of those concepts are new for Shimp, who views the food hall as an "incubator" to test the brands, with the goal of turning them into stand-alone brick-and-mortar locations.

Chicken Republic specializes in fried chicken, Venice Salads & Bowls has just that, and Shakee Shakee offers milkshakes. All are available alongside Red Cow's burgers, a known quantity.

It was important to Shimp that customers link the new brands to the established Red Cow to take the mystery out of the ghost kitchen.

"I realized people want to know who is behind the food," he said. "Even though it's delivery only, we wanted people to know it's in your backyard, and it's coming from us."

At CHX, a walk-up-only window (delivery is coming soon) operating from the kitchen of the Pourhouse in Uptown Minneapolis, putting a local face on a business that could one day exist "everywhere" was important to co-owner Frederick Huballa.

Biscuits are prepared by pastry chef Shawn McKenzie of Penny's Coffee and they're served drizzled with Skinny Jake's Fat Honey, both well-known names in the Twin Cities food world.

Since the window opened in July, lines have been growing for CHX's chicken strips, crinkle fries and limeade. And Huballa has ideas for several more brands to share underutilized kitchens — all with a local spin.

"I think that the ghost kitchens that people are going to really love and have affinity for are the ones that act as much like a restaurant as possible," Huballa said. "It doesn't seem like a ghost. There's a real life to it."

@SharynJackson