The Reason Virtual Kitchens Like MrBeast Burger Might Not Be Around Long

MrBeast Burger, the launch of which we at Mashed covered in December, is very much a brand for the times. 300 locations (which, as The New York Times noted, were ghost kitchens and not brick and mortar MrBeast Burger locations), sprang onto delivery apps everywhere overnight. However, though some like Eater paint ghost kitchens as the future of the industry, the ghost kitchen model (and therefore MrBeast Burger) may not prove tenable in the long term.

The crux of the issue, as Dan Fleischmann, the vice president of the restaurant-focused venture capital firm Kitchen Fund, told CNBC, is that a ghost kitchen model of business won't be able to survive the costs required to operate it. First, there's the loss of revenue from in-house clients. Then, there's the money that delivery apps siphon from the bill, a convenience charge that can consume 15 to 30 percent of the order. Already, any profits made by the kitchen have dropped from anywhere between a third to a half. And, as BTIG analyst Peter Saleh noted in a video conference quoted by CNBC, with such a demand for ghost kitchens, the price of a small kitchen has easily reached that of a restaurant with a dining area, adding yet another cost on anyone tempted by the model. 

To that end, it's possible that once the pandemic's displacement of gathered eating has ended, kitchens that fuel ghost kitchens, like the ones on which MrBeast Burger relies, will revert to restaurants.

Ghost kitchens could give way to unceasing chains

Looking towards a post-pandemic environment, some worry that the result will be chain restaurants unending. 

Bloomberg paints a landscape in which the surviving restaurants pounce upon rental property owners ready to lease their empty locations at a low price. The restaurants that are likely to do this, the piece notes, are Chipotle, which has announced an intention to open 200 locations this year. The bleakness ends by suggesting full-service restaurants may rebound somewhat once a large amount of people have received the COVID-19 vaccine, but the market still won't see its 2019 highs anytime soon. Fortunately, some rebound is likely to occur, as even in the Eater piece there's an acknowledgement that only certain kinds of food works for a ghost kitchen. "It's a lot of chicken wings, a lot of grain bowls, and sandwiches and pastas, things that travel well," Nikki Freihofer, a senior strategist for the Culinary Edge explained.

MrBeast Burger, as The Food XP reported on March 12, is expanding at a similar rate as Chipotle, with 120 new locations added to the original 300; three of them were in Canada, marking an international ambition. Of course, these too are ghost kitchens taking part in a branded partnership. However, as the expressed intention seems to be to continue the brand's expansion, there's no reason to suppose that MrBeast wouldn't pivot his brand towards actual stores if it proves to be more economically viable.