• by Steve Ellwanger , January 27, 2022

The menu of ghost kitchen options for restaurant brands big and small keeps expanding.

Family dining chain Denny’s is about to embark on a partnership with virtual-restaurant operator Reef Technology, with the goal of expanding its presence in dense metropolitan locations.

On the lower end of the food chain, virtual restaurant company Virturant and tech provider Lunchbox Technologies will launch a smartphone app called Ghost Eats that will enable people to obtain meals from a variety of restaurants in a single order.

Ghost or virtual kitchens are cooking facilities that produce food only for delivery and don’t have eat-in or customer-facing services.

Amid the pandemic, Denny’s entered the ghost kitchen space last year with the launch of The Burger Den and The Meltdown, to augment its Denny’s On Demand off-premises offering.

For delivery, The Burger Den uses DoorDash, Postmates, Uber Eats and Waitr, while The Meltdown relies on DoorDash.

In a virtual presentation on Jan. 11 at the annual ICR Conference, Denny’s executives said The Burger Den and The Meltdown represent 3% of sales, which they described as incremental in nature.

Among other attributes, the new brands help to amortize labor costs at Denny’s restaurants that prepare the virtual brands’ food for delivery.

“Virtual brand transactions leverage underutilized dinner and late-night dayparts and contribute to a high degree of incremental margins,” said CEO John Miller.

“In fact, approximately 72% of transactions from The Burger Den and approximately 60% of transactions from The Meltdown occur during the dinner and late-night dayparts compared to approximately 43% of transactions for the Denny’s base brand," Miller added.

“Not only are we leveraging underutilized dayparts, these transactions also slightly over ndex during the weekdays compared to the Denny’s base brand—delivering additional opportunity to leverage underutilized labor.”

With more than 8,000 U.S. locations, Reef operates virtual kitchens for various restaurant brands. It uses its own delivery personnel along with third-party services.

In announcing the partnership with Reef, Denny’s said it will help the chain expand “in key, under-penetrated metropolitan markets with high consumer demand for delivery” and be “a key player in Reef’s platform for breakfast offerings.”

Launched in 2019, Virturant represents more than 25 virtual restaurant brands, among them The French Toastery, Sunrise Sandwich Co., Sandwich Boss, Pasta Envy and Hell's Chicken.

Virturant positions the brands within the apps of third-party delivery platforms, whose drivers fulfill the orders.

"Our new Ghost Eats marketplace will give hungry diners access to a wider variety of cuisines and virtual brands to choose from in a single order," Virturant chief revenue officer John Young said yesterday when announcing the partnership.

The app will launch in the second half of this year.