Dive Brief:

• Famous Dave’s of America is currently scouting locations in California and Minneapolis to launch virtual kitchens that would be dedicated solely to catering and delivery, with plans to open in December, COO Geovannie Concepcion told Nation's Restaurant News. 
• Famous Dave's catering business grew by 2.9% year-over-year in its third quarter, according to a company earnings call. 
• The chain has also introduced four new menu items in its turnaround bid led by CEO Jeff Crivello. Crivello told NRN that this is the first time the chain has had “a menu shift of this magnitude.” 

Dive Insight:

With plans to open ghost kitchens as early as next month, Famous Dave’s is showing signs of accelerating its catering and delivery businesses — and for good reason. Casual dining concepts have struggled for the past decade, unable to keep up with the demands for speed and convenience offered by quick-service and fast casual brands. Famous Dave’s has not been immune to these trends. But Crivello, named CEO last year, has vowed to turn the “tired” chain around. 

One way to do that is to focus on off-premise channels, particularly delivery ,which levels the playing field for convenience across the industry. Off-premise sales overall are estimated to account for 37% of total restaurant sales, or $209 billion, this year, according to the 2018 Takeout, Delivery and Catering Study conducted by CHD Expert. That number is expected to jump to nearly 50% by 2023.  

This means restaurants have — or will have — more volume coming from more channels. To prepare for this continued delivery and catering growth, some restaurant companies are adding ghost kitchens or fulfillment-type units to ease the operational pressure on traditional in-store and drive-thru business. Chick-fil-A is perhaps the biggest example of this, recently opening two such prototypes in the Louisville and Nashville markets. “Our restaurants are incredibly busy and our hope is that this new concept will provide both capacity and complexity relief,” Luke Pipkin, Chick-fil-A’s senior platform lead of innovation, told Forbes. 

Famous Dave’s previously explored the idea of a partnership with Kitchen United in California, but the collaboration didn’t happen. Kitchen United, which recently secured funding from Alphabet’s venture capital arm Google Ventures, seems to be targeting newer and smaller concepts, but Famous Dave’s has the brand equity and footprint to support its own model. It’s expected that these types of fulfillment units will continue to grow — not to replace traditional restaurants, but rather to complement them while supporting higher delivery demands, and, if the December target date comes to fruition, Famous Dave's will be well positioned to leverage that growth as it continues its turnaround.