Dive Brief:

• Famous Dave's is planning to test ghost restaurants that will serve a separate menu of fried chicken and burgers in Michigan and California, CEO Jeff Crivello told Nation's Restaurant News.
• The menu will be posted on Grubhub under a new name, but meals will be made inside a Famous Dave's kitchen.
• The casual dining chain also plans to run a pilot of virtual kitchens that have small footprints and run off-premise and catering operations for Famous Dave's.

Dive Insight:

Ghost restaurants and virtual kitchens are increasingly gaining popularity among restaurants, particularly in New York, to try new menu items and concepts without having to drastically change operations or open new locations. On the other hand, consumers have complained that these concepts often lack transparency, since it is difficult to know the restaurant they are ordering from online doesn't actually have a storefront.

For many restaurants, the cost outweighs the risk. Traditional restaurants can risk around $800,000 to test new concepts, but if a menu flops at a ghost restaurant, it costs about $25,000 according to Fast Company.

Many virtual kitchen operators also offer the needed infrastructure from equipment to tech platforms to help restaurants expand. Kitchen United, which raised over $10 million in funding in October, plans to begin operating kitchen centers in Austin, Scottsdale, Atlanta and Columbus, Ohio, in the coming months, according to Hospitality Tech. By the end of 2019, it expects to open 15 kitchen centers in various markets including Los Angeles, Seattle, Denver and New York City. 2ndKitchen garnered about $1.4 million in additional funding in February. Uber Eats, which has about 1,000 virtual kitchens on its platform, has also been trying out virtual restaurants, using data to figure out what customers were searching for, but not finding, in specific markets.

Famous Dave's is not the only casual chain that has been testing delivery-only concepts, either. Red Robin began rolling out delivery-only locations in 2017 to offer signature menu items and catering. Outback Steakhouse and Carrabba's also has been trying out a delivery- and takeout-only concept.

Famous Dave's, which has 127 franchise locations and 17 company-owned restaurants, is making a huge push into off-premise, which now makes up 50% of its sales, according to Nation's Restaurant News. Ghost restaurants and virtual kitchens will be a natural addition, so it will be interesting to see how these concepts impact its to-go and catering sales, which were up 3.4% and 0.5%, respectively, during 2018.