Dive Brief:

• TGI Fridays is partnering with Reef Technology to launch 300 delivery kitchens across North America and other international markets throughout the next five years, the company said in press release emailed to Restaurant Dive. The first location will open in Miami, where Reef is headquartered.
• This marks Reef's first partnership with a global casual dining concept. In a statement, TGI Fridays CEO Ray Blanchette called Reef a "launching pad" to deliver Fridays' menu while "prioritizing convenience and quality."
• The partnership is the latest in a flurry of restaurant deals for Reef. Less than a month ago, the ghost kitchen platform announced plans to open 500 locations with 800 Degrees Pizza. In August, it struck a deal with Wendy's to open 700 delivery kitchens.

Dive Insight:

This TGI Fridays partnership builds on Reef's goal to expand to 10,000 locations, an expansion tear its funding with the $700 million it secured in 2020 from a Softbank-led syndicate investment. The company currently has 5,000 locations in 30 cities worldwide, according to the press release, but only has about 450 ghost kitchen units in its network, Reef said in a recent interview. 

Just this week, Reef also acquired logistics company Bond, which has a network of refrigerated, last-mile-delivery "nano warehouses." The flexibility of Bond's model may give Reef a leg up over more traditional ghost kitchen providers, which typically rely on large warehouse fulfillment centers.

Reef's model doesn't require much real estate investment. The platform converts underutilized city space, like parking lots, into hubs for ghost restaurants by opening relatively small ghost kitchens, often using trailers. It supports those delivery kitchens with its software and digital infrastructure, including a new direct ordering platform.

This model could allow TGI Fridays to expand into new markets at reduced cost — a value proposition that is a major driver behind the expansion of the ghost kitchen segment. This opportunity could potentially allow the chain to reenter some of the markets it exited during the worst of the pandemic, as well.  

The Reef deal bolsters TGI Fridays' off-premise strategy, which helped the chain survive the past 18 months. In Q2 2020, sales at TGI Fridays were down 80%, but have since rebounded due to the chain's investment in delivery and curbside pickup.

This isn't TGI Fridays first foray into ghost kitchen partnerships, either. The casual chain works with JustKitchen in Taiwan, for example. The restaurant's owner, TriArtisan Capital Advisors, also recently invested $10 million investment in C3 (Creating Culinary Communities), a company that utilizes kitchen capacity within existing restaurants to deploy virtual restaurant brands.