Wow Bao's partner kitchen program will hit 1,000 locations by the end of 2021, up from 150 locations now and only six at the beginning of 2020.
In early 2020 Wow Bao had six locations in and around Chicago -- and another six in major airports -- and sold its product through grocery partners. Now it's an option to consumers in 24 states and Washington, D.C. The Asian restaurant's line of buns, bowls, potstickers and more will be available for delivery to people in 160 cities in 36 states by mid-year.
The surge is more than just a boon for Wow Bao as most of the partnerships help keep locally-owned, mom-and-pop restaurants in business, says CEO Geoff Alexander. Restaurants are expected to face tough times through 2021. Even as vaccines ease the pandemic, the industry could face restrictions on capacity and other issues for some time.
"We didn't conceive this for the pandemic, but as soon as it started, we realized these partner kitchens were perfect for the critical situation restaurants are facing right now and will face for some time,'' said Alexander. "This is a lifeline that quite literally can mean the difference between profitability and extinction to restaurants.''
The partner kitchens have had particular success in rural areas, home to about 40% of new locations, where food variety is more limited than in metropolitan areas. And whether urban or rural, restaurants are learning to cope with more sales through delivery services such as Grubhub or DoorDash, which take a large bite out of profits. Wow Bao's program is designed to leave enough margin for restaurateurs to make money while using delivery services.
Any restaurant can join the Wow Bao program for less than $1,000. Most partners have been surpassing the expected sales mark of $2,500 or more in six weeks. The small amount of equipment needs no more than three square feet of space and has limited storage requirements. Owners of anything from restaurants to seasonal operations or catering companies can apply on the Wow Bao website.
Food and packaging costs run about 36 percent, leaving plenty of room for profit even while using third-party delivery services to get the product to consumers, which account for another 25 percent of costs. That means operators maintain almost 40 percent of revenue.
The fit with third-party delivery services is key. About 23 percent of quick-service / limited-service restaurant sales will be through third-party delivery apps by 2025, according to a November study by market research firm Incisiv.
The new partnership with Franklin Junction, a digital marketplace connecting host kitchen operators with customers will add another 50 locations through the Northeast and Mid-Atlantic this month, followed by a nationwide expansion of another 50 plus locations in the first half of 2021.
Franklin Junction, which launched in April 2020, also offers restaurateurs the ability to enhance revenues from idle or under-used kitchens while giving consumers offerings previously unavailable in their area. The company, which calls itself the world's first and largest host kitchen matching solution, works with 500 restaurants including 20 brands in 35 states. Franklin is an offshoot of NRD Capital, which owns Ruby Tuesday, Fuzzy's Taco Shop and Frisch's Big Boy.
"Wow Bao is a perfect addition to our host kitchen portfolio,'' said company founder Aziz Hashim. "Their off-premise model has been built to allow restaurant hosts to quickly launch and add to their sales and profits using prepared Wow Bao menu items that have minimal equipment requirements and low impact on host kitchen operations.''