Fast Food Giant Wendy’s is Opening 700 Ghost Kitchens by 2025

Wendy’s restaurant made a big announcement this week, revealing that it will be opening up 700 ghost kitchens across the U.S., U.K. and Canada by 2025 through a partnership with start-up Reef Technology.

Founded in 2013 as ParkJockey, Reef started off just as a parking garage operator but has since branched out into ghost kitchens inside shipping containers located in more than 4,500 parking
facilities.

As of February, Reef raised more than $756 million, including an investment from SoftBank, according to Pitchbook. Other restaurant partners include BurgerFi and Wow Bao.

You may be wondering what a ghost kitchen is. Ghost kitchens, also known as virtual, cloud or dark kitchens, fulfill delivery orders placed through third-party delivery apps like DoorDash.

This helps restaurants cut down on costs.

According to the company’s CEO Todd Penegor, Wendy’s is forecasting annual average sales of $500,000 to $1 million for a Reef ghost kitchen.

Penegor told analysts Wednesday that its U.S. business saw digital sales dollars grow more than 10% in the second quarter.

Wendy’s and Reef have piloted eight ghost kitchens in Canada already. The companies expect to open roughly 50 of the ghost kitchens this year.

“If you look at the economics, it’s early to tell what we can do from sales out of each of those vessels, but we’re expecting the sales in the range of $500,000 to $1 million per unit,” Penegor explained.

The average gross annual sales for a franchised Wendy’s restaurant in the U.S. was $1.75 million in 2020, according to franchise disclosure documents.

Penegor also said the program could be a great way to bring in new franchisees because of the lower cost of investment.

Wendy’s reported quarterly earnings and revenue that topped Wall Street’s estimates and raised its 2021 forecast on Wednesday as well.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.