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‘A year of transition’: Restaurants add ghost kitchens to get through pandemic

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MADISON (WKOW) -- 2020 was the worst year in history for the restaurant industry.

The National Restaurant Association had expected sales could reach almost $900 billion last year, but those goals were cut short when everything shutdown and took months to start to reopen slowly.

Restaurants were the hardest hit by the pandemic, but sales have been rising in 2021, as restaurant owners continue to grow takeout and delivery services.

"We tried to scratch every dollar we could out of what we were doing and then once things re-opened, it's different. We're doing business. You're sort of still in survival mode, which is where we still are. We're not out of the woods," said Eric Suemnicht, owner of Nitty Gritty.

Another Madison mainstay, The Great Dane, faced the same challenges. Director of operations and executive chef Matt Pace is thankful to be welcoming more customers into the restaurants now.

"We're really grateful to see more of our guests coming back every day, but also along the same times, right, we've been trying to find ways to keep our tradition of serving our community, of serving our guests, as viable as possible," he said.

The restaurant industry ended up losing $240 billion during the pandemic, with revenue down 27 percent. 90,000 businesses are still closed, either permanently or temporarily to wait for a safer return, according to the National Restaurant Association.

"2021 is a year of transition and redevelopment for the restaurant industry," said vice president of research Hudson Riehle.

The restaurants that have been able to survive have had to adapt and change their business models to serve customers in a new way.

Suemnicht's team took advantage of online sales but had to make some difficult decisions to survive without bar and event sales.

"It was a few months into the pandemic, really, when you realize life is not going to return to normal as quickly as we thought," he said. "We then realized we're going to have to think about how we can drive revenue and do business in the market we're in right now."

Cooking up a new concept

That tough reality drove Nitty Gritty to a new virtual venture. Cluck launched in January.

The specialty chicken sandwich menu is fried up right in Nitty Gritty's kitchen, but is only available online.

"It just gives us another source of revenue for a different style of customer that just wants something different," Suemnicht said.

It's grown in the past four months, with sales steadily climbing and just recently surpassing The Gritty downtown's carryout and delivery orders.

The Dane has seen similar success with its online only concepts. Midcoast Wings launched in August and Taco Royale started a few months later. At one time, they were bringing in almost a third of The Great Dane's revenue though that percentage is lower now with more in-person services available.

"It's absolutely been a year of adaptation for everyone," Pace said. "The positive thing to come from adaptation is innovation."

Those virtual kitchens are run out of each Dane location as a partnership with the delivery service Eatstreet.

"From the get-go, it was that synergy, that working in tandem, that really allowed us to adapt as quickly as we needed to," Pace told 27 News.

Virtual kitchen trend growing

The pandemic has only accelerated the growth of so-called "ghost kitchens" across the US. Industry leaders say the trend started pre-pandemic and is here to stay.

"In many instances, it can require lower investment of capital. The footprint is smaller. And so the whole operating and cost structure can be dramatically different," Riehle said.

The trend has allowed new entrepreneurs a chance to try out the model while also giving large chains an opportunity to expand to new markets.

Madison-based EatStreet sees virtual kitchens as the future, hoping to bring its partnership with The Great Dane to other restaurants in 22 Midwest markets.

Midcoast Wings has already launched in Lawrence, Kansas and will open in Green Bay this month.

"The pandemic just hit fast forward on virtual brands being something that's cutting edge in the industry and then now necessary and even more prevalent," said spokeperson Caitlyn Kalscheur.

The restaurant industry's future

Ghost kitchens could also become the food court of the future, where many virtual kitchens come together to cook in once space that serves as a food delivery hub.

No matter how the trend develops nationally, both Madison restaurants see virtual kitchens as their future.

Nitty Gritty is considering opening its own ghost kitchen location just for virtual orders, because the downtown restaurant won't be able to handle Cluck orders on top of a full service Nitty Gritty menu when they can return to normal.

The Dane also wants to expand as it continues serving up its special menus.

"I think history has shown us time and time again, challenges beget innovation," Pace said. "Even as we welcome back more guests and we return to what will be a more normal, or a new version of that, how are we able to take what we've learned and what we've accomplished and continue on into the future?"

Jennifer Kliese

Weekend Anchor and Reporter, 27 News

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