My First Million - One Question Friday: How Do You Scale A Ghost Kitchen Business?

Episode Date: April 29, 2022

Shaan Puri (@ShaanVP) and Sam Parr (@TheSamParr) answer one listener question. On this episode, Brian asks how he should grow his successful ghost kitchen business. To submit your question and hear yourself on My First Million, go to MFMPod.com and click on the circle with the microphone in the lower right hand corner. ----- Links: * Do you love MFM and want to see Sam and Shaan's smiling faces? Subscribe to our Youtube channel. * Want more insights like MFM? Check out Shaan's newsletter.

I feel like I can rule the world. I know I could be what I want to. I put my all in it like no days off. On a road, let's travel, never looking back. This is one question Friday where we answer a grand total of one question from a listener. One lucky listener gets to ask a question. Me and Sam are going to give our raw off-the-cuff answer.

We haven't seen the question before. Jonathan has it. And these are tips. and they are just the tips, as I like to say. We try not to go too deep. All right, Jonathan, you want to hit us with the question? Hey, guys. My name is Brian, and I'm calling about Ghost Kitchens.

I've first learned about Ghost Kitchens on Pod, so thanks for that. So I developed a model to implement a couple of Ghost Kitchens concepts into my restaurant. I had great success. Lifting my margins over 450% over six months with just one of the concepts. Now I'm looking to scale the business by offering licensing agreements. for operators and other markets to use these concepts, including the branding, recipes, et cetera. It's very simple.

You find an operator that wants a new stream and wants to do a Go's Kitchen, and they can start slinging product within a matter of weeks. I've researched the model that much larger companies are using, where they leverage celebrities to sell these concepts. My model's better. It's cheaper, and the recipes are second to none in the space. assuming you didn't have the following

and the platform that you do, how would you go about selling this idea to restaurant operators across the nation? Where would you start? Sidebar, I love what you guys do on the pod. Sam, I just signed up for copy that and I can't wait to get started. Good man.

What's his name, by the way? I'm going to call him Joe. No, it was a... Yeah, I don't remember. Thanks for the question, Ryan. Yeah. Two weeks in a row, we have one question. and we do not know the guy's name again.

It sounds smart. It sounds like he's got his game plan together. So let's recap. The business is what? All right. So he owned, here's what I understood. He owns a restaurant.

And then he added in a ghost kitchen meeting. He, like, created a ghost brand, which is like what that means is, if you go on DoorDash or Uber Eats or one of these delivery apps, you can order from a restaurant, but there's no physical restaurant for that thing.

It's just a virtual brand. And his restaurant would then, have the packaging. So let's say my normal restaurant is Sean's pizza. Well, then I could also have a ghost brand called Sean, you know, silly sandwiches. And silly sandwich, if I get an order from silly sandwiches, my restaurant crew will just like package it up as a silly sandwich order and it'll be ready to go. And so I'm kind of running multiple restaurants out of one restaurant is the idea. And why does the restaurant owner want to do that with them versus on their own? So what he said was he, I don't know if he created that ghost brand or he added that gross

but he said it improved my restaurant margins, 450%. So he 4xed his restaurant's margins. So let's say normal restaurant has, I mean, it sounds a little unbelievable, right? Like, let's say he had,

I don't know, 6% margins before, you know, don't do public math, but he's saying that that basically 4xed his margins. I'm not sure exactly what he's talking about here. That's cool,

but you know what business would be way better? Do you remember Alex Hermazi's business? That's exactly. Jim launch. Jim launch. Exactly what I was going to recommend. Go ahead.

Well, maybe you weren't going to say this. I was going to say, go listen to that episode. What his model was, he had a gym and he was like, all right, how do I get my gym to be more profitable? And then he figured out like a sales method to get his gym. If he opened up a gym, he figured out a sales method that would get him to have a bunch of customers paying high prices and making a bunch of money on a gym. And his friend at a mastermind one day was like, yo, you need to like not do this. You don't need to open up 50 gyms doing this. you need to go teach other gyms how to do this.

Like your product isn't the gym. It's a sales process to make any gym more profitable. And so that's what he did. Then he created gym launch, which would basically advertise, hey, are you a gym owner? I can help you make an extra $100,000 a year guaranteed using my sales method to get you more customers paying higher prices.

And they'd be like, all right, cool. And then he would fly out to that gym. And he would spend the next, I don't know, couple weeks or whatever implementing that process. so that they would then have more revenue, more customers coming in using his thing. And he would teach them, hey, here's how you do it.

Here's your offer. Here's your Facebook ads. When they come in, here's your sales script. Then you sign them up for a free trial. Then here's how you close them. Then here's how you upsell them protein powders and this other stuff. Here's how you upsell them training packages.

That's the sales process. And he built a multimillion dollar business doing that. If you did that for restaurants to teach them how to do this, that sounds like a business. 100% no brainer. That's what I would do. except so you said that Alex would fly out there. Eventually, he wasn't actually flying out there.

Eventually, it was basically, it's not fair to call it a course, but he would, that was part of it. So he would teach you stuff. But then also, he would be like, here's the Facebook ads. Like, I've already made them for you. You can use my Facebook ads that I already made. Here's the drip email sequence. Here's the script that we use.

Here's everything. And then he would say, oh, by the way, if you don't want to do this and you just want me to run the ads, fine, pay us and we'll do it. And here's how you sell protein. you want to sell protein. And by the way, the protein that sells best, we just went and bought it. So we already own it.

So if you wanted to get on a subscription and we'll just send it to you and here's how you sell it, we'll just go ahead and do all that for you anyway. So I would 100% do that. We, on that pod, we go, Alex, what's a good market for Jim Launch Buffer, Blank? And we actually didn't have that many good answers.

The answer is this restaurant business. This is the answer. This is a great example. And like, lucky for, you know, our buddy here, Ryan, we're calling him for a second, that there's like a pretty great blueprint to follow, right? Like there's a blueprint that he was very public about how he did it. He's now exited the business. And also, by the way, this is what his business does now is it invests in other people doing this model. And he's like, dude, I already know how to do this.

I can scale it up. Now you have to be at some scale before he'll do it. But like he gives away the free content on how he structured Jim Launch to be able to do this. So that's, I think what you should do, which is like restaurant launch or the ghost kitchen process, the ghost kitchen system, which is basically, hey, if you're a, if you're a independent restaurant and trust me, it's tough, foot traffic is tough with COVID. It's tough. It's blah, blah, blah. Everyone's ordering delivery.

Here's how you can increase your margins, blah, blah, blah. Here's how I did it. You kind of open up your financials and you say, look, I was making $32,000, you know, a quarter doing it this way. Now I make $58,000. And that extra bit is from my ghost kitchen concept. and here's how I do it. And basically they can either pay you for the course on how they can do it,

or you'd hit them with the Alex Formosie where you're like, if this sounds too complicated, I can also do it for you. And if you qualify, I'll do it for you. What he did was risk-free. He's like, here's my offer for you. You pay me nothing. I only get money once I've increased your sales by over $30,000, $1,000. So once you've made that much more money off this,

then I get to get my cut of 30% of, of whatever the total is that we get. And I'm so confident that I'm going to be able to raise your sales that I'll do that for you. I'll take the risk on that. How does that sound? And they're all like, yeah, you're going to fly out here. You're going to implement your process.

It's worked for you. And you're saying that I only pay you once I'm making all this extra money. That's a pretty damn good offer. And so you could do a similar thing for the restaurant. I saw a guy the other day do a sales process where he was like trying to sell a service just like this. And let's just say the little restaurant owner was like, I don't know if I want to do that.

And he goes, that's fine. But how about this? You implement what I say. And if it works, I get a split of the revenue. And the guy goes, great. I'm 100% to do that. What's the split? And then the seller goes, well, how about 50-50?

And the buyer goes, I don't know, man. That's a lot. And the seller goes, well, but I'm, you know, it's 50-50. It's free money for you. I'm doing all the work. And the guy goes, well, what if it blows up? You know, like you're going to get a lot of money. And the seller goes, you know,

I think you're right. Well, he goes, it might blow up, but I'll tell you what. You might be right. Fine. We'll go back to the original deal. You only got to pay $5,000. And the guy goes, okay, fine. It was like the best sales sequence.

It's like, totally worth. I was like, oh, my God, that's beautiful. Yeah, I would totally do this business as well. I think that that's way better. I would continue running the main thing just so you're in the know and like getting results that you could post the social media. but that's what I would do too. Are there any other industries that jump out now that this could work for?

Probably physical therapists. I would imagine doctor's offices and physical therapists. I think maybe barbers. Real estate brokers. So every real estate broker is like running their own little small business. Sometimes as part of a brokerage, sometimes their own brokerage. And there's a whole process to basically like, hey, you should leave Caldwell Bankers. They're taking half of your commission.

I spun out my own. Here's how I did it. Here's how much more I make. And I will spin you out of this big brokerage firm. I'll set up your website. I'll set up your back office legal structure. I'll set up your marketing package. I'll show you exactly how this all works.

And instead of Coldwell Baker taking half of your commission, I will take 5% of your commission to do this. So I think you could basically, I think selling a sales system is a, is a pretty good business to be in in general. Yeah, I mean, it's like very, very high margin. I think that a lot of course businesses top out at a certain level. I think when you're selling a sales cycle or a sales product like this,

I don't think you're, I think the cap is way higher. By the way, also, now that Alex Hermosey's not doing gym launch, you could also just do lit gym launch again. Like, you know, now that he's like checked out, do another shit, like, you could have always competed with him. But like, he put a place. playbook out there. He exited the company. It's still running. But like, you could just do it again. You could literally recycle his business. I think this is so underrated. Just recycling business

ideas. Once the person has exited and, you know, they've let their foot off the gas or they've expanded. They've moved upmarket. It's like they just leave you an exact playbook on what to do. And more often than not, that timing still will work. Dude, we had a couple at the hustle, So we had a few companies that would just copy and paste our content and just create a new newsletter. And some of them got traction. Yeah. Edit that out. I don't want people doing that now.

Well, it doesn't work in the end. It's a very short-term thing, you know. But all right, that's it. You got the tip. I feel like I can rule the world. I know I could be what I want to. I put my all in it like no days off. On a road.

Let's travel. Looking back.