The parent company of Nextbite, another pioneer of the model, received $120 million in venture-capital funding in October for its 13 virtual brands. Franklin Junction, founded last year, helps restaurants do business as known food brands, including Wow Bao and Nathan’s Famous. Companies like Future Foods, Combo Kitchen and the Local Culinary are all making similar plays.
In the delivery app era, the ghost franchise can be a lifeline for the independent restaurateur, a way to make thousands of dollars a month in a devastating time. It can also be a liability, exploding the marketplace in ways that serve big brands more than small businesses.
James Garofalo, 52, grew up working at his father’s diner in Chicago Heights, Ill. Now, he’s the chief operating officer at Goddess and the Baker, a cafe with several locations in Chicago and one in Brookfield, Wis. At first, Mr. Garofalo was skeptical of the ghost-franchise model. But as the pandemic cut off foot traffic, he decided it might make sense. “At this point, you’re looking for ways to generate dollars, keep staff on,” he added.