How to Save Restaurants? Meet "the Airbnb and of Food"

It's called Franklin Junction, it's rethinking what a restaurant kitchen is for.

This story appears in the November 2020 issue of Start Up.

Let’s say you go onto Grubhub, see that there’s a new franchise in town called The Captain’s Boil, and order a shrimp basket for delivery. Score! But here’s what you don’t see: The Captain’s Boil may not have a restaurant in your town. Your lunch was actually made inside a Ruby Tuesday.

The Captain’s Boil

This is magic of Franklin Junction, which bills itself as a mixture of Airbnb and — but for restaurants. The platform finds kitchens with extra capacity and matches them with brands that want to expand into new locations. It was conceived of by Aziz Hashim, founder and managing partner of NRD Capital, which owns more than 700 franchise units in North America. He launched it in January, and originally intended it for his own stores (including The Captain’s Boil and Ruby Tuesday). But once COVID-19 damaged the restaurant industry, he opened the platform up to any brand, and is now working with Nathan's Famous and exploring other partnerships.

“It’s a business, but also a bit of a public service,” Hashim says. And it might be a peek into the future of franchising — where a brand doesn't necessarily need to open restaurants to thrive. He explains.

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Franklin Junction launched in 2020, but it’s been in development for two years. Why did you originally create it?

The world has too many restaurants and not enough people. We have seen the rise of delivery, and the rise of other forms of food service, like food courts in Whole Foods, and more and more restaurants keep coming online. Yet the demand for restaurants stays constant, or even goes down. So if you look at net sales over the last few years, you don't see that there's a lot of growth.

How is Franklin Junction a solution?

Restaurants are very expensive to build. If you spent the money, and you don't have as much volume as you would like, the natural tendency is to ask, “How can I raise my sales?” One way to do it is through discounting, but this is ridiculous. All your expenses have gone up — labor, insurance, rent. But you can't raise your prices. Then we have product innovation. Can you come up with new products that people would want to buy? These strategies have been tried and tried, and they're difficult.

The industry was under capacity by 15 to 20 percent before COVID-19. If you know anything about the retail business, it's all at the margin. If you fill up that last 15 or 20 percent, you make a lot of money. All your fixed costs are covered already. So, can I sell food for other people? The difference between innovating your own food and other people's food is: You get the benefit of the other person's branding!

Can you give me a case study?

There's a brand in Canada called the The Captain’s Boil, the leading seafood brand in Canada. They didn't exist here in America. We introduced The Captain’s Boil into our Ruby Tuesday sites two months ago, and now we’re in 100 units. That expansion would have taken a decade, maybe two decades before. Everyone's making profit, so everyone can contribute a little bit towards branding and marketing.

That all makes sense, but it’s a big change to how restaurants operate. What’s been the response — do you think restaurateurs are more open to this change because of COVID-19?

Significantly. During this time, with dine-in basically closed, a lot of restaurants have been down 50, 60, 70 percent. The need for sales is tremendous. It's urgent. People need revenue, and they need it today. We're getting flooded with inquiries. We just can't keep up. And we're also getting a lot of inquiries from non-restaurants — a store or a hotel.

A minute ago, you said there were too many restaurants. Franklin Junction isn’t exactly a solution to that. In fact, it could create more restaurant brands. Square that for me.

The solution relies on more consumer variety. It's not that America or the world doesn't need new kinds of food. We just don't need to build new restaurants. That's where I'm coming from.

So demand remains static, but now a physical restaurant can get a larger share of that demand — because it’s offering more options?

Exactly. We like to try new stuff, but in the past, in order for you and me to try new stuff, some poor entrepreneur had to spend $2 million to build a restaurant. Then, if you and I decide we don't like that food, that guy is out of business and he's lost his life savings.

In this case, you've got a new food genre. You bring it to Franklin Junction, we'll try it out for you in 10 or 20 locations. Let's see if there's public desire for this. If there is, wouldn't you feel better about opening a restaurant? A contract with Franklin Junction doesn't preclude you from opening a standard brick-and-mortar. This is a way to actually solve multitudes of problems.

The first thing people tell you is the old adage “You’ve got to spend money to make money.” We're going to spend no money, and we're going to make money. We've got extra kitchen capacity. Let's go sell some other people's stuff, you know?

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