This Restaurant Just Launched 8 New Brands. Sales Boomed.
To boost sales during the pandemic, the founders of Dog Haus flooded the delivery apps with virtual restaurants that operate out of existing franchise kitchens. They've been so valuable that they're now here to stay.
When Dog Haus launched in 2010, its concept made a lot of sense…for the year 2010. Its mission was to elevate stadium food into culinary masterwork, and it did so by selling hot dogs and sausages decorated with ingredients such as bacon, pastrami, caramelized onions, and arugula. The three founders, Hagop Giragossian, Quasim Riaz, and André Vener, dubbed their concept "craft casual," and they built fun, large, airy venues to serve customers. It has grown to 50-plus locations since franchising.
But in the decade since, much has changed about how Americans eat. People increasingly order food through Grubhub or Uber Eats. Dog Haus responded by expanding its reach through ghost kitchens — delivery-only facilities with no seating, parking, or signs. Then, when the pandemic hit, foot traffic dropped even more — and the ghost kitchens presented an intriguing opportunity. If Dog Haus could sell food without a dine-in location, why did its founders have to stick to just selling Dog Haus-branded food? Couldn't they sell, well, anything?
In March 2020, the three Dog Haus founders put that question to the test by announcing an ambitious roster of brands: The Absolute Brands, consisting of seven new quick-service restaurant concepts that had no physical stores and operated out of existing Dog Haus locations. (After all, Dog Haus kitchens suddenly had excess capacity.) Today, six brands are still standing — Plant B, The Impossible Shop, Big Belly Burger, Bad Mutha Clucka, Bad-Ass Breakfast Burritos and Jailbird — and more than 20% of the company's sales are coming from The Absolute Brands. Same-store sales are up 34% compared to pre-pandemic 2019.
The three founders sat down with Entrepreneur to explain how The Absolute Brands work, and why the future is looking a lot more flexible.
It sounds exhausting to launch multiple restaurants during a pandemic. How were you able to do
it so quickly?
Giragossian: We began testing The Absolute Brands back in January, before COVID. At first, we thought we'd just run them from the ghost kitchens, but when the pandemic happened, we thought they could be a lifeline for franchisees. The brands weren't fully ready to launch at the time, but we thought that if the franchisees were down, we could figure it out as we go. And they jumped at the opportunity.
But how? Is it really that easy to run eight restaurants from one kitchen?
Giragossian: It's been fairly seamless, actually. We started with just three concepts, and we've been rolling out the others since. These concepts require no vendors, no new kitchen equipment, and zero capital expenditure from franchisees. As far as products go, we only added two or three things — like a tortilla, for example, to wrap the burritos. We changed some of the packaging so that we're not sending out everything with Dog Haus branding, but aside from that, everything is consistent with what franchisees were already doing.
Instead of launching new restaurants, why not just add more items to your existing Dog Haus menu? Wouldn't that be easier?
Riaz: People aren't necessarily searching by brand on the delivery service providers [DSPs]. They're searching what they want to eat.
Vener: For example, if you walk into a Dog Haus, you'll see on the menu board that in addition to dogs and sausages, we have burgers, a chicken sandwich, and plant-based products. But if you're craving a chicken sandwich and you go to a DSP, you might scroll over Dog Haus. You might type in "chicken sandwich," and we won't show up high on the queue. So we pulled out our chicken sandwich, Bad Mutha Clucka, and added some of the LTOs we've created — like chicken wings for March Madness and the Super Bowl. Now we have a brand called Bad Mutha Clucka, and when people search for "chicken," it pops up first.
Giragossian: Plus, multiple brands allow our franchisees to be flexible. They can turn these virtual concepts on and off as needed to fill out day parts.
Wait — you can just turn a restaurant off?
Riaz: That's the beauty of this. If somebody wants to turn off Bad-Ass Breakfast Burritos during a high-volume time of the day when they need more grill space for burgers, they can do that.
Vener: And when a brand is turned off, it's gone from the DSP platform. It doesn't say "closed." It just doesn't show up in the search.
It's notable that some of The Absolute Brands are in direct competition with each other. At first, you had Bad-Ass Breakfast Burritos and Huevos Dias, which are both breakfast concepts. Today, you have Plant B and The Impossible Shop, which are both plant-based concepts. How concerned are you with the success of any of these brands on an individual level?
Riaz: I'd rather have us compete with us than compete with somebody else. Effectively what we've done is allow our operators to run all these different restaurants within the same four walls. So they've got a leg up on the competition.
Vener: As long as we're collecting dollars to fill up the total sales for the day, we don't care if one brand is 25% and another is 10%. If there comes a point down the line where brands just aren't working for some reason, we could either fold some of the items from one into another or cancel it and create an entirely new brand. We could close something overnight and launch something new the next day.
Is there potential for confusion with multiple brands operating under one roof? Someone could order from Plant B, and when they type in the address, their GPS takes them to Dog Haus.
Vener: That changed completely with the pandemic. All drivers know that these virtual brands are everywhere, and we changed our branding to say that orders are "powered by Dog Haus." So your order would say "Impossible Shop powered by Dog Haus."
What can you say about The Absolute Brands' success now that people are doing in-person dining again?
Vener: The Absolute Brands right now make up just north of 20% of our sales. Obviously, everything has opened back up again. It's doing great. Our same-store sales in the past two years are up 34%.
Giragossian: I don't think we're embarrassed to say this, but one of our restaurants has been struggling since it opened four years ago. We didn't know why. It has a great operator and a great location, in Chicago's Lincoln Park. But at the end of 2019, the franchisee was like, "I don't think I'm going to make it." Then the pandemic hit, and he started serving The Absolute Brands. Since then, he has more than tripled his sales. So maybe Dog Haus wasn't going to survive in Lincoln Park, but Bad Mutha Clucka and Bad-Ass Breakfast Burritos do really well.
Vener: He's still in our top three stores, and he opened two more locations in Chicago. He's now opening a fourth one, in Peoria, Illinois. He's in construction for that, and he just bought some more territory in Florida.
Have you discussed what will happen if one of these brands turns out to be a huge hit? Would you turn it into its own franchise?
Vener: We're not planning on making any of these into its own model in the next year. We want to wait, with the pandemic, to make sure everything is good. But it's not off the table. And Dog Haus is now in 20-plus venues with Live Nation, so we're excited to see how that goes. And the ghost concept Kitchen United, which we've partnered with for a long time, has a new partnership with Kroger. The Absolute Brands being in some supermarkets is among the first things they're trying. We're already in two locations — Westwood, California, and Houston, Texas — and we're about to open a third in Dallas. You can walk up to it and order, or you can order for delivery, so it's like a normal ghost kitchen. There are 2 million people in those stores a year. That's eyes on our logos.