Why Dog Haus is excited about the future of ghost kitchens

Photo courtesy of Dog Haus

Gourmet hot dog concept Dog Haus was one of the first to enter the virtual brand segment, launching several delivery-only restaurants in the early days of the pandemic.

With a few years of recorded experience, Dog Haus said it found a successful model for its digital business.

“2021 was our best year in Dog Haus history,” said co-founder Andre Vener. “We were all ready for deliveries, virtual brands and ghost kitchens. We were planning all of this before the pandemic.

Pasadena, Calif.-based Dog Haus has 51 locations and operates several virtual brands, including Bad-Ass Breakfast Burritos, Bad Mutha Clucka and Plant B, under the Absolute Brands name. These virtual concepts account for 17.5% of system-wide sales, he said, with the breakfast burrito brand ranking among the top performers. In December, Dog Haus partnered with Impossible Foods to launch virtual brand The Impossible Shop, selling plant-based burgers, chicken nuggets and more.

The fast-casual chain also has 10 ghost kitchens. In these places, virtual brands account for nearly half of all sales. The company plans to open at least 10 more ghost kitchens this year, and Vener is especially excited about ghost kitchens that also have pickup centers.

Dog Haus is part of a new ghost kitchen initiative with grocery chain Kroger that places its brands in supermarkets but also serves as a third-party delivery hub.

“It’s been a huge success so far,” he said of the two sites. “They drive a lot of sales… But then you have extra people who can get it while they shop, you have a million eyes on your store… And the labor is completely lean.”

These locations are particularly attractive because labor remains the company’s biggest challenge, Vener said.

“Some locations didn’t have a labor issue and some of our busiest stores had to close for a day or for hours,” he said.

The chain, which was founded about 11 years ago, said it expects to have 75 locations in total by the end of 2022.

Dog Haus acted very deliberately in creating the virtual concepts.

For Bad-Ass Breakfast Burritos, for example, the only new SKU is a 14-inch flour tortilla. The burritos use toppings that already existed in the Dog Haus kitchen for hot dogs, brats, and burgers.

Burritos have also been a big hit for late-night hungry people, Vener said, as many locations are open until 2 a.m.

“We created more hours in a day just by adding a tortilla, and a new audience as well,” he said.

But the company’s push for offsite growth doesn’t mean it’s ditched the restaurant business.

Currently, about half of the restaurants in Dog Haus have a beer garden. Of the next 16 stores under construction, 15 will have a beer garden.

“You can’t sit down and eat three hot dogs for three hours, but you can sit down and have three drinks,” he said. “Two years ago everyone thought, ‘Since you’re running with ghost kitchens, people don’t want to dine out anymore.’ As soon as it gets up, little by little, everyone wants to come back.

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