Host kitchens, ghost kitchens, virtual concepts, automation, tech stacks—these are the buzz words you hear when discussing the future of the hospitality industry. But too often, that futuristic, tech-focused narrative erases the actual restaurants. The independent operators, the heart of this industry are completely replaced by projections of an all automated, delivery only world.
For Alex Canter, it’s different. His family has been running Los Angeles’ Canter’s Deli for four generations. With a background that’s on the intersection of tradition and innovation, Canter sees technology as a tool that can support independent operators. That’s the whole idea behind his company Nextbite, a restaurant technology company that combines delivery, virtual restaurants and online management to help restaurants bring in additional revenue.
“Change is good. Technology should be embraced, and we should be experimenting with all the stuff that’s out there,” he explains over a TEAMS call.
“There’s so much resistance to change in hospitality. Growing up, I heard a lot of ‘if it’s not broken, don’t fix it’ and ‘they don’t make things they way they used to.’” It was difficult, constantly being told to slow down. But it forced him to learn the rules of the family business, if only to break them later. “Restaurant owners are very resilient and very creative. There’s no other choice.”
He used his family’s restaurant as the testing ground for his first idea, Ordermark. It took six months of working behind the deli counter to develop a software that could aggregate all the ordering apps together. And then suddenly, it became clear. If they could run multiple apps through one software, why couldn’t they run multiple brands out of one kitchen?
Canter started with two low effort, low cost concepts: grilled cheese and burgers, made right in the Canter’s Deli kitchen. They had unique names, unique brands and unique menus. When they were delivered, they arrived in branded packaging. To any customer scrolling through a third-party delivery app, these seemed like regular restaurants, something you could walk into anytime. Except, you couldn’t. The restaurants didn’t have their own physical presence, they were being run out of the Canter’s Deli kitchen.
And these two virtual concepts alone equated to an extra $250,000.
“The revenue opportunity of running multiple brands out of your kitchen is the most significant thing we can be teaching,” says Canter. “It’s the same fixed cost business revenue and overhead to run four or five brands out of their existing restaurant. It’s such a no brainer for me. I want to shake restaurant owners sometimes. It’s so fucking obvious! You should be doing these things, and you’re not!”
That led to Nextbite, a virtual restaurant solution for operators. Nextbite uses demographics and consumer data to figure out the best virtual restaurant for a location, that works within the current setup. Then they pay the operators to make the food during slow times, when the kitchen has capacity for extra orders.
Ordermark and Nextbite have now rebranded as just Nextbite.
“Restaurants run on razor thin margins. If you’re lucky, you’re making 5-10% margins. We’re creating a more profitable and sustainable business model for restaurants, by empowering them to handle more volume in a fixed cost business. Almost every restaurant has some time of the day that’s slow, where they can handle an extra, five to 20 orders a day. Every incremental order has up to a 30% profit margin.”
Nextbite has a portfolio of 20 different virtual brands operators can work with, including several celebrity brands like George Lopez Tacos and Hotbox by Wiz Khalifa. The majority of the restaurants, or ‘host kitchens’ take on two or three virtual brands, and see an average of $10,000 or $15,000 in incremental sales per month.
“We’re in the new normal now,” says Canter calmly. “There is no ‘post-pandemic’ in my mind.” After two years of restaurant closures and reliance on delivery, consumer behavior has changed. Convenience isn’t a trend, it’s a fact. And contrary to what so many people are afraid of – this new behavior actually offers opportunity for restaurants, if they’re able to embrace the virtual environment.
Canter likens this new virtual boom to e-commerce in the 90s, when every business had to rush to put their products online. “Experiential dining, Michelin-starred restaurants, omakase sushi, these are all experiences that can’t translate to an online format. But most restaurants will have to have some digital offerings to get the volume they need to survive.”
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