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The Frenzy for Brooklyn Dumpling Shop’s Automat Model

Jul 9, 2021

BDS

The first automat opened in 1895 in Berlin. Dubbed the Quisisana, it was the first method of getting food and beverages sans human interaction—insert coin, get a coffee or a sandwich in return. It was mind boggling, selling more than 35,000 items its first day in business and spreading around the world in years to come. Brooklyn Dumpling Shop founder Stratis Morfogen looks to stir up a similar frenzy with his new-age automat.

The first opening weekend, there was a line around the corner from the first location in the heart of Manhattan’s East Village. Throngs of people were lining up to try Cro’Somethings—flaky breakfast dumplings—chicken parm dumplings, pastrami dumplings and Rueben dumplings. Morfogen expects the area’s young, hip residents to show up at bar close, too. The location is open 24 hours a day, and allows for a lot more flavors and experiences than a drunken diner cheeseburger.

That experiential aspect and design is especially important to Morfogen. Like the first automats, bedazzled by brass and Italian marble, the design of Brooklyn Dumpling Shop is refined. He said even though the process is exceptionally streamlined, it still feels like a restaurant.

“It’s a metal box, if you have that wall to wall, you really not going to create a really friendly consumer-friendly, sexy environment. When you walk into Brooklyn Dumpling Shop, half of it is a glass kitchen. You can see the whole thing; people have an idea that it’s sitting there for 30 minutes. That’s not what we do, it’s cooked to order and it goes to the automat in four to six minutes,” said Morfogen. “It’s basic foodservice and atmosphere, a lot of people will open an automat and think they’ll have instant success. But if the food isn’t on point and the experience isn’t on point, you’ll fail. People will come and take their picture for Instagram, but they’re gone if your food is not on point.”

Apparently, they have hit the mark, as Morfogen said the offering has gone viral among the social-media savvy 12 to 24 demographic.

“My 12-year-old called me. I said, ‘I’m with the Wall Street Journal,’ and she said, “They don’t matter, you’re going viral on TikTok, that’s what matters,’” said Morfogen.

The simplicity for consumers was the draw back then, as it is today, but Morfogen said the simplicity on the operating side is really exciting.

“It’s like a restaurant on training wheels. You don’t need a chef, or cashiers, or logistical support staff and you need a smaller labor force. You don’t have any fresh products, they all come in frozen. That’s how you have to cook dumplings—if they’re fresh, they fall apart,” said Morfogen.

Under the hood, the initial location is humming. While Morfogen said most locations won’t be in such a prime location, the business makes a lot of sense for pickup, delivery and experiential dining. He said a 500 square foot location could do $1,500 a square foot. For comparison, Chick-fil-A averages about a $1,000 per square foot.

The location in Manhattan is 980 square feet and on track to do $3,000 per square foot ($3 to $4 million annually) when it’s fully up and running. He said it’s 75 percent there, but key components, like delivery, aren’t set up because there’s simply too much demand.

When testing delivery, he said the location got 50 orders in the first hour along with the line around the block, so he had to shut it off. In the near future, the company will be sending out delivery orders just like a normal pick-up order with its delivery partner, Relay. The courier gets a barcode, scans it at the location and one of delivery-dedicated cubbies will open up.

“I think we’re going to double our sales with delivery,” Morfogen added.

It’s all pretty engaging, and Morfogen sells the idea he hatched in 2018 very well. Operators are lining up as fast as customers for one big reason though: the model meets the current labor challenges head on.

“We can run the whole restaurant with five employees, two in the kitchen one on prep and packaging and one or two outside a greeter and someone disinfecting. The industry norm is 12,” said Morfogen. “Our goal is to keep payroll at about 16 percent instead of 25 to 30 percent, then after that we have a deal with Miso Robotics, we’re delivering completely automated technology. We’re looking to launch that in fall of 2021 or the first quarter of 2022. We’ll be offering the whole Flippy system.”

He said Flippy would further cut payroll. The efficiency, the automation and the automat, he said, is actually about preserving jobs.

“That’s the beauty of it, we’re saving jobs,” he said. “Seven of 10 restaurants fail in the first three years, the No. 1 reason for failure is excess labor. Wouldn’t it be nice that seven of 10 restaurants didn’t survive but thrive because we have payroll at 10 to 12 percent?”

He admits it’s a counterintuitive way of looking at the company, but he said by operating vastly more efficient than other restaurants, it can stay open, it can provide long-term, stable employment and can flex to pay growing wages.

“Our industry of ratio of success its demoralizing, it’s scary how bad our number of failures is,” said Morfogen. “We got to fix that, and we can fix that with technology.”

So far, operators are lining up. The franchised concept sold 100 locations before the first location even opened. For those unfamiliar with the franchise world, that is exceptionally rare. Buyers typically want a lot of assurance and proof that the concept will work in an urban core, out in the burbs or in non-traditional settings like airports. Instead, they’re saying, “I need this ASAP.”

We have, however, seen this story before back in 1895 through the eventual end of automat operations in 1991. More recently, too, Eatsa tried, but its food was mediocre and the locations were sterile even with cute cubby mascots. The company was acquired and the technology currently lives only as IP. Wao Bao sought to move to automat operations but it pivoted to supplying ghost kitchens instead.

The potential for the new-age automats is as engaging as a chicken parmesan dumpling, but time will tell if diners keep coming back.

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