I spent my Sunday ordering multiple pizzas, Caesar salads, cheesecake slices, smash burgers, crinkle-cut fries, and water bottles. Buying all this delivery was how, I figured, I would be able to mull over: a) the new startup Popchew; and b) the concept of a virtual brand in general.

It all started with a Twitter thread from Joe Sweeny (see below for one of the tweets) that the NYC-based company recently raised $3.6MM in seed funding from a variety of investors, including, but not limited to: Long Journey Ventures, Anti Fund, Flybridge, WndrCo, and the Uber Alumni Syndicate. Whereas other virtual food brands look to ghost kitchens—facilities whose sole purpose is to only put together delivery-only/takeout meals—to execute meal preparation, Popchew’s creator brands make use of existing restaurants who still continue their regular operations while also fulfilling Popchew orders.

Joe Sweeny @JoeySweeny

And it's a Win + Win + Win Restaurants get a new revenue stream in the form of Popchew orders. Creators get to launch a new food brand overnight Popchew builds a brand that reaches millions

Instead of tackling everything in one go, I’d like to address these two topics in a two-part series. For this first part, I’d like to examine the implications of Popchew’s model and its effect on the idea of the virtual brand; and for the second, I’d like to talk more broadly about virtual brands—for which I bought the burgers, fries, and water—and their constraints.

P.S.: I also considered how this post might’ve benefited from some video commentary of the actual taste and look of the food , but hey, I don’t have enough money to rework part of my apartment into a recording area, hence my having applied to Substack’s Food Intensive. Yes, that was a not-so-low-key “wink wink nudge nudge” to any judges out there.

What exactly is Popchew?

To hear from Popchew cofounder Nick Sopchak in the initial spiel, the company serves as the connector between content creators and restaurants. The goal is to provide influencers a way get into the business of food by launching their own brand, similar to MrBeast Burger. However, instead of investing upstart capital for nationwide infrastructure (i.e. ghost kitchens), Popchew opts to partner with local restaurants by white labeling their food as the creator’s brand. But as we’ll see, there are some conflicting mentions of how Popchew envisions the restaurant executing the food component.

In some ways, we could say that Popchew is a marketplace of sorts. It wants to eventually develop its own community by way of a loyalty program that connects its network of creator brands, which isn’t so different from third-party delivery platforms who encompass a roster of restaurants from which to order. But as I continue to reconsider what Popchew’s unique selling prop later on in this newsletter, the unique selling proposition here is that the creator and their fandom is first and foremost, as opposed to the food brand on just another delivery platform.

Another part of Popchew’s charm to investors is its low overhead and operating costs. Without investing in the building and maintaining of ghost kitchens, a lot of capital is freed up. White labeling food products—as mentioned on “The Pomp Podcast” at the 2:46 mark—when sold with branded packaging is a far lower cost when compared to real estate. The company can, in actuality, rely on the marketing engine that is the creators themselves, who most likely command large followings that are readily to convert when given something to buy.

By ordering and tasting three pizzas, I’m left with a few thoughts about: a) consistency; b) direct vs. third-party platforms; and c) the notion of the virtual brand in relation to Popchew.

Note: While I would’ve preferred to have a larger sample by purchasing more pizzas from various white labeled restaurants, my credit card can only take so many hits take for this experiment of mine.

Consistency: menu offerings and packaging

Popchew’s first creator brand—which is the term they opt for, as opposed to “virtual brand”—is Anthony Pompliano’s Bitcoin Pizza. If you order directly from Bitcoin Pizza’s page, you can even pay in Bitcoin if you are so inclined. There are five pizzas that make up the virtual brand, ranging from a plain cheese pie to the equivalent of a Hawaiian pie.

Most recently, during the “Just Raised” podcast interview, which was released earlier this month, host Jason Sweeny touts at the 9:25 mark that the products are Popchew and/or creator-branded with Parikh going on to articulate the following:

“We have partnerships with the food distributors… whether you’re ordering in LA or New York, you get the exact same ingredients, the exact same food, the exact same packaging delivered to your door.”

What’s being suggested by the above is that the restaurants are provided with ingredients to assemble these pies, which may or may not be different than what they already have. In any case, this method of carving out space in the walk-in (i.e. the jumbo fridge in restaurants) and trying to forecast the potential demand for this second business presents a huge issue, especially for restaurants who are strapped for space in metropolitan areas.

But let’s recall: in “The Pomp Podcast”, which aired more than a half year earlier than Sweeny’s, the assertion is that Popchew is white labeling the restaurant’s food—in other words, rebranding a local joint’s pizzas whose combos will reflect Bitcoin Pizza’s offerings.

The approach of taking over a restaurant’s supply chain with one for the virtual brand is one that will assure the most consistency nationwide, but it is also a significant challenge to interrupt an existing and ongoing business’ workflow. However, letting the restaurant mimic the virtual brand’s offerings with their own ingredients exposes a vulnerability in consistency for the virtual brand.

These are two conundrums that Popchew themselves are may be trying to figure out, judging from the competing operational methods expressed in the two interviews. Or, and also very likely, Parikh actually meant that the composition of each product will have, in essence, the same toppings and sauces (even if the way the food is made may be different) and packaged in the same branded boxes.

In any case, I only bore witness to the white labeling of a restaurant’s menu in my trials of Popchew’s offerings. Of the two brands available—Pompliano’s Bitcoin Pizza and Zias’ Wing SZN—I opted for the pies, because I was just in the mood for a good ol’ New York slice(s).

Ordering and receiving Bitcoin Pizza

When you look for locations of Bitcoin Pizza on the direct order page, you can see quite a few spots in New York. And while the partner restaurants name doesn’t get a shoutout, a quick Google search can reveal who is actually making your pie.

Google Map view of NYC, featuring overlays of Bitcoin Pizza locations — Google Map view of NYC, featuring Bitcoin Pizza locations

174 Avenue B is home to both Bitcoin Pizza and Eleven B. I scheduled an order for a Capital Greens pie (which curiously omits the inclusion of black olives on its direct and DoorDash listings), slice of cheesecake, and Caesar salad via DoorDash, and a control order of a similar pie (I added peppers, onions, and mushrooms to a cheese pie, since the Seamless page only lists a cheese pie as your starter), same dessert, and same salad.

Discrepancies are apparent between what’s proposed on the overarching Bitcoin Pizza website vs. the local Bitcoin Pizza before the orders even arrive. For instance, this location of Bitcoin Pizza curiously omits the inclusion of black olives on its direct and DoorDash listings. Not only are the black olives featured in the stock photo, but they’re also touted on the virtual brand’s website. Other New York locations tout olives on the pie, so it may very well have to do with what the local restaurant uses themselves.

Upon the arrival of the control and virtual brand pies, it’s clear that the creator-branded boxes aren’t always provided, as I received two identical 11B Express boxes. Similarly, all the items from the Bitcoin Pizza order were packaged exactly the same as its control.

And yes, my Capital Greens pie arrived with actual greens. I assume my pie maker disagreed with the original Bitcoin Pizza description, which lacked any greens whatsoever, and added his own touch of spinach for a little “health is wealth” ethos.

From appearance alone, the food follows Popchew’s originally proposed model of letting restaurants do their own thing and the virtual brand white labeling the menu items as their own. If looks weren’t convincing enough, the taste test did demonstrate that the salads and desserts were the exact same. The pies, while the toppings differed slightly, were also identical in terms of the dough’s chew and the taste of like toppings (mushrooms, onions, peppers, cheese, and sauce).

On a side note, the pizzas are very enjoyable.

What was perplexing, though, was the lack of promised branding. I ordered a third pie, but this time through the direct ordering website (I couldn’t bear to have more cheesecake and salad in my fridge, so I skipped on those items). And sure enough, the branded pizza box appeared at my doorstep, and I have a few theories on why the “correct” packaging was used for the direct order and not the DoorDash one.

But to first close out on the discussion of consistency: by relying on the restaurant’s food to deliver the end item, it’s hard to declare Popchew as building “food brands” for creators. While menu offerings may vary ever so slightly (a common practice that takes into account different markets’ preferences), the virtual food brand’s actual final items can heavily differ within one market—never mind nationwide—with each restaurant abiding by their own ingredient sourcing and cook methods. If we’re selling more so the idea of certain combinations of ingredients vs. a final food product, are we really selling a food brand?

Packaging for Bitcoin Pizza — Third time’s the charm: that Bitcoin Pizza box

Direct vs. third-party platforms

Let’s take a peek under Popchew’s hood. Poking around, we’ll see that the two currently operational creator brands—Bitcoin Pizza and Wing SZN—use different direct online ordering systems.

Bitcoin Pizza makes use of Captain, the company who made a splash last year with the headline that more than half of its staff had worked at Grubhub at some point during their careers. On the other hand, Wing SZN uses the Dublin-based company Flipdish for its direct online ordering.

Look, there’s no one right partner to work with; it comes down to needs, vibe, and pricing. And while Popchew is in its early stages, it’s still jarring to have them experiment with different online systems if they are looking ahead to create an ecosystem that connects its users, thereby introducing them to more content and creators. The large disconnect that I see here is that by having accounts and logins that are already separate from the main website, not only customer profiles are going to be a challenge to pull and reward for one brand, but also for the multitude of brands that Popchew aims to launch.

If I wanted to be a part of the Popchew ecosystem in the future, why would I have to make two separate accounts now for both Wing SZN and Bitcoin Pizza? And having to sign up again on Popchew’s main website? I won’t be surprised to see a complete overhaul that either commands a lot of handling (and potential mishandling) of personally identifiable information (PII) as they synthesize their databases, or a complete ditching of the data amassed from online orders and subsequent reliance on the main website’s signups.

The third pie: the “Satoshi”, which the shop decided not to add jalapeños on

And let’s quickly talk about revenue from these online food sales

Now, even though Popchew doesn’t have the same overhead expenses as others who are venturing in the virtual brand space, the current revenue schemes may still not be enough. According to ARLnow, Bitcoin Pizza takes in approximately 20% of the revenue generated from pizza sales.

To rephrase, Popchew is speculatively (I say speculatively because that article is from several months ago and things change quickly!) taking a 20% cut from the restaurants who are making the pies. However, I would imagine that this sizable ding would be coming from the direct ordering page, and a lesser cut would be taken from third-party delivery platforms. Otherwise, it would be defeating Popchew’s narrative of empowering the local restaurant to make more money than they currently are making on the likes of DoorDash. Now, 20% doesn’t necessarily go a long way, especially when you have to factor in the creator’s undisclosed cut, platform fees (e.g. Flipdish takes a 7% cut on all orders, although I’m sure this can be negotiated to some extent), all the subsidized packaging and development, and the company’s day-to-day expenses.

What they, in conjunction with the partnered restaurants, pay as a cut to the third-party platforms is also a mystery. There isn’t quite yet a strong enough proof of concept to leverage a heavily discounted commission rate, nor is there a large number of sales that show steady year-over-year growth to point to. Sure, there is volume in the number of outposts opened thus far, but the delivery giants’ arms aren’t being bent terribly far behind their backs.

So, let’s get to the final part of this newsletter—the virtual food brand and how it probably feeds into Popchew’s end goal.

What’s in a brand?

I frequently come back to the question in my mind that if the creator brands are selling more of an idea of the food they enjoy vs. the actual consistent product, what are they selling and what am I buying?

And if the economics of food businesses are not yielding a tremendous profit for the delivery giants, why would it be any different for Popchew in the end?

The food isn’t the point. Rather, Popchew’s real moneymaker is going to come from the notion of fandom itself. The idea of being rewarded for being part of this creator’s community is the narrative that Popchew should be driving, although the narrative of food is a pretty easy and attractive one to espouse. Sweeny hit the nail on the head when he articulated that what the company is delivering is adult Happy Meals. Remember when you were a kid? The nuggets or the burgers were never the point—the toys were. That said, of course, consistency in food product and packaging are still helpful, and that is something that the company will have to address sooner than later.

Anyway, it’s to say that Popchew is setting up a holistic platform for influencers and content creators to sell themselves. The virtual food brand is a vehicle within an ecosystem that brings together what other platforms have created separately and made it the job of creators to figure out how to tie it back to their individual brand.

Take personalized messages through Cameo and merchandise from Teespring, for instance. To have to juggle the promotion of these revenue streams and facets of a content creator’s business is difficult when all you have, for example, is a YouTube channel to drop links or a bio link tool like Linktree. What Popchew proposes, though, is a way to tap into all of these ways to experience the a creator’s brand through incentives (i.e. prizes) all in one place. It’s an added marketing and sales component, but it’s one that should, in theory, be able to seamlessly overlap and integrate with all the other components.

The ghost kitchens and traditional food brands stop at just the celebrity affiliation and endorsement. For them, selling food is the end goal; whereas, for Popchew, selling potential access to a creator and their ethos is the end goal.

Lastly…

Special thanks to my anonymous co-taste tester who assisted me so that I didn’t have to eat all the food by myself.

As for the second part of this newsletter, I’ll drop it next week.

Stuffed Domokun in a designer handbag — Taste testing assistant: everybody’s friendly neighbourhood Domokun

On the back burner: Restaurant Revitalization Fund

Any hope on the Restaurant Revitalization Fund being included in the upcoming omnibus spending bill has been squashed. Per Lindsey McPherson of Roll Call, Senate Small Business Chair Ben Cardin cited objection from GOP leadership. Even though the hope is to revive the Fund through a separate bill, it is unlikely to go through with the current Senate’s composition.

Further reading

LA Times: “Thunderbolt almost closed during COVID. Then it was named one of the world’s best bars”
VinePair: “The bold premise and false promise of copyrighted crypto cocktails”
NYT: “Manhattan’s Chinese street signs are disappearing”

Chortle Chortle

Popchew: just another startup building…