Disruption. This word comes from a great insight by Clayton Christensen, although he regretted how it was adopted by every tech start up since 1999. Indeed it is almost always truly misunderstood and misapplied. With ture disruption, it’s hard for incumbents to explore radically new concepts because they are locked into a successful business model. This gives advantage to true disruptions to explore radically new business models based on new core strengths and and new assets.
This is precisely what Mr. Beast A.K.A. Jimmy Donaldson the 22-year-old entrepreneur and the second-highest paid YouTube star in 2020 did. He took the attention he has captured and directed to philanthropy and new business models. This has been a spectacular success.
The psycho-demographic that is flexible to new food concepts wrapped with the branding of a well known persona aligns perfectly with Mr. Beast’s audiences and the likelihood they would at least try the food.
Mr. Beast Burgers is a Virtual Kitchen business. It is important to distinguish Virtual Kitchens from “Dark Kitchens”. In general a Dark Kitchen is not at a retail operating environment and generally in an industrial or commercial building and area and are designed for delivery service only. The beauty and the soul of Mr. Beast Burger is they reached out to small local operating retail businesses to become partners. This is a powerful concept as it not only assures better quality it does more good in most communities as it allows the physical retail business to exist. The Virtual Kitchen of Mr. Beast Burger means that the food is prepared by operating kitchens that maintain all of the overhead of rent, employees, heath departments, insurance, etc. while Mr. Beast sends in orders via the iOS app directly to the business or in some cases sent directly to a handful of food delivery companies (UberEats, DoorDash, PostMates) who in turn send it to the local restaurant. Most orders are delivery, however some allow you to pick up (I will explain why later in the article). With this model just about everyone wins.
If this is all new to you, it should be, it just started and already millions of burgers have been sold. So here’s the basics: Mr. Beast A.K.A. Jimmy Donaldson is a North Carolina native whose fame is based on his antic-filled philanthropic videos. He gives away cars, money, tech gear and, most recently, food. In December, he launched an initial 300 virtual kitchen virtual restaurant chain, called Mr. Beast Burger, and gave away food and cash to thousands of people as part of the marketing. He also uploaded a corresponding video titled, “I Opened A Restaurant That Pays You To Eat At It”. It received over 34 million views in just a few days. You might have also seen some of Donaldson’s fellow YouTubers reviewing the burgers, chicken sandwiches and fries themselves on their own channels.
I got to hear about Mr. Beast Burger earlier in 2020 as a few merchants I know called me about how they were approached with a “crazy idea from a guy named Mr. Beast”. I knew these merchants as I signed them up for payment processing some decades ago, many are friends and we talk often. The 2020 year was most destructive to small businesses especially food service and most destructive to quick service restaurants near work areas. With the pandemic lock down there were no workers at many of these areas and they faced closure. I told every merchant that I talked to “Do this, it is a great offer and you will thrive from it”. All did and some have 4x increases in just one month. Mr. Beast literally saved some of these businesses from folding.
This success prompted me to conduct research to better understand the business model and the impact to businesses. So I called the merchants I knew that partnered and a few more for a total of 25 Mr. Beast Burger locations.
What I discovered is simply astonishing:
- 25 said they have seen considerable increases in business and repeat customers
- 25 said they love this new business model
- 8 said Mr. Beast Burger saved their business
- Much more
I asked 30 questions more and we will explore some of them and exactly how Mr. Beast Burger built a 300+ location Burger empire in just a few weeks and never did any advertising or paid any rent. It is an astonishing story that will change everything about retail business.
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This is a very good model and has answered to the current situation with great success. What is the impact to the participants’ primary brand – have they now resigned to being branded as Mr Beast? What are the costs associated, as they are in essence participants of a franchise model?
Very interesting. I was not aware of any of this so thanks. My daughter has a restaurantier friend who might like to know of this. It’s also uplifting in this time of uncertainty.
I don’t understand how they can make a 30% profit if Uber takes 30%. Uber leaves 70% for inventory, labor, profit and overhead. What percentage does Mr. beast take?