If you've seen hot pink food trailers proliferating around Austin, you're witnessing the vision of Nick Nanakos, who is applying what could be described as a technology startup mindset to the restaurant world with Ziki Kitchen LLC.
He's doing it with the backing of Gigafund, the venture capital firm known for big investments in Elon Musk's SpaceX and The Boring Company (it has also backed Austin's Sana Benefits, a small business health insurance company).
Ziki in July closed a $6.7 million seed round, led by Austin-based Gigafund. Nanakos, who is founder and CEO, recently explained how that money is helping to accelerate expansion plans.
The fund "gave us the resources we needed to truly begin scaling," he said. "Prior to raising the funds, it was a lot of ideation, a lot of testing, just this long gestation period."
While it may seem strange for a VC firm that has invested in Musk's grand ambitions to get behind food trailers, it's worth noting that Ziki has unit economics and growth projections more akin to a software company. Since February, it has opened five food trailers. Four are in Austin — on West Third Street downtown, South Congress Avenue, North Lamar Boulevard and the University of Texas campus — and one is in Georgetown, a fast-growing suburb in Williamson County. Nanakos expects to have five more in operation by March.
And he's already thinking beyond those 10 trailers. Nanakos wants to eventually open drive-thru locations. He aims to expand next into the Miami market, which he said fits Ziki's "look good, feel good" aesthetic.
The CEO wants to hook consumers with the trailers' flashy colors and loud music, then convert them into regulars based on the food quality. Ziki serves a fusion of Mexican and Greek cuisine, with items such as falafel burritos, gyro bowls and baklava.
Ziki caters to health-oriented diners, many in their early 20s to late 30s, Nanakos said. The chief executive likened it to fast casual darlings Cava and Sweetgreen. Ziki makes all of its food without the use of seed oils, vegetable oils or soy.
The company builds its own engineless trailers, which measure 256 square feet but are set up to handle the same sales volume as a regular restaurant, according to Nanakos.
When it comes to finding real estate, Nanakos tells his team not to wait until properties become available. If there’s a luxury hotel that suits a trailer, Ziki will try to find a way to open nearby. If there's a new development with a retail component, the company will try to seek an early entrance.
The first Ziki trailer is on track to bring in revenue of more than $1 million by February, when it completes its first year in business.
The profit margins in Ziki's most mature trailers exceed 25%, Nanakos said. Restaurants are known for their thin margins, which typically average about 3% and 5%, according to Toast, maker of point-of-sale software.
Ziki, which employs about 50 people, keeps its margins high by focusing on labor costs. When a trailer isn't in peak hours, it may only need two workers, Nanakos said. Additionally, the company has found ways to reduce food waste with software that tracks every ounce of food going in an out of the trailers, helping to better manage inventory, he explained.
The next step in lowering overheard costs will be a move into the delivery space. Nanakos expects Ziki to release a delivery application around the end of the second quarter of 2023. The company will not entirely cut out third-party delivery apps, but the CEO hopes this will create another avenue for customers to order. While delivery marketplaces help with market awareness and customer acquisition, they also cut into a a restaurant's bottom line — fees often range between 20% and 30%, Nanakos said.
The Ziki CEO feels his timing is right, despite abundant fears about a future recession. Food is the most important spending category in the world, Nanakos said. He stays mindful of the situation and is using this period of investment to work more and hire employees.
"We're seizing the moment right now ... because there's opportunity in crisis," Nanakos said. "Everyone in the company has a just unstoppable level of optimism around what we're doing."
The future will also likely include more venture funding for Ziki. Nanakos declined to discuss the company's exact runway after raising the $6.7 million but said he is already taking steps to prepare for a larger, series A round, possibly in next year's third quarter.
Editor's note: This story has been updated with a photo of Nick Nanakos and to clarify a quote by the Ziki CEO.
