In 2018, Tastemade set its sights on opening physical cafes with the hopes that they would become a new revenue stream for the digital food publisher. But after a rocky start (those dreams were never actually realized), Tastemade is opening restaurants five years later.
On Thursday, the Tastemade Me Tacos cafe will open in the Citizens Culinary Market at Hudson Yards in New York City to the public. It marks the first of six physical cafes it hopes to open this year in the U.S. — hoping to eventually expand Tastemade Me Tacos to 30 regions around the country on food delivery apps like DoorDash, GrubHub and Uber Eats with local and national chain restaurants serving as ghost kitchens, preparing and fulfilling orders and sending them out in Tastemade packaging.
Later this spring, locations in Seattle, Los Angeles, Philadelphia, Atlanta and Minneapolis are expected to open. The New York City location opened for a preview on Tuesday night with samples of its culinary fusion-inspired tacos including the “Carnityaki taco” with teriyaki beef and the Chicken Shawarma taco with feta, sumac and tahini. Primarily aimed at serving the lunch crowd for Hudson Yards-based employees, the food stall is open from 11-3 p.m. Monday through Fridays.
And while that might sound like significant overhead and operational costs for a publisher already in a precarious industry, Tastemade seems to have struck a relatively risk-free deal with restaurant operator and food tech platform C3.
Jeremy Strauss, head of business development at Tastemade, wouldn’t disclose the exact terms of the partnership between Tastemade and C3, but he said that the company licensed the Tastemade name to C3 and that there is a revenue share deal on the restaurant’s earnings.
“This will be profitable for us this year and I believe it will be profitable for C3 as well,” said Strauss, who added that the goal is to scale the cafes and delivery markets starting in Q4 this year, as well as explore cafe openings in airports and sports arenas, which C3 also operates.
Tastemade’s first attempt to bring its food content to life was in 2016 when it became a minority investor into Bondi Harvest, an Australian-inspired cafe adjacent to its Santa Monica-based content studio that was operated by two of Tastemade’s own creators. Three years later, Bondi Harvest became Blueys and though Strauss didn’t explain the exact current dynamic, he did say Tastemade is still an investor and works with that team “quite closely.”
A couple years later in 2018, Tastemade attempted the cafe licensing model in Brazil, its second largest market for audience, and licensed its name to a cafe operator there. But alongside many other food establishments in 2020, the Sao Paulo-based Tastemade Cafe closed during the pandemic.
A licensing consultant who spoke on the condition of anonymity said that without knowing the exact terms of the deal, it’s reasonable to assume that a licensor in Tastemade’s position would earn anywhere from 10-18% in royalties from the revenue share model. The upfront licensing fee was more difficult to estimate, however, given that those prices are really specific brand to brand and could realistically range anywhere from $20,000 to $1 million. But they did say that licensing fees can be reduced on occasion to account for the overhead costs that a licensee like C3 has to take on within the partnership.
“It’s definitely riskier for C3 than it is for Tastemade. What’s the worst that can happen? They pop up and it dissolves in six months? That’s not so bad [and] it’s great marketing exposure for Tastemade during the time because, really, licensing is, at its heart, a mode of marketing,” said the licensing exec.