While indoor dining has dropped way down during the pandemic, food delivery has grown considerably. DoorDash and Uber Eats, the two largest delivery apps by market share both saw their sales double from the end of 2019 to the end of 2020.
But while it might be an easy decision for customers to use these third-party delivery apps, the decision for restaurants is not so easy. There is a lot to consider, and it’s not a one-size-fits-all solution.
Demand for food delivery has soared amid the pandemic, but restaurants are struggling to survive. In a fiercely competitive industry, delivery services are fighting to gain market share while facing increased pressure to lower commission fees and provide more protection to their workers. Video/Photo: Jaden Urbi/WSJ
Ghost kitchens are kitchens designed for delivery-only businesses, without dine-in areas or customer facing storefronts. The pandemic has ravaged dine-in eateries, and companies that have focused on delivery could come out on top if the current trends continue. Watch the full video to see why ghost kitchens are taking over the restaurant industry.
Here are some of the top Ghost Kitchens:
With a $10 million dollar investment from Google Ventures, Kitchen United has been one of the leanest (and fastest-growing) startups in the space. Founder Jim Collins has turned down hundreds of millions of investment dollars to focus on growing more organically. Currently, Kitchen United plans on conquering the global restaurant space — with 5,000 kitchens planned in the next four years.
All in all, Kitchen United offers a turn-key, light-capital model, delivering a complete, code-safe kitchen replete with appliances and cooking implements. All that’s left to do is to…cook.
The fastest-growing and most investor-friendly ghost kitchen startup, CloudKitchens, has already taken in over $400 million from investors. $150 million interestingly invested by its founder (former Uber superstar) Travis Kalanick. Like Kitchen United, CloudKitchens offers fully-equipped kitchens (branded as “smart kitchens”) for the delivery-only model. Honestly, you can’t ignore a project that Travis is a part of.
Another not-so-surprising entry into the ghost kitchen space is DoorDash, which has already premiered locations in San Francisco and Redwood City. Currently, DoorDash’s model is focused on catering to high-delivery areas for established brands like Chic-Fil-A, but we’re sure they have plans in the works for new locations, as well.
For the time being, DoorDash Kitchens is still in the experimentation phase, with only a few locations. And, like others on this list, it provides everything a restauranteur would need for a single monthly fee.
For the moment, we’ll set aside the possible conflicts associated with Uber’s ex co-founder Travis Kalanick — who’s also operating CloudKitchens. We’re sure that bridge will need crossing at some point if Uber expands its operations. For the time being, the ridesharing company has been keeping a low profile in the ghost kitchen space. To date, it has been testing ghost kitchens in a few markets, though it remains curiously reluctant to share the delicious details pertaining to its Paris operations.
Virtual Kitchen Co.
Another new entry is Virtual Kitchen Co. — which already operates several successful ghost kitchens. They plan to open 15 more kitchens over the next few years, driven by $15 million dollar Series A. Again, Virtual Kitchen Co. offers a similar pricing structure: Restaurants can pay a monthly fee for everything.
The one small difference here is that Virtual Kitchen Co. seems to be targeting existing restaurants that want to enter the delivery space.
Will the coronavirus pandemic lead to long-term changes in how we shop for food? To better understand the challenges facing grocery stores, WSJ’s Alexander Hotz spoke with an industry insider, a store owner and a Walmart executive.
“The way our customers order and receive meals is evolving, and ClusterTruck’s innovative culinary and digital design is cracking the code for the future of profitable meal delivery,” said Yael Cosset, Kroger’s CIO. “Kroger is leveraging ClusterTruck’s advanced technology to ensure our customers don’t have to sacrifice quality and value for convenience when it comes to meal delivery. Kroger Delivery Kitchen Powered by ClusterTruck will allow our customers to access restaurant-quality fresh and delicious meals like never before and without having to pay excessive service or delivery fees.”
The Kroger Co. (NYSE: KR), America’s favorite grocer, and ClusterTruck, a software platform that powers profitable, vertically integrated delivery-only kitchens, today launched a partnership that will change the way Americans access freshly prepared meals. By offering multiple menus from one central scratch kitchen, Kroger Delivery Kitchen will deliver fresh and delicious meals on-demand without service or delivery fees.
DoorDash customers can now order from a handful of chain restaurants and either pick up food right at the commissary or have it delivered. This first location of DoorDash Kitchens, located in Redwood City, CA, will serve several cities in the California Peninsula area, including Menlo Park, Palo Alto, and Woodside, among others.
With more and more restaurants, food entrepreneurs, and delivery services using ghost kitchens, it seemed only a matter of time before DoorDash built one of its own. So it’s not too surprising that today, the San Francisco-based company announced the launch of its first ever shared commissary kitchen, dubbed DoorDash Kitchens, which will house multiple to-go restaurant concepts under a single roof, according to an email sent to The Spoon.
The national pizza chain recently announced a partnership with Rad Power Bikes, a Seattle-based electric cycle startup, in which Rad will provide Domino’s franchise owners with e-bikes to replace vehicle deliveries. Through the exclusive partnership, Domino’s franchise owners will have the option to purchase a custom-outfitted e-bike for up to $1,400. Switching from vehicle deliveries is not mandatory, but according to Brian Rinckenberger, commercial sales director for Rad Power Bikes, it’s likely to be an appealing option for Domino’s franchises as e-bikes could help speed up delivery times and create opportunities to have more people making deliveries at once.
That is what played out when Domino’s tested out making deliveries by e-bike in Houston, Miami, and New York City earlier this year. According to Rinckenberger, stores saw improvements in overall delivery time and service, as e-bikes are able to skirt around congested vehicle traffic lanes and can be parked much more easily.
From a New York Times article by Mike Isaac and David Yaffe-Bellany:
No longer must restaurateurs rent space for a dining room. All they need is a kitchen — or even just part of one. Then they can hang a shingle inside a meal-delivery app and market their food to the app’s customers, without the hassle and expense of hiring waiters or paying for furniture and tablecloths. Diners who order from the apps may have no idea that the restaurant doesn’t physically exist.
The shift has popularized two types of digital culinary establishments. One is “virtual restaurants,” which are attached to real-life restaurants like Mr. Lopez’s Top Round but make different cuisines specifically for the delivery apps. The other is “ghost kitchens,” which have no retail presence and essentially serve as a meal preparation hub for delivery orders.
“Online ordering is not a necessary evil. It’s the most exciting opportunity in the restaurant industry today,” said Alex Canter, who runs Canter’s Deli in Los Angeles and a start-up that helps restaurants streamline delivery app orders onto one device. “If you don’t use delivery apps, you don’t exist.”