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Daily news and analysis about the food tech revolution

Cloud Kitchens

MrBeast: I Want To Move On From Beast Burger, Enjoy Feastables ‘100x More’

As the virtual restaurant and ghost kitchen business has struggled for much of the past year, proponents pointed to the success of MrBeast Burger, a virtual restaurant chain started by the YouTube star that expanded to over 300 contracted restaurants and included some physical restaurants.

But now it looks like the creator behind the virtual brand wants out, tired of a business in which he claims he has little control over the quality of the end product. In a series of now-deleted tweets late last week, MrBeast – whose real name is Jimmy Donaldson – explained he was ready to move on from the brand and wanted to focus more on his snack brand, Feastables. In one of the tweets, Donaldson lamented that the company he partnered with to launch the brand (Virtual Dining Concepts) won’t let him stop “even though it’s terrible for my brand.”

In the following tweet, which has yet to be deleted, Mr. Beast explained his reasoning for wanting to move on:

MrBeast’s problems with varying food quality are a symptom of the virtual restaurant industry’s decentralized and distributed operating model and lack of a uniform set of enforceable quality standards. Still, much of his loyal fan base has been willing to cut him some slack, and up to last fall, Donaldson was still discussing plans to expand the brand to more physical restaurants.

Despite his wishes, VDC still looks to have an enforceable contract that they plan to run with. Donaldson lamented their insistence on continuing the brand, saying, “the company I partnered with won’t let me stop even though it’s terrible for my brand.”

Donaldson’s disclosure about his feelings leaves VDC in an awkward spot, even if they have the right to continue opening the brand. MrBeast’s fans tend to be pretty loyal to him, and if word gets out that he’s soured on the project, my guess is any remaining loyalty they have to the virtual brand will evaporate.

Unlike the virtual restaurant brand, Donaldson’s snack brand Feastables is one over which he appears to have much more control. The brand was internally incubated through his own management company, and he partnered with industry pioneer Jim Murray (founder of RX Bar) as a co-founder and CEO of the company.

2023 Restaurant Tech EcoSystem: Nourishing the Bottom Line

In collaboration between TechTable and Vita Vera Ventures, we are pleased to share an updated 2023 Restaurant Tech Ecosystem map.

We all saw that the pandemic brought a wave of experimentation in the restaurant tech space, but we also know that tech-driven change is not always linear. 

In early 2022, we made bold predictions about the restaurant tech environment in 2023, as we anticipated numerous acquihires ahead (acquisitions primarily driven by tech talent vs strategic tech value). This was due to the tight tech labor market (at the time) and the increasingly challenging funding and interest rate conditions. 

However, with the recent wave of macro tech layoffs, the tech labor market is no longer tight, and we believe more restaurant tech companies may be forced to shut down rather than finding a soft landing through acquisition. We’ve already seen a strong reset on requirements for capital efficiency and valuations of startups in the sector. This macro shift may create potential for rollup opportunities, but many early-stage assets across the sector are overfunded single-point solutions and still subscale.

This is ironic as the need for tech-driven solutions has never been stronger, but companies without the right growth metrics will likely struggle to survive. The inflationary environment is also forcing harder decisions for operators, which may further dampen their willingness to engage with new solutions.

With that in mind, we are pleased to share our 2023 Restaurant Tech Ecosystem, which serves as a current heat map of the broader ecosystem within the US (and is clearly not exhaustive). 

Click here to enlarge/download image of map. Click here for downloadable PDF.

The Journey from Point Solutions to Comprehensive Tech Stacks

While single-point solutions for things like online ordering, loyalty programs, and delivery were popular during the pandemic, we have reached a moment now with perhaps too many point solutions in the market. 

Tech stacks that require too many logins are now in fact creating a cognitive burden for employees, rather than the intended promise of efficiency and ease of use. As a result, operators are beginning to seek integrated systems and smaller tech stacks that can do more. (See commentary in the previous section about rollup opportunities!) 

Restaurant tech advisor David Drinan succinctly identifies the near-term priority for most operators: “The restaurant industry is thirsty for technology innovation that will deliver high margin, incremental revenue.”

On the operational side, managers are still struggling with certain areas such as scheduling and inventory management. These tasks can be time-consuming, especially for independent restaurant owners who have limited resources. As a result, we have seen a growth category of solutions that can automate these functions and provide real-time data to help operators make informed decisions.

Help *Still* Wanted   

The labor shortage in the restaurant industry has been a major challenge for operators in recent years, and labor optimization is still at the top of every operator’s mind. The pandemic caused many workers to permanently leave the hospitality industry, leaving restaurants short-staffed. 

According to the National Restaurant Association, almost two-thirds of US restaurant operators say they do not have enough employees to support existing demand. Instead of replacing this lost workforce, many operators are turning to tech to automate more functions and reduce the need for human labor. 

From digital menus and ordering kiosks to automated kitchen equipment, there are many ways that technology can help restaurants operate more efficiently with fewer employees. By automating basic tasks such as taking orders and processing payments, operators can free up their staff to focus on more complex tasks that require human expertise, such as customer service and food preparation.

Another trend the restaurant industry is grappling with is the changing expectations of younger workers when it comes to the employer/employee relationship. With more emphasis on work-life balance, career development, and job satisfaction, younger workers are looking for more than just a paycheck. 

To meet these expectations, operators are looking for workforce management solutions that can help to improve engagement, development, and rewards for their employees. This includes tools for tracking and managing schedules, as well as innovative solutions for tip outs and other compensation mechanisms. By investing in these solutions, operators can not only attract and retain top talent but also improve the overall efficiency and productivity of their workforce.

Finally, it is worth noting that basic scheduling and labor management tools can have a significant impact on profitability by reducing labor costs and improving operational efficiency. By automating scheduling and timekeeping, for example, restaurants can reduce the likelihood of overstaffing or understaffing, which can be costly in terms of wasted labor or lost sales opportunities. 

In the end, the ability to leverage technology to optimize labor is critical for restaurants to remain competitive in a challenging operating environment. While kiosks and text ordering have shown promise in the QSR space, there are many other opportunities for technology to make a positive impact on the industry as a whole.

Ghost Kitchens: It’s Even More Complicated

In our 2021 restaurant tech retrospective, we had a lot to say about this growing subsector, including the challenges for success (a.k.a. profitability) within the confines of a ghost kitchen business model.  

Now, as the concept of virtual and ghost kitchens continues to evolve even further, it’s important for operators to understand the complexities involved and navigate these challenges to build successful ghost kitchen operations.

One major obstacle has been the potential for tension between virtual brands and existing businesses, where adding virtual brands can lead to direct competition with their own existing businesses. Finding the right tech and operational partner to balance between these two is key.

Additionally, ensuring food safety and maintaining quality standards across multiple brands can be a challenge. Many of the generic virtual brands have lacked distinct value or clear taste standards, leading to underwhelming food quality issues and removal from the major third-party delivery platforms.

Last Mile Magic

Making the economics work for restaurant delivery is a growing priority for the industry. This includes better interoperability between POS/Kitchen systems and delivery providers, better routing and batching systems, localized kitchens, and of course even the mode of transportation for delivery.

We are tracking over 20 companies in the North American unattended last mile category, but it is still early days with most (all?) of the solutions operating in limited geographies and customer trials. So we have left this slice off the infographic for 2023, but don’t forget to keep your eyes on the sky, as we’ve seen recent growth of backyard drone delivery companies which are proving to be faster and better for the environment (if they can outweigh the noise and regulatory concerns).

GenAI on the Menu

Tech entrepreneurs have long dreamed of personalized food recommendations, but few have succeeded in creating true personalization beyond dietary concerns, allergens, or ingredient likes/dislikes. 

However, we have now reached a unique moment where new technologies like ChatGPT will be able to create meaningful and personalized interactions with guests. This has always been the premise of a variety of AI-driven restaurant tech startups, but the ability to leverage the underlying data to engage and interact with guests in a truly personal and conversational manner is game-changing. 

By using data from previous orders and interactions alone, ChatGPT can help to create a more tailored experience for guests, from recommending menu items to offering personalized promotions. ChatGPT can become a critical part of a restaurant’s marketing team by creating content, with the ability to easily translate to different languages as well. This could give operators a crucial competitive advantage as consumers demand more personalized experiences. We have only begun to see the capabilities of ChatGPT with free templates being offered to restaurant operators already.

Moreover, conversational AI like ChatGPT can also be a valuable tool for restaurant operators seeking to understand their own operating metrics. By integrating ChatGPT into their tech stack, operators can ask natural language questions and receive real-time responses, empowering them to make informed decisions about their operations.

Emerging Restaurant Tech Concepts to Watch

  • Chat/AI across marketing and operations
  • Tech-enabled employee support and training (for example, personalized perks, tip-out options, or language choices) 
  • AI for scheduling to free up managers
  • Dynamic pricing
  • Reusable containers + tech-driven circular economy for foodservice 

Looking ahead –  As always, we welcome your thoughts and reactions, and look forward to continuing to follow this sector together in the coming years. Reach out to us: Brita@vitavc.com and hello@techtablesummit.com. 

CloudChef Wants to Capture a Chef’s Knowledge in Software to Recreate High-Quality Cuisine Anywhere

What if you could digitally record the best chefs in the world as they make their culinary masterpieces? And what if you took that knowledge and encoded it into software that enabled everyday kitchen workers across the globe to recreate these dishes without specialized training?

That’s the idea behind CloudChef, a new company that wants to create a “Spotify for food” with a cloud software platform that aims to enable culinary teams in remote kitchens to make a meal just as a master chef would.

“We started CloudChef with this whole notion that in the same way that you can record and playback audio and video, you can now record and playback taste,” said CloudChef founder Nikhil Abraham in an interview with The Spoon. “And if you could hypothetically record and playback taste, you could eat from the best chefs and restaurants and literally anyone from the world without having any location constraints.”

So how does it work?

According to Abraham, CloudChef has outfitted its capture kitchens with technology that closely monitors a chef working through a recipe. Sensors and cameras monitor everything from the temperature of a protein to the moisture lost while reducing a sauce to the brownness of an onion and put it all into a machine-readable playback file that can be executed in a kitchen powered with CloudChef’s software.

“With our sensors, depending on what recipe it is, we can codify the intent behind the steps and also codify the intuition of the chef,” said Abraham.

Record & Playback Taste - CloudChef

On the “playback” side, how does CloudChef-enabled kitchen work?

Abraham said a CloudChef-powered kitchen is nothing but a standard kitchen, but the appliances are controlled by software. Modern appliances accessible via an API (like a newer Rational oven, for example) can connect directly and receive instructions from the CloudChef software. For appliances without the ability to interface with external software systems, CloudChef “opens it up, and we put an additional small amount of hardware in there to help us control the appliance with software.”

Abraham said that while CloudChef kitchens have the cooking guided by their software, humans still play a significant role in creating meals. The physical labor of moving food from station to station, taking stuff in and out of the freezer, and plating are all still done by workers without specialized training under the guidance of CloudChef.

“Every workstation in our kitchen is loaded with screens, and people have personal devices on them at all times,” said Abraham. “For example, they get tasks like ‘go to workstation two, and then the task would be to remove contents from this pan onto this other pan and put it inside the blast freezer.’ The physical action of moving stuff around in the kitchen, weighing things out the right way, is done by humans while all the cooking decisions are made by software.”

Abraham believes this ‘co-botic’ balance between software automation and humans is essential. For example, while he could envision a future where more cooking tasks are executed by robotics, he said the best results come when a human is involved.

“And at some point, we’ll have some amount of automation in the kitchen, but there are still a lot of different tasks in robotics that machines are particularly bad at, and humans are just instinctively good at,” said Abraham. “If you tell a human to scrape stirred rice from the bottom of a pan, it’s pretty intuitive. Most humans wouldn’t have a problem doing that. But teaching that to a robot takes time.”

Eventually, the company plans to open up the CloudChef platform to other kitchens via a licensing/SaaS model.

“The vision with that product is that if you’re a kitchen owner, you will give your kitchen spec via a web interface, and we will guide you on what all appliances you need to buy, or what all incremental things you need to put in your kitchen to make it CloudChef ready,” said Abraham. “So just like how Android has guidelines for hardware manufacturers, we will also have guidelines for kitchens that are CloudChef-powered

But for now, Abraham said the company’s current focus is on the “capture” side of things. They are working on recording as many chef recipes to the platform as possible – they currently have about 100 – which can be used in CloudChef-powered kitchens.

CloudChef currently has two company-owned kitchens, one in Mumbai and one in Palo Alto. The Mumbai location is an outsource kitchen for brands and has already served over 50 thousand CloudChef-cooked meals. According to Abraham, the brands have received higher ratings and retention rates compared with other kitchens. The Palo Alto location is operational and delivers meals via third-party delivery services like DoorDash.

While you may be partially correct if you think some chefs would resist the idea of having their cooking know-how put into a system that automates their work somewhere else, the company hasn’t had any problems getting high-profile Indian chefs like Srijith Gopinathan (Ettan), Thomas Zacharias (Bombay Canteen, Locavore), and Manjit Gill to record recipes on their platform. Part of the attraction, no doubt, is the royalty the chef receives each time one of their recipes is made. However, I imagine some may also be attracted to the idea that CloudChef technology could create a more chef-like version of their recipe, which may make them feel better about the idea of lending their name to food sent out via ghost kitchens which, if we’re being honest, don’t always have the best record of creating chef-like food.

CloudChef’s own investors include celebrity chef Tom Colicchio and Roy Yamaguchi, so they clearly also see value in the idea (though they haven’t – at least at this point – put any of their recipes on the platform).

Dallas Chef Offers A Fearless Approach to Her Vegan Ghost Kitchen

For Dallas chef Lori Moore, operating her new business, Vspot, out of what is commonly called a “ghost kitchen” is no figment of anyone’s imagination. Her vegan-inspired menu evolved from her fanciful passion for food, but Lori’s lunch and dinner spot is the result of years of training, hard work, and planning. In her case, the “ghost” part of the equation is more of a conscious choice than a need to follow a growing trend.

“I was always that weird kid that loved veggies,” Moore said in a recent interview with The Spoon. After graduating from Dallas’ Le Cordon Bleu College of Culinary Arts in 2011, Lori toyed with the idea of opening a vegan food truck. Still, the cloud kitchen concept allowed her to focus more on cooking and less on infrastructure.

In order to avoid tackling complex technology on her own, Moore took advantage of a platform offered by Los Angeles-based CloudKitchens, a company founded by Diego Berdakin in 2016. Key features of CloudKitchehn are tools that allow Moore to track orders and work with suppliers. The consumer-facing process starts with Flipdish, a seperate technology, that takes customer orders, which are sent to the kitchen owner for fulfillment. Next in line is Otter, an AI-based technology, which seamlessly connects to various delivery options, including Uber Eats, Door Dash, Caviar, and Grubhub.

“Using the technology of a cloud kitchen, it takes care of the technology that is out of my range,” Moore said. “It lets me do what I do best—cook.

Before starting Vspot, Moore offered meal prep, which gave customers menu options in advance that the Dallas chef would prepare for her clients to pick up. Her weekly menu would include five different choices for lunch and five for dinner.

Moore’s decision to focus on vegan food was partially based on her food preferences and appealing to the North Texas’ growing interest in plant-based foods, which was aligned to her community becoming more health-conscious during the COVID-19 pandemic. The commissary where she does all her cooking is in Trinity Grove, near the downtown area, where many of her regulars live.

“Many people are intimidated by the idea of being vegan,” she said, commenting that many are shocked when they order and enjoy a vegan burger. “They can’t believe it’s vegan and can’t wrap their head around it.”

Between 75% and 80% of her food is made from scratch, with such items and burgers, cheese, chicken, and buns provided by a local purveyor. Listening to what she jokingly calls “voices in her head,” Moore hopes to add soups and other staples to her roster of vegan offerings.

As with most successful upstart food companies, Moore is a heavy user of social media leaning on Instagram to whet people’s appetite with pictures and videos of her burgers (Impossible Burger), vegan chicken sandwiches, sides, and desserts.

The cloud/ghost kitchen concept fits Moore’s vision to a T. She refuses to be satisfied with her single location in Dallas, hoping to expand her idea across the country. She would find a place for the cloud kitchen and train people to handle the food prep in order to carry out that vision. Of course, leaning heavily on her model of using Flipdish and CloudKitchens for the required tech muscle would be a significant key towards achieving her long-term goal.

Lori Moore is not alone in seeing the power and profit of vegan-themed cloud kitchens. Aside from startups in China and India, there are Souley Vegan, based in Oakland; Good Vibes in Sacramento; Qusqo Bistro in Los Angeles, and Los Angeles-based Plant Nation.

Restaurants Are ‘Always Blamed’ When It Comes to Bad Delivery. Here’s How Tech Can Help

Who is responsible when something goes wrong with delivery?

A succinct-yet-apt answer to that question recently came from fast casual chain Wow Bao’s President and CEO Geoff Alexander, who spoke at The Spoon’s Restaurant Tech Summit this week: “As the restaurant brand, you are always blamed.”

If you’ve ordered via third-party delivery with any frequency, you’ve likely dealt with the following scenario: The order is late or does not arrive. The customer calls the delivery service and gets an automated response. The customer calls the restaurant itself, who may not know where the food is because it left the the building ages ago. If and when the meal finally arrives at the consumer’s door, it will be cold, soggy, dry, or all of the above. It’s usually not DoorDash, Uber Eats, or any other delivery service that gets blamed for these problems. 

By way of example during the event, Alexander brought up Fargo, North Dakota, where Wow Bao operates one of its dark kitchen locations. For these kitchens, other restaurants cook some of the Wow Bao brand’s signature items and sell them on the usual third-party delivery channels as a way to make incremental revenue. Wow Bao has about 350 dark kitchen locations around the country right now, with a “moonshot goal” of reaching 1,000 by the end of the year. 

Brand integrity is always something to watch for with these kitchens. “When an issue happens there, it’s not Wow Bao,” Alexander explained at the event. “It’s somebody running one of our dark kitchens. And [the food is] delivered via one of three or four delivery platforms. I get the phone call. Wow Bao corporate gets the phone call, we get hit on Instagram or social or Google Reviews. That whole brand transfer hast to be the most guarded and respected piece by the brand itself and by the operator to work together. At the end of the day, the way that guest is handled is what’s going to decide if the guest is going to come back and who they’re gonna tell.”

As to how tech can help restaurants guard this brand transfer, the other panelists pointed to tools that can optimize operations. Ava Ghaiumy, Delivery Hero’s regional director for global foodservice operations, pointed out that there is “almost no bigger KPI than speed.” Her company, which is investing heavily in various tech initiatives, is working on things like improved dispatching and rider-tracking features that can help with speed of service when it comes to delivery.  

Olo’s Marty Hahnfeld, who was also on the panel, said it’s all about “precision in operations.” That includes improving order accuracy, making sure menus are up to date across all ordering channels at all times, and that pricing is correct on those channels as well. Olo offers its Dispatch service that allows restaurants to order directly from a restaurant’s own website or mobile app. Though in most cases, there is still a reliance on third-party delivery to handle the last mile.

At the end of the day. the most important technology to keeping brand integrity intact may be one that’s been around for quite some time: the POS integration.

Such an integration connects, among other things a restaurant’s main POS system with the many different channels through which customers buy meals nowadays, including third-party delivery. Whereas in the old days (two years ago), delivery services provided an external tablet and restaurant staff manually key’d in orders to the main POS system, more restaurants are now directly connecting delivery to that main system. Panelists were unanimous in their belief that this is an extremely important technology when it comes to improving order accuracy, timing, and a generally smoother experience for everyone.  

As the Ghost Kitchen Industry Matures, Here Are 5 Trends to Watch

This following a guest post from Warren Tseng, a long-time operator, investor and advisor in the restaurant and ghost kitchen industries (full bio below).

The food industry has managed to squeeze about 10 years of innovation into just 18 months thanks to the pandemic. This in turn has given rise to a variety of ghost kitchen models that have allowed restaurants and food brands to increase sales and reduce their operating costs. Now that restaurant operators have seen that online delivery may likely be the bulk of their sales going forward, we will continue to see them double down on delivery and find new ways to become more efficient and technology-driven in terms of menu development, supply chain efficiency, direct-to-consumer distribution solutions, and kitchen automation. Here are five trends that will continue to shape the rapidly evolving ghost kitchen industry beyond the pandemic.

  1. Leveraging data and AI to inform menu and product development

Data can provide invaluable insight to any customer-facing industry, and ghost kitchens are no exception. Ultimately, data regarding brand preferences, pricing strategy, ingredients, and the popularity of cuisine types in certain regions can inform everything from menu design to marketing strategy for delivery-only food brands. Examining customer ordering data can also inform restaurants where their particular cuisines may fill a gap on a hyper-local basis, and where they might want to offer their products via a ghost kitchen versus a bricks and mortar location.

For example, JustKitchen has partnered with two Michelin-rated restaurants, Orchid by Peng and 3 Coins, to create delivery-only menus. Their brick and mortar locations previously were situated in very high-density areas of Taipei. By partnering with us, they were able to test the demand for their food in other parts of Taiwan without having to invest in real estate first. By examining the customer ordering data on a trial basis, we were able to see that the demand for this fine-dining style of food was very strong throughout areas of Taiwan they previously weren’t serving.

Additionally, brands that are interested in expanding into new countries can use a ghost kitchen to test out the popularity of the food on a trial basis before taking the leap and investing in the additional real estate and marketing that a global expansion normally requires. They can also test menu items on a trial basis and use ordering data to determine whether certain menu items are a fit for a new market — for example, a North American market versus an Asian market — before developing and rolling out a final concept and menu.

  1. Delivery-only food brands going direct-to-consumer

Whereas today many ghost kitchens and delivery-only brands rely solely on third-party food delivery platforms to connect with customers, in the future we are going to see more ghost kitchens and food brands going direct-to-consumer. Established food delivery platforms will more frequently be used as a test for brands to get initial exposure through the platform’s users. Once operators have found the right product-market fit, they will benefit from continuing to invest in the brand and building out new distribution channels, just as many startups first launch products on a platform like Shopify to test the market before building their own online sales portals and investing in marketing and distribution.

  1. Environmentally conscious initiatives to reduce packaging and food waste

Food waste is a growing global environmental and social issue, and restaurants are one of the world’s biggest contributors to it. In the U.S. alone, it’s estimated that restaurants account for 22-33 billion pounds of food waste each year. But ghost kitchens really do have an opportunity to be leaders in the restaurant industry in terms of reducing food waste. For example, using technology, ghost kitchen operators have the ability to more carefully track historical delivery data to better predict demand and thus more accurately plan supply, which can greatly reduce food waste. In addition, real estate players that host multiple ghost kitchen operators in a single facility, such as CloudKitchens, are able to leverage economies of scale with suppliers to boost efficiency and lower costs for operators. Similarly, ghost kitchen operators that offer grocery delivery in addition to meal delivery can take advantage of the FIFO (First In, First Out) rule: ingredients and supplies can be used in both meal preparation and grocery delivery services, reducing the chance of food going off before it’s used.

It’s no secret that the rising demand for online food delivery also means more packaging that gets tossed in the garbage. I believe that as the industry matures, more ghost kitchen operators will be held accountable for their packaging. At JustKitchen we use 100 percent recyclable or compostable packaging and paper straws instead of plastic straws. I believe, and hope, that we will see more ghost kitchen operators taking the initiative to replace single-use plastics with more environmentally friendly materials in future.

4.) Autonomous food delivery

A big challenge that ghost kitchens and online food delivery platforms alike experienced during the pandemic was a shortage of delivery drivers. As demand for online food delivery exploded during the pandemic, many third-party delivery platforms found themselves short of drivers. Additionally, many people were concerned about drivers handling food hygienically and following contact-free drop off protocols. In some cities, autonomous delivery robots have provided a viable solution to these issues, as they can bypass obstacles such as traffic and human-to-human contact during delivery. However, realistically delivery-by-robot only works in core downtown areas where the delivery destination is relatively near to where the food is prepared. Self-driving cars that can travel longer distances will likely provide a more viable autonomous delivery option in future, but we are not there quite yet.

5.) Modularized / container ghost kitchens

As the industry evolves and cooking technologies become more automated (check out Flippy, the burger-flipping robot), kitchens and everything from cooking to packaging and delivery will become more streamlined and less costly. In general, if care is taken to design menus and preparation methods that are highly efficient, delivery-only food brands will continue to evolve so that they need less space, less equipment, and perhaps even less staff to operate. When you need less space to operate in, you can invest in setting up a greater number of smaller kitchen facilities that occupy less real estate but cover more ground. Modular kitchens can be set up in spaces as small as a shipping container, can be deployed almost anywhere, and can still produce excellent quality products. Many ghost kitchens, such as Reef Technologies, are already implementing modular kitchens and although it can be a trial and error process at first, this is likely a trend we will see more of in the future.

At the end of the day, successful ghost kitchen operations are all about efficiency, and that can be thought of in two parts. On the restaurant side – implementing technology that enables a single ghost kitchen operator to handle multiple brands on multiple delivery platforms out of one kitchen will improve staffing efficiency and reduce food wastage. On the delivery side – having multiple restaurants and multiple brands concentrated in a small footprint, and technology that enables effective queuing and batching of orders – allows couriers and third-party logistics to batch multiple orders from one pick-up location to deliver to multiple destinations. This not only significantly boosts the efficiency of the logistics providers for the last mile, but most importantly, ensures the customer receives the highest quality product possible. Ultimately, ghost kitchens that can consistently deliver high-quality, on-brand products will be the winners in this increasingly competitive marketplace.

Warren Tseng is a strategic advisor to Taiwan-based cloud kitchen operator and delivery-only food brand developer, JustKitchen. Mr. Tseng is an early-stage business operator, advisor, and angel investor with extensive experience establishing and growing companies acrossSoutheast Asia and Greater China. He was an early entrant to the on-demand economy and the cloud kitchen industry from his previous roles as General Manager (Singapore) at Uber Technologies, and Regional General Manager (Asia Pacific) at CloudKitchens, where he established the companies in eight countries across the APAC region.

Q&A: Euromonitor’s Michael Schaefer Talks Restaurant Tech

Those with an eye on restaurant tech may remember that this time a year ago, Euromonitor predicted that the ghost kitchen market would be worth $1 trillion by 2030. 

That’s an enormous number to pin on what was then still quite a nascent sector. But Michael Schaefer, the Euromonitor analyst who made that prediction, wasn’t just talking about ghost kitchens for restaurants. He was talking about ghost kitchens that house ready-made meals and pantry/fridge staples, deliver groceries, and service other parts of the food sector in addition to restaurants. Turns out, he was right. Those lines between grocery, restaurant, ghost kitchen, and convenient store are fading as we speak, as much recent Spoon coverage can attest.

Michael is the Head of Beverages and Foodservice Research at Euromonitor International, tracking consumer trends, product innovations, and market evolution across the F&B industries. Needless to say, he’s hyper tuned into the state of the restaurant industry in 2021. Along with food tech investor Brita Rosenheim, he’ll help open The Spoon’s upcoming Restaurant Tech Summit, a day-log virtual event that will discuss the state, present and future, of restaurant tech. 

As a teaser, we recently got some high-level thoughts from Michael about where the industry is headed. Full Q&A is below. And if you haven’t already, grab a ticket to the show here.

This interview has been lightly edited for clarity.

The Spoon: What is the biggest change in terms of the restaurant industry’s approach towards technology as a result of the pandemic? 

Michael Schaefer: There’s certainly a greater willingness to experiment in the restaurant industry. Some technologies, which were adopted out of necessity — such as QR codes for ordering — offer long-term benefits without compromising the guest experience. This will drive further experiments, particularly with technologies that can offer labor savings. 

What do you think the restaurant industry’s biggest challenge is right now? 

Labor is without question the restaurant industry’s biggest challenge in the short term. Restaurant work is difficult, demanding, sometimes dangerous and often pays minimum wage. The pandemic exacerbated these issues while extended unemployment insurance has given workers time to consider their options. This shifting cost-benefit analysis will create ongoing staffing issues. More restaurants will need to consider investing in technology that creates labor savings and makes the average worker’s job less strenuous. 

What is the biggest challenge for restaurants right now when it comes to digitization? 

Integration is the biggest challenge for restaurants when it comes to digitization, particularly among independent outlets. There are more options than ever in terms of systems and approaches to technology. This creates challenges in terms of finding the right solution and ensuring that disparate software and equipment setups can work together in a high-stress restaurant environment. 

What are you most excited about when it comes to the impact of restaurant technology? 

I am most excited to start seeing a range of new models that will reshape what traditional restaurants look like. A restaurant starting from scratch in 2022 will likely take a very different approach to staffing, tech, integration with third-party delivery and loyalty, among other strategies, than a ten-year-old business might. 

What do you think the restaurant industry will look like in five years? In the next five years, restaurants will become less synonymous with prepared food. Prepared meals will remain the primary business for restaurants, of course, and dining in restaurants will not be going away. However, the range of operators, concepts and venues for obtaining prepared meals and solving for daily meal occasions will continue to expand. Rather than a strict separation of restaurants and prepared meals on one end and grocers and packaged food and drinks on the other, we’ll see more of a spectrum, with a range of different approaches to prepared food and drinks, generally ordered via an app and often fulfilled by third-party delivery.

Kroger and Kitchen United Partner to Bring Ghost Kitchens to Grocery Stores

Kitchen United (KU) will expand its ghost kitchen network to include Kroger locations thanks to a just-announced partnership between KU and the grocery retailer. KU kitchens will be located at various Kroger locations, the first of these being at a Ralphs in Los Angeles slated to open this fall. 

Participating Kroger stores will house a KU location that includes “up to six local, regional or national” restaurant brands, according to today’s press release. Customers can order meals from these restaurants via the KU mobile app or onsite at a self-service kiosk. They will have the option to bundle items from different restaurant concepts together into a single order, a concept that KU’s Chief Business Officer Atul Sood recently said was technically complex but extremely important to the future of online ordering.  

While customers can choose to have their meal delivered (via KU’s third-party delivery service partners), the bigger appeal here might be the pickup option. Since the kitchens will be located onsite at stores, Kroger customers can order food while they shop for groceries and simply pick their meal up at the end of their trip.

The partnership is another example of the lines between the restaurant ghost kitchen and the grocery store fading. A year ago, Euromonitor predicted such a shift would happen. In keeping with that, the last several months have seen companies like GoPuff, Ghost Kitchens, and Food Rocket launch initiatives that sit squarely between the grocery and the ghost kitchen.

Moving towards this gray area is intentional on the part of KU. “We are proud to have launched a number of successful ghost kitchen centers across the country, and now we are applying our experience and taking steps to expand in non-traditional ghost kitchen formats such as retail shopping centers and food halls like our newest kitchen center location in Chicago alongside our efforts with Kroger,” Sood noted in a statement. 

He added that KU’s tech stack is an important part of this setup and can optimize “any kitchen setting for streamlined and profitable off-premise business.”

More KU-Kroger locations are planned for the coming months. In the meantime, those interested in learning more about ghost kitchens and the ghost kitchen tech stack can tune into The Spoon’s Restaurant Tech Summit on August 17. The virtual event will feature KU’s CTO Jessi Moss along with many other restaurants, tech companies, and thought leaders in the restaurant space. Grab a ticket here.

Hosted Kitchens Raises €1.25M Seed Round for its Ghost Kitchen Network

Hosted Kitchens, an Ireland-based network of ghost kitchens, announced today that it has raised a €1.25 million (~$1.48M USD) Seed round of funding. In a message sent to The Spoon, Hosted Kitchens CEO Sean Murray said the round was funded by Irish private investors.

As its name suggests, Hosted Kitchens builds out multi-kitchen properties and software for other restaurants to rent to fulfill online orders. The company places its facilities in high-volume locations. Its software can process orders from multiple third-party delivery services such as Just Eat and Deliveroo.

Hosted Kitchens’ fundraise comes as the ghost kitchen space has been evolving over the past year as what a ghost kitchen is and where it’s located continues to change. For instance, third-party delivery service DoorDash expanded its own ghost kitchen program in California last week. We’re also seeing the new wave of speedy grocery delivery services like Gopuff and Food Rocket launch their own ghost kitchen programs, blurring the line between food retail and restaurant. We’ve also seen QSRs get into the ghost kitchen game with Burger King launching its own ghost kitchen in the UK. And ghost kitchens are starting to pop-up in new settings, such as C3’s move to bring ghost kitchens into residential buildings.

For it’s part, Hosted Kitchens says it will use its new funding to continue rolling out to new locations in Ireland and expand into the U.K. The company will also continue to hire out, growing its team from 4 to 20 over the next year.

Fee Caps, Mobile Apps, and More Recent Restaurant Tech News

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Here at The Spoon, we’re up to our elbows in prep-work for the upcoming Restaurant Tech Summit, which is right around the corner (August 17). The daylong virtual event will feature restaurant owners and managers, restaurant tech companies, investors, and many others sharing their thoughts on the digitization of the restaurant biz. 

In the meantime, there’s been plenty of news coming out of this sector that hints at what the digital restaurant of the future might look like. Here are a few notable pieces from the last week:

New York City’s commission fee cap gets extended to 2022.

NYC was one of the early cities to invoke a cap on the commission fees third-party delivery services like DoorDash and Grubhub could charge restaurants during the pandemic. The Big Apple currently requires those fees to be capped at 15 percent (normally fees can go up to 30 percent per transaction), and recently announced that lower number will remain in place for the rest of the year and on into next. The legislation was introduced along with four other bills aimed at third-party delivery, including one prohibiting non-partner restaurant listings and one forbidding services to charge for phone orders that didn’t lead to an actual transaction. 

All of this is a sign that City regulators are getting more involved with the doings of third-party delivery, which up to now have been largely unregulated and often controversial. San Francisco has already made fee caps permanent, and NYC doing so would further influence other cities. The pattern isn’t unlike the original fee caps introduced at the start of the pandemic: San Francisco was the first city to introduce them at the start of the COVID-19 pandemic. NYC quickly followed suite, trailed by most other major cities and dozens of mid-tier ones across the country. 

Homebase raises $71M for its restaurant team management platform.

Homebase, a SMB management platform, announced a Series C round of funding last week backed by a boatload of celebrity investors, including Matthew McConaughey and athletes Jrue and Lauren Holiday. The company will use the new funds to develop more digital tools for automating HR and payroll tasks.

While Homebase is not exclusively a restaurant tech platform, its focus on small, local business is beneficial to the thousands of independent restaurants out there that aren’t raking in billions thanks to their robust digital platforms. Homebase’s SaaS platform offers things like a digital schedule builder, a time clock that can integrate with POS systems, and payroll and hiring software. Working together, all of these small tasks have the potential to save time and therefore money, two things indie restaurants could use more of these days. 

Bluestone Lane launches a new app for all ordering channels.

A year ago, Austrailian-inspired cafe chain Bluestone Lane was touting its DIY mobile app thrown together quickly in response to the havoc COVID-19 was wreking on the restaurant industry. Fast forward to now, and the company chain has launched a new proprietary app that will process not just takeout orders but also those for dine-in and delivery.

The ability to process orders for off-premises and on-premises meals is unusual in the restaurant biz at the moment. Up to now, most mobile apps have been squarely focused on fulfilling delivery, pickup, and curbside orders — understandably, since those were the only channels available to consumers for more than a year. 

But even with dining rooms reopened, mobile ordering’s popularity continues to rise. Eventually, most mobile apps will likely service both off-premises meals and those eaten in the dining room. Bluestone Lane’s recent release gives us a glimpse into how those might function in the future. 

More Headlines

Gopuff Confirms Latest $1B Funding Round – The new money comes just months after Gopuff raised $1.5 billion, in March of this year. 

DoorDash Expands Its Ghost Kitchen Operation in California – DoorDash Kitchens San Jose will house six different restaurant concepts from both nationally known restaurants and those from the San Francisco Bay Area. 

Basil Street Using Equity Crowdfunding to Raise $20M for its Pizza Vending Machines – The pizza vending machine company recently announced that it is raising its Regulation A+ round of financing through equity crowdfunding. 

DoorDash Expands Its Ghost Kitchen Operation in California

DoorDash has launched a new location of its ghost kitchen operation, the company announced today via a press release sent to The  Spoon. DoorDash Kitchens San Jose will house six different restaurant concepts from both nationally known restaurants and those from the San Francisco Bay Area. 

This is the second DoorDash Kitchens location. DoorDash launched the first almost two years ago in Redwood City, California, and has served the Peninsula area of the state ever since. The new location will offer delivery and pickup orders for customers in San Jose proper as well as Saratoga and Campbell.

Restaurants in the new location include Aria Korean Street Food, Canter’s Deli, Curry Up Now, Milk Bar, The Melt Express, and YiFang Taiwan Fruit Tea. Canter’s, in particular, is notable on this list because it illustrates how ghost kitchens can potentially improve a restaurant’s geographical reach. Canter’s is so famous in Los Angeles it’s practically an institution. It also only has one brick-and-mortar location, in Los Angeles, though in the last couple years it has expanded its reach in Southern California via a partnership with Kitchen United. Teaming up with DoorDash gives Canter’s a presence in Northern California without requiring the buildout of a full restaurant.

As part of the new facility, DoorDash has launched DoorDash Kitchens Full Service, where the delivery service assumes day-to-day operations like cooking and boxing up orders instead of requiring the restaurant to do so. That requires less work from the restaurants themselves, but it does place even more control over the brand in the hands of DoorDash. DoorDash has partnered with culinary operator A La Couch to hire cooking staff and prepare meals. The last mile, of course, will be handled exclusively by DoorDash and its own couriers. 

DoorDash said part of the motivation behind Full Service is to offer restaurants even less labor-intensive ways to run a delivery-only kitchen. And nowadays, it doesn’t seem like such a bad idea, as many restaurants continue to struggle with high margins, a dearth of labor, and uncertain times in general. 

Full Service handles the hiring, training, and day-to-day tasks in the kitchen such as procurement and inventory management. Restaurants receive a portion of the revenue in return. A specific percentage was not given.

 

Gopuff is Hiring to Get Into Ghost Kitchens

It looks like Gopuff, which is best known for ’round the clock, half-hour grocery delivery, is expanding into the ghost kitchen business. According to HNGRY (subscription required), Gopuff is hiring more than 100 cooks, managers in states across the country including Arizona, Texas, Florida and Pennsylvania to be a part of its new ghost kitchen endeavor (hat tip to Grocery Dive).

A job description for a Kitchen Associate in Chandler, Arizona on Gopuff’s site reads:

As a member of Gopuff’s new Fresh Food & Local team, the Kitchen Lead role is crucial to contributing to the success of Gopuff Fresh & Local by leading and managing a vertically integrated ghost kitchen.

Ghost kitchens are commercial kitchen facilities without dining rooms that restaurant brands can rent out to create delivery-only concepts. Meal delivery and takeout, of course, have risen in prominence over the past year as the pandemic forced the closure of dining rooms across the country.

Gopuff, which has micro-fulfillment centers in 650 cities in the U.S., raised a whopping $1.5 billion in funding earlier this year and acquired fleet management company RideOS last month. The general thinking at the time of that acquisition was that RideOS would be used as part of its core grocery delivery operations. But as Grocery Dive points out, that same feet management technology could also be used for routing restaurant meal deliveries.

The ghost kitchen space has certainly been a hotbed of activity over the past year with a number of players launching and expanding services. But perhaps what is more interesting about Gopuff’s hiring spree is the latest example of the lines between restaurant, grocery retail and ghost kitchen blurring. DoorDash, which started out as a restaurant delivery service, launched its own ghost kitchen and is expanding further into grocery delivery and expanding it own dark delivery only Dash Mart stores. Walmart is doing virtual food courts via ghost kitchens. And ghost kitchen operator C3 is running ghost kitchens out of hotels and residential spaces.

For Gopuff, adding hot meals to its existing grocery delivery business makes sense, given that it aims to complete deliveries in a half-hour. In that short amount of time your restaurant food arrives hot, while your pint of ice cream stays cool. Now the onus is on Gopuff to communicate clearly what it’s brand proposition is, so people will order both from the company.