Yesterday, ghost kitchen operator Kitchen United announced they had acquired Zuul, a ghost kitchen technology and consulting services company, for an undisclosed sum.
According to the announcement, Kitchen United will bring over the executive team and transition Zuul’s New York City facility to a Kitchen United MIX kitchen center.
The company also announced that it would integrate Zuul’s ZuulOS technology platform. From the announcement: ZuulOS enables operators to create their own virtual food halls and fulfill multi-brand orders effortlessly. The company also powers native online ordering and batched deliveries with a partner network to provide an efficient delivery model that will marry well with Kitchen United’s proprietary technology platform MIX.
While the addition of a NYC location and the executives is important, much of the announcement focused on the addition of Zuul’s technology platform, ZuulOS, to the Kitchen United offering. What’s interesting is Kitchen United already has its own tech platform called MIX, which is, well, a mix of both consumer-facing elements as well as some back-of-house delivery management pieces.
So what does Kitchen United get with ZuulOS? ZuulOS has white-label consumer-facing elements, but its core is a multi-brand virtual restaurant management platform. ZuulOS, which has its roots in the acquisition of OnTray in 2019, has accounting, menu-building, and kitchens operations components. Throw in Zuul’s consulting services arm, and it rounds out Kitchen United’s ability to spin up new virtual food halls for companies using its technology and shared kitchen products.
For Zuul, while it can’t be said for sure (since terms were not disclosed), chances are the acquisition is probably not the type of exit imagined when they announced they had raised $9 million just over a year ago. Six months after the funding news, it became clear the company was searching for itself as it announced the ZuulOS platform and transitioned away from being a ghost kitchen operator (aside from the one NYC location) to being a Saas/platform company. The news of this deal marks the completion of the company’s journey as it finds a home with one of the industry’s biggest players.
Let the ghost kitchen market consolidation begin
While this is one of the most significant acquisitions so far in the ghost kitchen space, it’s likely only the start of a wave of consolidation.
Even as funding still flows into the ghost kitchen and virtual restaurant space, many operators have realized that running an extensive network of multitenant kitchens is a capital-intensive business. Much of the recent funding in the broader ghost kitchen and virtual restaurant space has gone to companies that are creating platforms that make it easy for restaurant brands to launch new virtual brands through hosted kitchen models. While some companies, like Reef, continue down the heavy capex path powered by huge raises, venture and corporate capital has started to migrate towards hosted kitchen models and virtual restaurant brands that can take advantage of underutilized kitchen capacity in existing QSRs or independents.
This doesn’t mean we won’t continue to see lots of creativity over the next five to ten years in which operators build both new kitchens with limited front of house and completely dark kitchens. The realization in the restaurant, grocery and food service market that the traditional restaurant model of building a kitchen and front of house for every single location is outdated in the age of delivery and digital ordering is still a valid one, and the great recalibration towards new models like hub & spoke and virtual food halls will continue apace.
Part of the big shift towards the digital dining reality of today is finding out what works best for customers and its operations while optimizing the business model from a capex and opex perspective. For their part, Kitchen United, one of the early pioneers in the space, has made the transition from a ‘heavy capex’ model to one that is more flexible, working with everyone from big grocery store chains to set up ghost kitchens to bringing food hall formats to big shopping centers. This deal should only help the company remain a key player as the industry evolves and finds its way.
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