“To-go or not to-go.” That used to be the question. Then food delivery became commonplace, and with 60 percent of restaurant orders now off-premises, it’s pretty much mandatory for restaurants who want to stay competitive.
Now the big question is whether ghost kitchens will soon become mandatory, too. It certainly seems likely, particularly in light of news this week that DoorDash has launched its own ghost kitchen in Redwood City, CA.
The facility, dubbed DoorDash Kitchens, provides kitchen space and equipment to multiple restaurants needing to fulfill off-premises orders. As I wrote this week, it’s a way for restaurants to both accommodate the increase in off-premises orders and extend their geographic reach into areas where they might not have a brick-and-mortar location.
DoorDash’s own geographic reach is massive right now. The service is in all 50 states and also expanding outside of North America, and currently leads the market in terms of consumer spend for third-party delivery services. So even though the Redwood City facility is one single location (for now), its launch will have significant influence over the restaurant space.
DoorDash isn’t the first delivery service to try its hand at virtual restaurants, though. Uber Eats has been working with the concept for some time. Grubhub, meanwhile, is using ghost kitchen facilities to not just dish up to-go orders but also test out new restaurant concepts, for which the service is partnering with non-restaurant food brands like Bon Apétit and Whole30.
And those are just the third-party delivery aggregators. Kitchen United is rapidly expanding its version of the ghost kitchen, Starbucks is piloting them in Asia, and individual restaurant chains are even transforming existing brick-and-mortar stores into facilities for off-premises orders. Then there is Zume, which is blending the food truck and ghost kitchen concepts together to create what my colleague Chris Albrecht calls “an entirely new category of restaurant.”
To ghost kitchen or not to ghost kitchen? Pretty soon it will no longer be a question.
More Orders, More Partners
Another choice restaurants have to make these days is whether to go with a single third-party partner for delivery or multiple ones. We saw a significant shift towards the latter option in July, when McDonald’s ended its long-standing exclusivity with Uber Eats and added DoorDash to its delivery strategy. Not long after, Toast released a report suggesting restaurants best serve themselves by working with multiple delivery providers.
Wendy’s, too, hopped that bandwagon recently by announcing at an Investor Day event that it would expand its delivery capabilities in 2020 to include Grubhub and Uber Eats. As with ghost kitchens, a large part of the strategy behind partnering with multiple delivery services has to do with reaching more customers. In the case of Wendy’s, it needs the extra visibility to gain as much loyalty as it can to keep pace with the likes of McDonald’s and Burger King.
Uber Eats Announces Layoffs
All’s not completely rosy in the world of third-party delivery services, though. The model remains surrounded by controversy, including questions around whether these companies can ever become truly profitable — a point called into question this week when Uber announced layoffs that will include Uber Eats.
While we don’t yet know how many Uber Eats staffers that includes, and whether Uber’s profitability struggles will affect other initiatives, like its aforementioned ghost kitchens. But the news is a reality check and a reminder that the third-party delivery model is both new and far from perfect, and we’ll see more ups and downs happening simultaneously for some time to come.