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ghost kitchen

November 18, 2020

KFC Is the Latest QSR to Ditch the Dining Room in Favor if Digital Drive-Thru

KFC unveiled two new designs today for future stores that emphasize off-premises order formats and minimal dining room space, according to Nation’s Restaurant News. The Louisville, Kentucky-based chain is the latest major QSR to revamp its store format in response to the pandemic’s impact on the restaurant industry.

One design is for an “express” store format with no indoor dining space. Clocking in at about 1,300 square feet, the design is intended for use in crowded urban locations where space is both limited and expensive. This is a tactic also used by chains like Starbucks and, most recently, Chipotle. 

KFC’s other design is all about the drive-thru, which the company said grew 60 percent year-over-year in Q3 of 2020. The format includes multiple drive-thru lanes, including those dedicated to mobile orders, a small outdoor seating area, and designated parking spots and entrances for customers and delivery drivers picking up digital orders.

These new prototypes have actually been in development since last year. Chief Development Officer Brian Cahoe told NRN today that the company hit the “pause” button on these projects when the pandemic hit in order to learn and apply new requirements the pandemic would bring to the restaurant experience.

More obvious safety measures are one thing. The new KFC stores will include automatic doors and more space between tables. And of course, with the emphasis on digital ordering, a more contactless pickup or drive-thru experience is also on the menu. The company said some stores would also have a digital cubby system in future.

The QSR has in the last couple months become ground zero for testing out new restaurant tech. Besides digitizing the drive-thru, which everyone from McDonald’s to Tim Horton’s is doing, brands are introducing features like geofencing, conveyer belt meal delivery systems, and AI-powered menu boards to the restaurant experience. Many are also ditching the dining room in favor of drive-thru-only locations and ghost kitchen facilities. 

KFC will open three new restaurants based on these prototypes in 2021. 

November 11, 2020

Chipotle Finally Launches Its Own Take on the Ghost Kitchen Concept

QSR brand Chipotle is a known leader in the restaurant industry’s current transition from dining room to off-premises formats, but the company has for the most part been quiet in the conversation around ghost kitchens. Up to now, that is. The company today revealed its Chipotle Digital Kitchen a pickup- and delivery-only restaurant that is essentially its own homegrown take on the ghost kitchen concept.

The new restaurant, located in Highland Falls, New York, will open this coming Saturday (Nov. 14). Chipotle said in today’s press release that the Digital Kitchen is meant to drive business in “non-traditional locations” such as dense urban centers that can’t hold a full-service restaurant.

While the restaurant does feature a small lobby with a few seats, there is no assembly line from which to order food and no cashier to ring orders up. Instead, customers must place orders digitally via the Chipotle app or website, or through a third-party delivery platform. Guests retrieve their orders from the aforementioned lobby that is “designed to include all of the sounds, smells and kitchen views of a traditional Chipotle restaurant.” The location can also fulfill larger catering orders.  

Chipotle’s news comes the same week McDonald’s unveiled plans for its own to-go-centric store format that will consist of a kitchen surrounded by drive-thru lanes and parking spaces for curbside pickup. Since Chipotle’s Digital Kitchen is, initially, at least, focused on urban settings with space limitations, it does not accommodate a drive-thru lane. That said, the company has been very public about its intentions to incorporate that format into its stores, and today’s release notes that the new store format “allows for flexibility with future locations.” Drive-thru may not be part of this first location, but it’s undoubtedly on the way as the company opens more of these new store concepts.

With the future of the dining room still very much unknown, there’s something of a mass exodus from that format happening among well-known quick-service brands. Burger King, Wendy’s, Dunkin’, Popeye’s, and Tim Horton’s are just a few names on the growing list of restaurants changing up their store formats.

Chipotle has been trekking towards this shift for some time. In December of 2019, the company announced a few different store format designs for to-go, drive-thru, and delivery orders. 

Make sure to join The Spoon’s Ghost Kitchen Deep Dive event on December 9th. Register here!

November 10, 2020

Highpper Aims to Make Standalone Robot-Powered Restaurants-in-a-Box

When we write about food robots, typically those robots are like (very advanced) appliances that fit into an existing kitchen. Miso’s Flippy works the fryers, Picnic’s robot assembles pizza, and Spyce’s Infinite Kitchen sits at the center of that particular restaurant, making meals.

So one of the things that makes Tel Aviv, Israel-based Highpper interesting is that its robot is the restaurant. Everything from storage to production to packaging is 100 percent automated and done within a standalone 40-foot-long container that can be set up in parking lots or pretty much wherever you can get power and water. Highpper can run all day without needing human assistance.

That’s the plan, anyway. The company is still in the very early prototype phase, but there are reasons to believe it could come through on its ambitious plans. One such reason is that its founder and CEO, Udi Shamai, is also the president of Pizza Hut Israel, a master franchisee that oversees 90 Pizza Huts across his country. Shamai is also the non-executive chairman of Dragontail Systems, which uses computer vision and AI to automate food quality assessment for clients such as Domino’s Australia. (Dragontail was also named one of our Food Tech 25 in 2020)

Because of Shamai’s background, it’s no wonder that Highpper is starting with pizza. As we’ve said before, if you want to see the future of food tech, look to pizza, and Highpper is no exception. Though, when I spoke with Shamai by phone this week, he insisted that Highpper’s unique value proposition was less about futuristic technology and more about scale.

“I can ship 200 stores,” Shamai told me. “It’s scaled.”

Obviously, the proof will be the pudding to see if that’s the case, but Shamai said that Highpper will open its first third-party branded (Shamai declined to say which brand) standalone pizza operation in June of next year in Israel. Before that, the company will install components of its robots in an existing restaurant, to show off the machine’s capabilities.

One of the obvious uses for Highpper’s technology is automated ghost kitchens. If Highpper’s containers work (and that’s a big if right now), it’s not hard to imagine a parking lot filled with various robo-restaurants, churning out food for delivery, twenty-four hours a day. Speaking of ghost kitchen automation, there is actually another Tel Aviv-based company called Kitchen Robotics, which unveiled its Beastro robotic ghost kitchen earlier this year. Bistro, however, only does cooking and not everything Highpper says its machine does.

Right now, Highpper’s system only makes pizza, with burgers to follow and then the vaguely worded “Asian” food option. Highpper is in the business of selling its containers, not owning and operating its own machines or leasing the robots out as a service. An automated container will cost roughly $350,000 per unit (though Shamai indicated that price might vary a little bit).

Highpper is certainly entering the market at the right time. Euromonitor predicts that the ghost kitchen market will hit $1 trillion by 2030. More immediately, the global pandemic has accelerated interest in food robotics. Highpper’s ability to automate the entire workflow of creating fast food, could make potential restaurant customers pretty high on the company.

October 20, 2020

New WSJ Report Shows How Much CloudKitchens Has Spent on Real Estate and Where

CloudKitchens, the secretive ghost kitchen startup founded by ex-Uber CEO Travis Kalanick, has purchased more than 40 real estate properties across two dozen cities for more than $130 million, according to a report in The Wall Street Journal.

The Journal analyzed a number of different limited-liability companies, tracing their origins back to the business addresses of City Storage Systems, the parent company of CloudKitchens.

CloudKitchens has been notoriously secretive about its operations, and the Journal’s work not only gives us a glimpse into how much the company is spending, but where it could potentially be setting up ghost kitchen operations.

Ghost kitchens are centralized commercial kitchen spaces for restaurants to fulfill off-premises and delivery-only restaurant concepts. They have all the infrastructure needed for a restaurant to prepare food and serve as a delivery hub, without any of the additional overhead that comes with dine-in eating.

According to the Journal’s analysis, it looks like CloudKitchens has acquired buildings in:

  • Portland, OR
  • Las Vegas, NV
  • Columbus, OH
  • Memphis, TN
  • Nashville, TN
  • Miami Beach, FL
  • Queens, NY
  • Los Angeles, CA
  • Seattle, WA

As the Journal notes, CloudKitchens doesn’t say much about its business, including its locations. The company has evidently been just as hush-hush during these real estate transactions and not directly identifying itself with some sellers.

The Journal article is worth highlighting because it gives us some sense of just how big CloudKitchens is and could get. The ghost kitchen market is expected by some to hit as high as $1 trillion by 2030, and there are already a number of players in the space including Kitchen United, Zuul, Yummy and more (see our Ghost Kitchen market map for more). But if CloudKitchens has already attained national level reach, then it could be poised to quickly dominate the space.

Though CloudKitchens has reportedly spent $130 million on real estate, the company raised $400 million from Saudi Arabia’s sovereign-wealth fund last year. And given Kalanick’s track record with Uber, chances are good it could easily raise more.

With the pandemic still in full swing around the planet, the restaurant biz will still need to rely on delivery to stay afloat. Ghost kitchens will play an increasingly important part of that survival plan.

For more on ghost kitchens, you should read The Spoon Plus Guide to Ghost Kitchens (membership required), which outlines where the market has been and where it’s going.

October 8, 2020

Kroger Partners With ClusterTruck for In-Store Ghost Kitchens

Grocery mega-retailer Kroger announced today it is launching ghost kitchens at two of its Kroger retail stores. The kitchens will be done in partnership with delivery-only restaurant service ClusterTruck and provide Kroger customers prepared meals free of delivery fees, according to a press release sent to The Spoon.

Kroger and ClusterTruck have been piloting their partnership since 2019. Through it, ClusterTruck sells its restaurant-quality meals via the Kroger Delivery Kitchen website.

To be clear, the ClusterTruck platform is not a tool for selling meals from other restaurants. Rather, ClusterTruck handles the entire meal delivery process, from conceptualizing a menu to ordering the ingredients, cooking the food, and getting meals into customers’ hands. The company also uses its own proprietary tech stack to update menus and process orders and payments. ClusterTruck, which is headquartered in Indianapolis, Ind. and has a sizable presence around the Midwest, brings this end-to-end delivery concept to the Kroger ghost kitchens. The ClusterTruck menu will be available via the Kroger Kitchen Delivery site.

According to today’s press release, the new concept repurposes roughly 1,000 square feet at each store (a typical Kroger store is about 160,000 square feet). This repurposed space will be dedicated to ClusterTruck staff, who will prepare meals for delivery and in-store pickup.

In theory, at least, that means Kroger would not have to rely on third-party delivery services like DoorDash and Postmates for any part of the delivery process for these ghost kitchens. Interestingly, this comes at a time when some of those third-party delivery services are trying to diversify their platform by offering grocery delivery.  

For Kroger’s two new in-store ghost kitchens, one will be located in Indianapolis and the other in Columbus, Ohio. These will follow an on-premises ghost kitchen already open in Fishers, Ind., and one in Dublin, Ohio, which is set to open later this year.

Today’s news is also another piece of evidence that the lines between grocery store and restaurant are overlapping. In addition to the aforementioned third-party delivery services shuttling some grocery orders to customers, Texas-based chain H-E-B recently opened a food hall that delivers restaurant meals, and grocery service Cheetah added restaurant meals to its available offerings. And though the blurring of the lines between restaurants and groceries is a direct result of the pandemic’s closing restaurants and keeping people at home, the trend is unlikely to reverse, even when restaurants can operate at full capacity once more.

One reason for the continued merging of grocery stores and restaurants is the surging popularity of ghost kitchens. Euromonitor recently predicted that the ghost kitchen market will be worth $1 trillion by 2030. That number factors in not just ghost kitchens for restaurants but also spaces for food producers and retailers. The $1 trillion figure may seem a little absurd now, but if more partnerships like the Kroger-ClusterTruck deal emerge, it may soon seem a less outlandish number and more a reality for both the restaurant and grocery industries.

September 30, 2020

NYC Ghost Kitchen Company Zuul Launches a Virtual Food Hall

NYC-based ghost kitchen operator Zuul announced this week that its virtual food hall, Zuul Market, is now live.

The new initiative is a cross between an online marketplace and a white-label delivery platform. The marketplace sells a limited number of items from restaurants that are currently members of Zuul’s ghost kitchen facility in SoHo, including Junzi Kitchen, Stone Bridge Pizza & Salad, and Sarge’s Deli. Zuul has also worked with its member restaurants to co-create virtual brands, which are also available through the marketplace. For example, Stone Bridge also operates the virtual-only Rival Sandwich Co.

All food is prepped and cooked in the SoHo kitchen facility. Zuul then delivers the food at scheduled times to drop-off points located in office buildings as well as residential properties around NYC. Zuul controls the entire process, from order processing to fulfillment to the last-mile delivery.

The idea is to provide a more efficient system for delivery, where meals from multiple restaurants going to multiple different people can be bulked together and taken to a single location. To do this effectively, Zuul has partnered with Silverstein Properties and Broad Street Development, both major property developers in NYC that own both office buildings and residential properties. Zuul Market menus will be available to residents and employees throughout those companies’ properties. For example, Silverstein integrated Zuul Market into its Inspire app for tenants as a building-wide amenity across its buildings. 

How successful this delivery strategy is in office buildings depends a lot on how many people actually wind up going back to the office. Right now, it’s not many. But residential properties could be a lucrative area for delivery and commerce during the pandemic, and probably after. Folks are spending more time at home these days, and with colder weather coming, that’s likely to increase. So whether it’s automated convenience stores, contact-free delivery pods a la Minnow, or a virtual marketplace like Zuul’s, more and more companies are finding new ways to bring the restaurant experience into the home. 

Zuul said it plans to build additional food hall partnerships with both restaurants and properties in addition to more ghost kitchen facilities across NYC in the future.

September 20, 2020

Ghost Kitchen, Meet the Automat

Inexplicably, I’ve always wished I could have experienced the Automat in its heyday. Created at the tail-end of the Nineteenth Century, Automats consisted of a wall of cubbies containing simple food and beverage items users could unlock for a nickel. It was essentially fast food before fast food existed.

Fast forward to 2020, and it looks like I may yet be able to experience the concept, albeit a higher-tech version of it.

As we chatted on this week during our Editor podcast, the Automat is making a comeback. That’s thanks to restaurant companies launching cubby systems that are equipped with temperature control functionality and that can be unlocked with a user’s own smartphone. Brooklyn Dumpling Shop is the latest to iterate on the old concept, following in the footsteps of Minnow, Brightloom (née Eatsa), and others.

The resurgence makes sense, given the restaurant industry’s sudden shift to off-premises formats and simpler foods that travel well. Which is why I can think of no better location for Automat 2.0 than outside a ghost kitchen.

One of the major selling points for ghost kitchens is that they allow restaurants to operate without incurring the costs of a front-of-house operation. The ghost kitchen as we know it is also specifically designed to serve off-premises formats. Up to now, that’s been primarily delivery, but the pandemic has generated so much interest in ghost kitchens that we’re now seeing different styles of the concept emerge, including those that offer pickup. Kitchen United lists both options on its website, as does DoorDash (for its DoorDash Kitchens facility). Having a pickup option means restaurants can still take advantage of the ghost kitchen format without necessarily coughing up the sky-high commission fees associated with delivery orders.

At the same time, the pandemic continues, and even if it were to magically disappear tomorrow, our heightened expectations around cleanliness and “contactless” restaurant experiences are here to stay. Which is to say, customers are going to want minimized human contact for restaurant transactions for a long time to come. 

It doesn’t get more minimized than the Automat. By way of a hypothetical example, imagine a virtual deli that has a kitchen space from which it fulfills online orders. It would fulfill delivery orders, but also maintain a cubby system outside to hold any pickup orders. Throw a few tables and chairs near the machine where those who want can eat onsite. Other than the smartphones and the digital ordering, the setup isn’t hugely different from the original Automat concept.

Of course, some ghost kitchen companies choose to locate their facilities in former warehouse districts that don’t get much foot traffic. But as we outlined in our recent Spoon Plus report on ghost kitchens, that’s the exception, rather than the norm right now. Most ghost kitchen operators will tell you location matters, and the closer you can locate one to customers, the better.

And actually, we’re already trekking towards this automat-in-a-ghost kitchen future. Besides the above examples, Starbucks launched its Express stores in 2019 that act as ghost kitchens for nearby locations and include a wall of pickup lockers onsite. Other fast food chains have whittled their dining room concepts down to more to-go-friendly formats, and many of these orders are now being fulfilled in ghost kitchens.  

Automats were originally a precursor to fast food. These days, it seems like fast food may yet prove to be the forerunner to Automat 2.0.

This is the web version of our newsletter. Sign up today to get updates on the rapidly changing nature of the food tech industry.

Location-based Picnicking

You may remember a year or so ago when I wrote about Domino’s partnering with a company called what3words to delivery food to street corners, parks, and other non-traditional addresses. 

It seems what3words is at it again with food delivery, this time partnering with Honest Burgers in London to deliver to random swaths of grass in the city’s Clapham district.

What3words’ platform divides the entire world into 3m x 3m squares, which are GPS coordinates. An algorithm then converts the coordinates into three-word addresses to give each a unique (and often bizarre) name (see image above). With this technology, you could literally choose a random patch of a park sans any notable landmarks or other identifiable items and get your burger delivered to your exact location.

The program with Honest Burgers is only running for a few days and restricted to Clapham. But with more of the restaurant experience taking place outside the four walls of the business, a technology like this could become huge. That’s assuming the restaurant biz makes it through winter and and once more heads to outdoor spaces.

Cracker Barrel’s gone the ghost kitchen route. The company said at its earnings call this week that it plans to convert one of its locations in Indianapolis, Ind. to a ghost kitchen that will handle large-scale catering orders as well as some individual orders placed via third-party delivery services. The store will also be used to help fulfill delivery orders from other nearby Cracker Barrel locations during busy times, like the upcoming fall/winter holiday season.

Meanwhile, Shake Shack said this week it has expanded curbside pickup to 40 percent of its stores, and that roughly one third of all app orders are being placed for curbside. The company has plans to extend curbside to 50 of its locations by the end of September, and is also exploring the possibility of more drive-thrus and walk-up windows.

The New York City Council passed a bill that lets restaurants add a “COVID-19 surcharge” of up to 10 percent to a customer’s bill for up to 90 days after indoor dining reaches full capacity. In other words, for the foreseeable future. The bill is an attempt to help restaurants generate additional revenue as the struggle to keep the lights on continues.

September 9, 2020

Ghost Kitchen Network Virtual Kitchen Raises $20M

Virtual Kitchen, a company founded by two ex-Uber executives, has raised $20 million in new funding, according to a filing with the SEC (h/t Restaurant Dive). The round was led by Founders Fund and brings Virtual Kitchen’s total funding to $37 million. 

Virtual Kitchen runs multiple “delivery-optimized kitchens” where restaurants can rent space and also take advantage of the company’s technology to scale up operations quickly. Delivery fulfillment is done through partnerships with Grubhub, Uber Eats, Postmates, DoorDash and other third-party services. 

It’s unclear at this time what Virtual Kitchen will do with the new funds, though Restaurant Dive suggests the San Francisco-based company is likely to focus on expanding its network of ghost kitchens.

Now would certainly be the time to do that. As we detailed in a recent Spoon Plus report, the market for ghost kitchens is enormous — trekking towards $1 trillion by some accounts. As a business model, the ghost kitchen was already becoming an attractive option for more and more restaurants before the COVID-19 pandemic ever hit and decimated the restaurant industry. Since then, delivery and other off-premises formats have become priorities for large chains and mom-and-pop joints alike, and there’s no setting more logical for fulfilling all these to-go orders than a ghost kitchen. 

Given all that, the recent activity in the ghost kitchen space shouldn’t surprise. Kitchen United continues to expand across the U.S. Kitopi raised $20 million this year. Zuul raised $9 million for its NYC-focused ghost kitchen operation, Dubai-based iKcon raised $5 million, and that’s but a smattering of the recent developments in this sector. 

Virtual Kitchen’s new funding follows last year’s $15 million investment from Andreessen Horowitz and Base10 Partners. 

August 31, 2020

Beastro is a Robot for Ghost Kitchens

As the COVID-19 pandemic has pushed more people into ordering delivery from restaurants, the restaurant industry has responded by opening more ghost kitchens. And with more restaurants ditching the front of house for smaller-format, delivery-only operations, the logical next step is to automate as much of that new format as possible, which is now starting to happen.

Last week, Tel Aviv-based Kitchen Robotics unveiled the Beastro, a robotic ghost kitchen. The Beastro is an industrial-looking standalone kiosk that acts as a fully automated kitchen. The Beastro is 11 ft. 6 in. by five ft. 10 in. wide and 7 ft 2 inches tall, weighing in a 1,790 lbs. It can make 45 dishes an hour including Italian and Asian cuisines, as well as soups, salads and more. The Beastro starts at $5,990 a month.

As you can see from this promotional video, the Beastro is reminiscent of the Spyce Kitchen, with a series of grippers, conveyors and dispensers. The machine places all ingredients in a bowl, then mixes and heats the dishes, presumably through induction.

Beastro™ by Kitchen Robotics

The smarts of the Beastro is in Kitchen Robotics’ cloud-based Cuismo software. Cuismo manages the programming and monitoring of each dish made, allows for customization and, according to the company, uses deep learning and predictive analysis to reduce operational costs, though it doesn’t say exactly how. Cuismo also integrates with third-party delivery services. The base Cuismo software package is free for a single site. Prices jump to $249/month for up to five different sites and $999/month for an unlimited number of sites.

Beastro is arriving at an opportune time. Euromonitor recently predicted that the ghost kitchen market will hit $1 trillion by 2030 (read our Spoon Plus deep dive market report on ghost kitchens to learn more). Because ghost kitchens are built around delivery, the whole point of them is to get meals prepped and ready quickly, something a robot like Beastro can do around the clock, without taking breaks or, more relevant for our times, calling in sick.

Of course, automating ghost kitchens also brings up the societal issues around labor. If a prolonged pandemic means that ghost kitchens become the dominant venue for restaurants to exist, where will those line and prep cooks go once robots are installed? Not every restaurant brand or ghost kitchen will adopt automation, but what we do with displaced restaurant workers is something we need to deal with.

Kitchen Robotics’ told The Spoon that has received more than $1 million in funding from various investors and CEOs in the industry and that Beastro will be deployed in two major U.S. cities by mid-December of this year.

 

August 23, 2020

Can Ghost Kitchens Save the Vanishing Restaurant Biz?

“Perhaps we should stop using the term ghost kitchen. Ghosts are rarely seen, but ghost kitchens? Well, they are popping up everywhere.”

Spoon Editor Chris Albrecht was half-kidding when he wrote that line earlier this week, but he might have been onto something. Ghost kitchens, a concept that only really started turning heads one year ago, are practically unavoidable these days in a conversation about the restaurant industry. 

In the past few weeks alone:

  • Foodservice distribution giant US Foods launched its own ghost kitchen service that will provide restaurants “guidance and resources” to open their own kitchens.
  • Gig economy engagement platform ShiftPixy unveiled a ghost kitchen incubator that connects restaurants with physical kitchen space and the tech to run a ghost kitchen.
  • Dubai-based iKcon, raised $5 million to expand its kitchen network and the proprietary tech stack that goes with it.
  • Fat Brands announced that Johnny Rockets, a brand it intends to purchase for $25 million, will expand via ghost kitchens, many of them inside the kitchens of other Fat Brands restaurants.
  • Sweetgreen said it is testing the ghost kitchen concept out by working from a Zuul kitchen in NYC.

And those are just the highlights.

What’s noteworthy here is not that a bunch more restaurants and food industry companies have hopped aboard the ghost kitchen train. It’s that there are a fast-growing number of options when it comes to where and how a restaurant can open a ghost kitchen. With a company like iKcon, for example, a restaurant’s ghost kitchen essentially becomes a franchisee. Renting space from Zuul or another third-party kitchen provider is another way. Operating one brand out of the kitchen of a sister brand is perhaps the most intriguing concept on this list, and one we’ll see a lot more of in the future.

Add to all that choices around location, technology, and figuring out if they even have enough demand to warrant a ghost kitchen, and restaurants have a lot to consider in today’s off-premises-centric world.

What’s more, those restaurants are being forced to consider their choices when it comes to ghost kitchens. The pandemic has decimated the dine-in business for both large restaurant chains and smaller independent businesses. Recovery from the fallout will be slow, and the idea of most customers returning to brick-and-mortar restaurants seems less possible each week. Given those factors, more restaurants will have to consider either supplementing their existing operations with ghost kitchens or pivoting their entire model to a virtual, delivery-only one.

I suspect this is just the beginning when it comes to types of ghost kitchens that rise out of the ashes of the on-premises restaurant experience. We’ve already seen restaurants employ countless amounts of creativity when it comes to running a restaurant during a pandemic and trying to create a concrete restaurant experience out of virtual tools. With the pandemic still very much a part of our lives, we will now see that creativity head for the ghost kitchen.

SipScience Raises Money to Reinvent the Bar

SipScience, a data analytics company specifically for the hospitality industry, is preparing to launch itself into the contactless payments realm by launching a new platform, Sip. 

According to a press release sent to The Spoon this week, there are two sides to Sip. The consumer-facing one comes in the form of an app that connects to a user’s digital wallet. The app lets said user find nearby bars and open a tab from their own mobile device, through which they can order and pay for drinks. When it launches, Sip will be available at participating bars and venues across the U.S. Bonus: those who sign up for a subscription will get half off their first 50 drinks ordered through the app.

For venues, such as bars and restaurants, the app is a new way to drive more traffic, and the accompanying SipSync analytics engine gives these places more data on in-venue customers. Brands, too, are provided with real-time purchasing data, which is not something a payments app normally provides.

The company said this week it had raised $1.3 million in SAFE notes. There is no official launch date yet for the app, which makes sense, given the state of in-person hospitality venues. Bars in many states remain closed, as to venues built to hold hundreds of people. 

Granted, no sane person would spend much time in a bar right now. But SipScience’s news suggests that folks start flocking back to their local watering holes, they’ll find a far more tech-driven experience waiting.

Restaurant Tech ‘Round the Web

Starbucks launched a digital traceability tool this week that lets customers learn more about their coffee, including where it came from and traveled, and the farmers and roasters involved in production.

Domino’s is hiring 20,000 more employees. That’s on top of the 10,000 the pizza chain said it was hiring right after the pandemic hit, and just goes to show you that the company’s delivery-centric business is alive and thriving. 

Grubhub has launched an online petition to commission fee caps and is reportedly going to run an ad campaign that calls the fee caps “food delivery taxes.” Grubhub says fee caps result in higher costs for consumers and ultimately hurt restaurants. 

This is the web version of our newsletter. Sign up today to get updates on the rapidly changing nature of the food tech industry.

August 20, 2020

US Foods Launches Ghost Kitchens Program

Perhaps we should stop using the term ghost kitchen. Ghosts are rarely seen, but ghost kitchens? Well, they are popping up everywhere.

Case in point: Foodservice distribution giant US Foods announced this week the launch of US Foods Ghost Kitchens. The new service will provide guidance and resources to help restaurant operators open up their own ghost (AKA dark or virtual) kitchens.

For the uninitiated, ghost kitchens are facilities that house delivery-only restaurant concepts. While ghost kitchens have been around for a while, the trend really picked up steam when the COVID-19 pandemic forced restaurants around the country to shut down dine-in operations.

Off-premises formats like delivery and takeout have been something of a lifeline for restaurants, the majority of which can now only operate dining rooms at reduced capacity (if they can seat anyone at all). Additionally, the pandemic has kept a lot of people at home, ordering in. Ghost kitchens allow restaurants to keep making and serving food without the additional overhead associated with building out full-service brick-and-mortar restaurants. Euromonitor recently projected that the ghost kitchen space will be worth $1 trillion by 2030.

That US Foods would want a part of that market is not surprising, but it also needs restaurant brands to stay alive. The pandemic has forced the closure of a staggering number of restaurants around the country. US Foods can’t sell food, supplies and consulting services if its customers are all gone.

Plus, as my colleague, Jenn Marston wrote last month, winter is coming for restaurants. Literally. That means the outdoor seating options restaurants have been able to set up to scrape a few extra summertime bucks out of, are going away as the weather turns. Restaurants will need to lean into delivery because unlike summer, this pandemic is not going away anytime soon.

According to the press announcement, US Foods Ghost Kitchen service will include proprietary technology, proper menu item identification (a must for wanna be ghost kitchens), marketing support and other consulting services. The company’s website claims that restaurants setting up a ghost kitchen through this new program will need less than $5,000 and can open within three weeks. How well that promise matches reality remains to be seen.

US Foods, however, is entering a competitive market with a number of established players including Kitchen United, and Zuul. One competitive advantage for US Foods is that it’s already a national company that has extensive relationships with existing restaurants, and the aforementioned companies operate in pretty limited geographies. There is, in other words, still a lot of upside in the ghost kitchen space, and US Foods can see it.

If you want to look into the future of ghost kitchens, you should check out The Spoon Plus Guide to Ghost Kitchens, written by our very own Jenn Marston.

May 12, 2020

Hi Neighbor Turns a Shuttered Restaurant Into a Ghost Kitchen for Furloughed Chefs

San Francisco-based restaurant group Hi Neighbor is combating the current pandemic and simultaneous restaurant industry meltdown by launching a mix of virtual restaurant concepts via its new incubator program. The Hi Neighbor Incubator Series, first profiled by Eater SF, is letting furloughed chefs and bartenders start their own virtual concepts that can be ordered online by S.F. residents for pickup and delivery.

Hi Neighbor ran three restaurants before the pandemic: The Vault, Corridor, and Trestle. The group has kept all three closed during San Francisco’s shelter-in-place orders, which in turn has meant chefs of those restaurants have been furloughed. To get these employees back to work at a time when California dining rooms are still closed, Hi Neighbor partner Ryan Cole got the idea to let these chefs reinvent their existing restaurant concepts or create and launch new ones, only virtually. 

The current virtual restaurant lineup on the Hi Neighbor site includes three restaurants and one to-go cocktail concept. Korean-Californian concept JunJu and Uruguayan restaurant Ines are currently accepting orders for pickup or delivery via Caviar. Schmaltz Restaurant, which chef Beth Needelman calls “Jewish comfort food with a modern American twist” will start taking orders soon. To-go craft cocktails by AttaGirl Hospitality can be purchased with meals from any of the restaurant concepts. 

All orders are prepared in the kitchen of its restaurant Corridor, which remains closed as of now. Pick up orders can be retrieved at that location, and Hi Neighbor has even made gift cards available that are valid with any of the new restaurant concepts. 

Hi Neighbor has in effect turned itself into a kind of ghost kitchen provider, offering chefs fairly low-risk ways to test out new concepts and stay in business during the pandemic and shelter-in-place mandates. While the kitchen space and assistance setting up a virtual restaurant only extends to Hi Neighbor employees, this incubator is another example of how restaurants and restaurant groups are getting creative about doing business at a time when restaurant dining rooms remain closed.

The incubator is also notable because in normal times, Hi Neighbor’s restaurants are full-service affairs that don’t really lend themselves to off-premises formats. Full-service restaurants have taken the hardest hit in terms of lost sales as the result of sheltering in place. Asking existing chefs to either reinvent their menus or conceive entirely new ones designed for to-go orders could be a move more restaurant groups would benefit from in an uncertain time for the industry. 

Hi Neighbor plans to have incubator restaurants operate for at least the next three months, regardless of whether shelter-in-place mandates lift. It’s a wise move, considering reopened dining rooms will be operating at reduced capacity and many diners will probably remain wary of going out to eat for some time to come. 

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