Close Ad

The Spoon

Daily news and analysis about the food tech revolution

Ghost Kitchens

iKcon Raises a $5M Pre-Seed Round for Its Ghost Kitchen Network

Cloud kitchen startup iKcon announced today it has raised a $5 million pre-seed round led by Arzan VC, AlTouq Group and Nazer Group. This brings iKcon’s total funding to $10 million. 

The Dubai-based company, founded in 2019 by CEO Khalid Baareh and COO Kareem Abughazaleh (pictured above), operates a network of 10 cloud kitchens across the United Arab Emirates.

The company says it “acts as a franchisee” on behalf of restaurant brands, catering to both chains with existing brick-and-mortar operations as well as delivery-only virtual restaurants. iKcon’s kitchens also provide space for some CPG brands. 

Besides expanding its kitchen network, iKcon notes it will also use the new funds to further develop its proprietary technology platform, which it says uses AI and data analytics to improve operations in the kitchen. 

That tech will be an important differentiator for cloud kitchen companies across the board to improve as time goes on. For all their promises of low overhead costs and streamlined setups, cloud kitchens are still operationally intensive businesses that rely on lots of humans to cook, package, and deliver the food. With many restaurants around the world in danger of shuttering permanently because of the pandemic, delivery-only brands look more promising every week for some businesses. And as we discussed in our recent Spoon Plus Guide to Ghost Kitchens, the industry as a whole is moving towards more tech and automation to bring down costs, whether they’re time, money, or resources.

The cloud kitchen market itself is inching towards $1 trillion by 2030. iKcon’s fundraise is just the latest, following Zuul’s $9 million round and Kitopi’s $60 million fundraise.

For its part, iKcon says says it plans to expand to Saudi Arabia in the fourth quarter of 2020 and to other countries in 2021. 

I, Restaurant

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

This week’s virtual Spoon event was a goldmine of information for restaurants and restaurant tech companies, or really anyone who wonders what the word “digitization” actually looks like in action in a restaurant.

Once an industry reticent to adopt any new technology, the restaurant biz has been forced into using all manner of digital tools — from delivery apps to contactless ordering platforms — to stay afloat in the troubled waters brought on by the COVID-19 pandemic. As one of the event’s panelists, Ian Christopher of Galley Solutions, put it, there is now a “survive or die” mentality when it comes to digitization for restaurants.

Front-of-house technologies get the bulk of the investment money right now. But as Christopher, along with Martin Flusberg of Powerhouse Dynamics, SousZen’s Stephen King, and The Spoon’s Mike Wolf discussed, the reinvention of the back of house is arguably more important. 

As the panelists noted, 75 percent of a restaurant’s costs are in the back of house. If restaurants can’t address those, they’ll never get a good handle on their margins. Meanwhile, the pandemic has made those margins even thinner, intensified the labor shortage issue, and accelerated the widespread rise of ghost kitchens, which consist of nothing but the back of house.

How can more technology in the back of house assist in those areas and others? Here are a few takeaways from this week’s event:

More automation. Back of house automation isn’t just about robots making burgers. It has much more to do with digitizing operational processes to make them more efficient. That could mean a robotic arm doing manual tasks. But it could also mean using tech to replace paper-and-pen accounting books or taking a better, more granular analysis of food inventory to cut down costs.

More operational efficiency. Related to automation, the back of house will become more about making operational processes faster and more efficient. One of the panelists went as far as to say efficiency is the biggest thing for restaurants to get right. That’s especially true with fewer people eating in dining rooms and instead ordering takeout or delivery meals that are constantly evaluated for convenience and speed in addition to quality.

More transparency. The pandemic has arguably brought a greater desire for transparency when it comes to our restaurant food, and tech-savvy companies will respond with a variety of solutions. That could include installing software in a restaurant that can tell a customer exactly where their order is at any given moment (e.g., “on the grill,” “out for delivery”) or a tool that better informs them of a restaurant system’s security measures.

Will everyone in the restaurant industry welcome these changes with open arms? Absolutely not. Panelists said we can expect some pushback at the individual level from different folks in the restaurant industry, and one can hardly blame them. After all, what I just laid out above sounds more like a manufacturing facility than a restaurant. 

And to be honest, part of me balks at this new restaurant “experience” where speed and convenience rule and the majority of meals are flung together in ghost kitchens and delivered to me in a cardboard box. But listening to today’s panelists, it’s also clear that digitizing the restaurant biz could mean more businesses being able to stay open (in some fashion), more entrepreneurship, less waste (food and money), and safer procedures for everyone. At a time when the entire industry hangs in the balance, those factors provide some welcome sense of optimism.

80% of Restaurant Jobs Could Go to Robots

On the subject of digitization, this week, the Spoon’s Chris Albrecht wrote about some new numbers that claim 80 percent of restaurant jobs could be taken over by automation. That includes cooking, serving, and prepping jobs.

While the 80 percent figure is high, it doesn’t feel all that surprising. Automation was already coming for the restaurant industry, and robots specifically have been in use for the consumer-facing side of the business for some time (see Starship’s delivery bots or Chowbotics’ Sally).

The pandemic has obviously accelerated that. Reduced dining room capacity, full-on restaurant closures, and a move towards the so-called “contactless” experience has amplified the labor shortage. Throw in the above discussion about efficiency being the number one priority for many restaurants, and it’s easy to see why the industry’s automated future seems a foregone conclusion at this point.   

Restaurant Tech ‘Round the Web

Pacific Northwest chain Duke’s Seafood has installed a pathogen-filtering system in all of its restaurants “to kill COVID-19 particles.” The filtration process uses needlepoint bipolar ionization (NPBI) to reduce airborne pathogens, and is the same system installed in the White House, the Mayo Clinic, and some airports.

Hospitality platform BentoBox this week launched its own take on the contactless dining experience, according to a press release sent to The Spoon. The company’s Dine-In Ordering product features customized QR codes and digital menus, as well as complimentary tabletop signs with a restaurant’s branding.

Adobe Spark this week released a guide that, according to a press release, “covers everything small business owners and marketers need in order to implement QR and other touchless efficiencies right now.” Restaurants that sign up for a free Spark trial can access templates for in-store signage, mobile menus, and other graphical elements needed to communicate social distancing and contactless ordering.

 

The Food Tech Show: Ghost Kitchens, $1 Keto Cookies & the Magical Egg Cooker

The Spoon editors got together to talk about some of the most interesting food tech news of the past week (as well as complain about high-priced cookies).

Some of the stories we talk about on the pod include:

As always, you can listen to The Food Tech Show in Apple Podcasts, Spotify or wherever you get your podcasts. You can also download the show direct to your device or just click play below.

Is Your Restaurant Ready for Ghost Kitchens?

Ghost kitchens. You’ve heard about them nonstop since the pandemic overturned the foodservice industry and forced almost every restaurant in the country to go off-premises. And with the fate of the restaurant dining room still very much uncertain (see below), we’ll see more restaurants turn to the ghost kitchen model in the future.

That’s a nice blanket statement, but which restaurants, exactly, should use ghost kitchens? And there being more than one kind of ghost kitchen, which do they choose? Where do they locate? Will it affect franchisees?

I could go on, but instead, I’ll point you to our latest report, The Spoon Plus Guide to Ghost Kitchens. In it, I address all of the above questions (spoiler alert: ghost kitchens do affect your franchisees) and many more in an effort to understand just how widely ghost kitchens will serve the restaurant industry in the future. I’ll leave you to read the report for more how-tos and considerations on opening a ghost kitchen. In the meantime, here are a few things driving the growth of this potentially $1 trillion market:

  • Virtual restaurants. Soaring rents, high operational and labor costs, one pandemic and a lot of economic uncertainty make the idea of running a delivery-only brand attractive. After all, they don’t need a front of house to function and live solely in the digital realm, which is where most customers are the days anyway.
  • Off-premises everything. There’s no telling when — or if — restaurant dining rooms will again function at the scale and capacity they did before COVID. By now, consumer habits will have shifted farther towards pickup, delivery, drive-thru, and curbside orders. They may not shift back once we can (safely) venture out again.
  • Demand for delivery. Love ‘em or hate ‘em, third-party delivery aggregators keep getting bigger, and that’s not likely to change anytime soon. Many of these companies’ services are built right into the monthly membership of ghost kitchens, making them, for better and for worse, an obvious choice when it comes to fulfilling the aforementioned off-premises orders. 

But don’t sign your business away to a commissary space just yet. Certain parameters have to be in place in order for restaurants to justify the cost of doing a ghost kitchen. Kitchen United, ChefReady, Fat Brands, and other food industry leaders give their thoughts in the report on how to get your business ready for ghost kitchens.  

Grab yourself a Spoon Plus subscription to read the full report. And let us know what you think.

Yelp’s Latest Restaurant Data Is Alarming

Almost 16,000 restaurants have permanently closed, according to new data from Yelp that came out this week. In the site’s latest Economic Average Report, restaurants surpassed retail as having the highest rate of permanent closures.

Bear in mind, those numbers are only for restaurants listed on Yelp. It will be a long time before we know the exact number of total restaurant closures around the U.S., though plenty of other organizations have released their own data sets that give us an idea. For example, a June report from the Independent Restaurant Coalition found that as many as 85 percent of independent restaurants couLd shutter by the end of the year. And at least 3 percent of restaurants overall have alreadyclosed, according to the National Restaurant Association.

Beyond the closures themselves, what’s alarming about Yelp’s data is that it also found “a statistically significant correlation” between consumers’ interests in restaurants and other businesses and an increase in COVID cases. In other words, more people going to restaurants means a higher risk of the coronavirus spreading, which seems obvious but also puts restaurants in something of a catch-22. Many restaurants still need foot traffic to survive, but that foot traffic is a public health risk that, to get really Doomsday, could eventually lead to widespread shutdowns once again. Then nobody wins.

As we say ad infinitum these days, switching to off-premises formats is the surest way to stay in business without putting customers’ health at risk. But this is not a simple pivot for everyone, and as the industry reinvents itself for this to-go-centric era, I’m afraid many more restaurants could go by the wayside. So if you’re able, support your local indie restaurants by ordering a takeout meal every once in a while. Don’t forget to tip the staff.

Restaurant Tech ‘Round the Web

Clean Juice launches a new app with Lunchbox. Juice Bar franchise has teamed up with restaurant tech platform Lunchbox on a new app that services pickup, curbside, and, for the first time, delivery. 

Wendy’s launches a loyalty program. In a bid to compete with the McDonald’s and Burger Kings of the world, Wendy’s finally launched its own digital loyalty program. Customers earn points by ordering directly through the Wendy’s app, not through third-party delivery services.

Sonic has a new Alexa skill. Amazon and Sonic have partnered to give Sonic a new skill for Echo and Alexa devices. Customers can ask things like “Alexa, ask Sonic for a nearby location” in order to make the process of finding stores and new menu items faster.

This is the web version of our weekly newsletter. Subscribe to get all the best food tech news delivered directly to your inbox.

Zuul Raises $9M for More Ghost Kitchens in NYC

Ghost kitchen company, Zuul, announced today that it has secured $9 million in funding to expand its ghost kitchen operation across New York City. The company, which currently services downtown Manhattan will use the new money to begin operations across New York’s five boroughs.

Ghost kitchens (aka: dark kitchens, aka: cloud kitchens) are facilities that restaurants and other food brands can rent for delivery-only operations. Earlier this month, Euromonitor report predicted ghost kitchens could become a $1 trillion market by 2030.

A lot of that ghost growth is courtesy of the global COVID pandemic, which has forced the closure of many dine-in options for restaurants. As my colleague, Jenn Marston, who just published a premium report on ghost kitchens, wrote:

Much of the ghost kitchens’ rising popularity can be attributed to the rapid rise of the food delivery segment, which has been happening for some time now. Even more recent, though, are the economic fallout and changing consumer behaviors brought about by the COVID-19 pandemic. Put together, all these elements have accelerated the adoption of ghost kitchens much faster than what the industry expected even eight months ago.

This appears to be Zuul’s first round of funding, though the press release did not provide many details such as investors or how the $9 million is structured. This is, however, the latest move by Zuul, which acquired OnTray’s ordering technology in January, and partnered with Figure 8 to form a ghost kitchen consultancy in May of this year.

The company will need to bulk up its warchest, however, as there is plenty of competition in the ghost kitchen space including Kitchen United ($50 million raised), and CloudKitchens ($400 million raised), not to mention delivery companies like DoorDash getting into the ghost kitchen game.

Zuul is definitely striking while the ghost kitchen market is hot, now can it solidify its lead in NYC?

The Spoon Plus Guide to Ghost Kitchens

When 2020 began, the ghost kitchen topic poised to be one of the “it” trends to watch over the coming 12 months. Venture capital was pouring into the space, virtual restaurants of all types were popping up, and major quick-service chains were inking deals left and right with ghost kitchen providers. When The Spoon launched its (now outdated) ghost kitchen market map at the end of 2019, we predicted there would be an explosion of virtual restaurant brands and that some major chains would make ghost kitchens a normal part of doing business. 

Nobody predicted a pandemic would swoop in and irrevocably upset the restaurant industry down to its very foundation, which was built on consumers eating meals in dining rooms.

The COVID-19 pandemic’s dire consequences for the restaurant industry cannot be understated, and it would take an entire report of its own to outline just how far-reaching and long lasting the effect will be. A quick overview shows that:

All of this has led to a shift in business models that was underway already but has been accelerated. Off-premises order formats were poised to become restaurants main sales drivers over the next decade. Since the pandemic essentially forced restaurants into a to-go-or-die mentality, that is happening much faster now. 

That in turn has ramped up demand for ghost kitchens. However, just because restaurants are closing and off-premises orders are rising rapidly doesn’t necessarily mean every restaurant should follow the same trajectory when considering a ghost kitchen.

This report examines the kinds of ghost kitchens available to restaurants, the elements they need to consider before actually starting one, and opportunities and challenges in the space.  Companies profiled in this report include: Kitchen United, Kitopi, DoorDash Kitchens, Rebel Foods, CloudKitchens, Zuul Kitchens, ChefReady, Deliveroo Editions, Panda Selected, Muy, Reef Technology, Fat Brands, Brinker International, Wow Bao, The Halal Guys, Keatz, Middleby/Lab2Fab.

The full report is available to subscribers of Spoon Plus. You can learn more about Spoon Plus here.

Euromonitor: Ghost Kitchens Poised to Become a $1T Market by 2030

Ghost kitchens could become a $1 trillion market by 2030, according to a Euromonitor webinar from this week (h/t Restaurant Dive). 

The webinar was led by Michael Schaefer, the Global Lead for Food & Beverage at Euromonitor International. During the webinar, he noted that “we’re going to see a lot of new operators looking to fill the void with cheaper concepts . . . more delivery-friendly concepts that require less capital up front.”

Via a series of slides and commentary, Schaefer notes that “global foodservice delivery sales more than doubled from 2014 to 2019” and that 52 percent of global consumers are “comfortable ordering from a delivery-only restaurant (no physical outlet).” The pandemic, too, has made the market for ghost kitchens even more lucrative than it was at the beginning of 2020. 

With most restaurants having now been more or less forced into building out off-premises strategies, ghost kitchens provide in many cases a faster, cheaper way to fulfill things like delivery orders. An accompanying slide the webinar breaks down just how much of the restaurant segment ghost kitchens could potentially capture:

  • 50 percent of drive-thru ($75 billion)
  • 50 percent of takeout ($250 billion)
  • 25 percent of dine-in ($450 billion)

That said, ghost kitchens are “one step” in an ongoing evolution, according to Schaefer. “As more and more of the foodservice environment becomes optimized for delivery, a generation of consumers growing up with smartphones becomes accustomed and habituated to being able to order literally anything from their smartphone. That is going to drive ever-more innovation,” he said.

That innovation will in all likelihood touch every aspect of the restaurant experience, from how food gets from kitchen to customer to the types of foods prepared to the underlying technology powering operations. Ghost kitchens are getting a ton of press right now because of the role they could play in helping restaurants keep the lights on as the pandemic wreaks havoc on traditional dining rooms. But, as this week’s webinar suggests, it’s important to remember that things are just getting started as far as ghost kitchens are concerned. 

Singapore’s TiffinLabs Will Launch Its Tech-Driven Virtual Restaurant Network in the U.S. in 2020

Singapore-based food tech company TiffinLabs announced this week it has acquired access to kitchen space in 1,000 locations in the U.S., Europe, and Asia to create a global network of virtual restaurant brands.

The company, which was founded in 2019, is known for the nine different virtual restaurant brands it operates out of its kitchens in Singapore. According to a press release, TiffinLabs will bring five of these brands to the U.S., starting in San Francisco, Chicago, Los Angeles, Houston, and Austin in the fourth quarter of 2020. It also has plans to bring its restaurants to London, Manchester, and Birmingham in the U.K.

TiffinLabs uses what it calls an “AI-driven kitchen operating and management system” to “identify food trends and consumer preferences.” In other words, the company identifies food trends and demands in specific areas and plans its locations and cuisine types around those factors. The company also uses this data-driven model to improve improve its ingredient supply chain and research and develop the best packaging for delivery meals. 

It is one of several restaurant chains that is currently focused on creating global virtual brands and ghost kitchens. Fat Brands recently partnered with Epic Kitchens to open 20 ghost kitchens across the U.S. And Phillipenes-based Jollibee just opened its first ghost kitchen in Chicago. Other big-name brands — Chick-fil-A and the Halal Guys among them — have partnered with the likes of Kitchen United and DoorDash to get their food into areas where they do not necessarily have standalone locations.

TiffinLabs’ founder and chairman Kishin RK said in a statement that over the next three years, we’ll see two types of winners in the ghost kitchen/virtual restaurant space: local niche players creating specialty cuisine and global delivery players that serve all parts of the globe. TiffinLabs looks to be aiming for the latter category with its forthcoming expansion.

Report: Restaurant Transactions are Inching Towards Improvement for Major Chains

Restaurant transactions are improving — for some. Today, the NPD Group said customer transactions at major U.S. restaurant chains saw a slight uptick for the week ending May 31. Transactions at these chains declined by 18 percent compared to the same period one year ago. That’s a 3 percent week-over-week improvement.  

NPD has been providing regular updates on restaurant transactions for a number of weeks now as dining rooms slowly reopen and the restaurant industry as a whole continues to grapple with the unprecedented disruptions caused by the COVID-19 pandemic. 

Other notable numbers from this latest report include:

  • Restaurants in states where dining rooms are still closed had the steepest declines [—DECLINES OF WHAT?—]. For New York and California, that was negative 34 and negative 27 percent, respectively. 
  • By contrast, transactions in Kentucky, which was allowed to reopen on May 11, saw a 2 percent decline.
  • Full-service restaurant chains saw a negative 37 percent decline, which is a 15 percent increase from the prior week.
  • QSR chains saw a 16 percent decline in transactions versus 18 percent in the previous week.

David Portalatin, NPD food industry advisor noted in the release that the foodservice industry is “solidly in the re-start phase,” and that it will only be in a true recovery phase when all states reopen their dining rooms. Only then can we start to make “a detailed assessment of how many permanent restaurant closures there are and how that will affect what the industry will look like as it re-emerges.”

At least 3 percent of restaurants have already permanently shuttered due to the pandemic. Many of those have been independent restaurants, though some chains have also had to shut down locations.

And while we may not know exactly what the future restaurant industry looks like, one thing we can count on is more off-premises orders. Pretty much everyone, from family sit-down chains to fine-dining restaurants, are encouraged to continue offering to-go options to customers. Some chains are even launching to-go-focused concepts, while others are turning to the ghost kitchen concept to fulfill more delivery orders.

How big a role off-premises will play remains to be seen, and we likely won’t have a clear idea of that until more states reopen dining rooms. For now, delivery, ghost kitchens, virtual restaurant concepts, and other off-premises strategies have yet to prove themselves as real lifelines for businesses.  

ChefReady to Launch Ghost Kitchens With a Mom-and-Pop Mentality

Denver, CO-based ChefReady will launch its first ghost kitchen later this summer, in part to help keep restaurants alive that have been impacted by the COVID-19 crisis. According to a press release sent to The Spoon, the facility will open in July in Denver and provide space for 10 restaurants or restaurant concepts wanting to focus specifically on delivery.

Speaking in today’s press release, ChefReady cofounder Nili Malach Poynter said that when the company first examined the ghost kitchen concept, they found that “operate with a ‘churn and burn’ mentality, resulting in an unprofitably high tenant turnover. We decided to create a company that offers the convenience of a ghost kitchen, but with more of a ‘mom and pop’ personalized level of customer service, as well as greater efficiency, and a ‘greener’ footprint.”

Which is something a lot of restaurants are going to need soon.

That the pandemic is wrecking havoc on the restaurant industry is a point that’s starting to become old-hat. Many restaurants, especially independents, have already closed permanently. Many more will in the coming months thanks to the metaphorical train wreck of lost revenue, reduced capacity, upset business models, high rents, and many other factors converging at once on the industry.

Ghost kitchens, meanwhile, have so far been an obvious solution for larger chains that already generate the kind of demand needed to justify the expense of an off-premises-only location. But as restaurants close their doors forever, the concept might also be a way for them to save their business without the extra expense of running a brick-and-mortar location.

For ChefReady, the idea is to provide restaurants a way to keep their doors open without actually having to reopen any actual doors. 

ChefReady will provide restaurants with fully equipped kitchen space they can customize to some degree, as well as guidance on marketing, permits, and other areas of operations. Membership includes integration with third-party delivery providers. As with other ghost kitchens, there is also the benefit of lower overhead costs, since equipment is provided and rent is typically lower due to restaurants using less space. And for any restaurant trying to operate in this pandemic era, ghost kitchens provide the added benefit of not having to worry about the social distance guidelines and crowd control that comes with operating a front of house.

In all likelihood, the pandemic will accelerate the adoption of ghost kitchens, which were already getting popular beforehand. Kitchen United just announced a new facility in Austin, TX. Zuul Kitchens, which opened its first facility in 2019 in SoHo, NYC, recently teamed up with Figure 8 to start a ghost kitchen consulting firm. Equipment manufacturer Middleby is selling out-of-the-box ghost kitchen solutions, and there are plenty others in the space. 

While ChefReady didn’t say it was targeting a specific type of restaurant with its facility, one area that could benefit would be family dining. Those are your full-service restaurants like Applebee’s, Denny’s or the independent equivalents. Full-service restaurants have taken the hardest hit over the last few months in terms of sales declines, and that isn’t likely to change anytime soon. A recent survey found that 66 percent of consumers would not immediately eat in a restaurant dining room once it reopened.

As to whether fine dining restaurants could benefit from ghost kitchens remains to be seen. Food is just one part of the experience of many upscale establishments, and that experience is tough to replicate in a to-go box. For smaller fast causals, family dining joints, and other indies, though, ChefReady’s approach to ghost kitchens might be just what they need to keep the lights on another day. 

Hold the Phone. Soon it Will Be Your Restaurant’s Menu

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

A couple of years ago I came across a restaurant in Dallas, Texas that featured a menu written entirely in emojis. It was unexpected and creative, yet clear enough that a server didn’t have to come over and re-explain everything on the page.

I’m not (necessarily) advocating we battle the current restaurant industry fallout with emoji menus, but maybe we could use some of that outside-the-box thinking when it comes to revising menu formats to fit the new reality we live in. 

Since reusable menus are basically germ repositories, it’s no surprise they’re out now that dining rooms are reopening. The CDC’s recently released guidelines for reopening suggest restaurants “avoid using or sharing items such as menus” and to “instead use disposable or digital menus. . .” The National Restaurant Association’s guidelines tell restaurants to “make technology your friend” and suggest mobile ordering, and every other restaurant tech company that contacts me these days is offering up some form of digital menu for restaurants to integrate into their operations. 

A lot of restaurants will definitely start out by offering simple disposable menus. Paper is cheaper than software most of the time, and typing up and printing out a menu is faster than onboarding your business to a new tech solution.

Over time, though, that could change. As more emphasis gets placed on digital ordering for everyone, we’ll access more restaurant menus through our own phones and mobile devices. That opens up a whole world of possibilities in terms of what restaurants could one day offer on their menus beyond just the food items themselves.

Just a few examples: Menus could provide in-depth information the ingredients in a dish, like where that cilantro came from and how many months the apple traveled before it hit your plate. Menus might also include ratings from other customers, and Amazon-esque “you might also like” recommendations could show up on the screen. Maybe you could dictate the portion size you want, thereby reducing food waste.

With AI making its way into restaurant tech more and and more, restaurants could also build dynamic pricing into menus, based on time of day, foot traffic, weather, and offer coupons and promotional offers in real time. And sure, if someone really wanted to, an emoji menu would probably fly right now in more than a few places.

Most of these things exist already, though they’re not widespread and some are still in conceptual stages. The massive overhaul of the restaurant menu is a chance to start bringing those disparate pieces together to revamp the way we order our food.

Kitchen United Is Open for Business in Austin

One effect of this whole pandemic is that we’ve seen an uptick in to-go orders, and that trend won’t subside anytime soon. That makes now a good time for restaurants — some of them, at least — to consider adding a ghost kitchen to their operations. 

Those in Austin, TX can add Kitchen United to their list of choices when it comes to choosing a facility. The company, which provides ghost kitchen infrastructure (space, equipment, etc.) to restaurants announced this week its new location near the University of Texas is open for business. 

A number of restaurant chains have either already moved into the space or plan to do so in the coming weeks. Kitchen United has also allocated one of the kitchens in the new space to Keep Austin Fed, a nonprofit that gathers surplus food from commercial kitchens and distributes it to charities. As part of the deal, Keep Austin Fed will be able to “rescue” food from restaurants with kitchen operations inside the new KU facility. 

A press released emailed to The Spoon notes that “additional kitchen space is currently available” for restaurants that want to expand their off-premises operations. On that note, a word of advice for restaurants: make sure your restaurant is actually in need of a ghost kitchen before signing up with one. Kitchen United’s own CEO, Jim Collins, told me recently that restaurants need a certain amount of customer demand in order for the economics of a ghost kitchen to make sense. It’s not a small demand, either. In times like these, where the future of all restaurants is uncertain and what little money there is needs to be spent carefully, it pays to exercise some caution, even when it comes to an enticing new trend like ghost kitchens. 

Los Angeles Moves to Cap Third-Party Delivery Commission Fees

Behold, more fee caps for third-party delivery companies. This week, the Los Angeles City Council voted 14–0 to ask attorneys to draft a law that caps the commission fees delivery services charge restaurants at 15 percent. “Why should restaurants, and their customers, be put in a position to subsidize delivery app companies? We need to level the playing field,” Councilman Mitch O’Farrell told the Los Angeles Times.

This week’s proposal would also require that 100 percent of the tips customers leave on delivery orders through these apps go directly to the driver, which is pretty standard nowadays but caused some ruckus in the not-so-distant past. The fee caps would end 90 days after Los Angeles lifts its dining room closures. 

Needless to say, the move — which several other cities have already made — is not popular with delivery companies. Postmates, which is LA’s most popular third-party food delivery service, said governments setting a price on fees threatens jobs and creates “a false choice between local restaurants and the delivery network companies that support them.” The service wants instead to have a fee charged in delivery orders that would assist restaurants. That in turn would translate to yet-another fee for the customer, and be yet-another way in which restaurant food delivery services will suggest/try anything to avoid having to shoulder some of the burden the pandemic has brought on the restaurant industry.

As restaurants slowly reopen and the industry starts to adjust to its new normal, now we’ll begin to see if fee caps actually make a difference for struggling restaurants, and if they are here to stay for the long run.

Zuul Kitchens and Figure 8 Team Up for Ghost Kitchen Consulting Firm

Ghost kitchen provider Zuul Kitchens and delivery consulting firm Figure 8 Logistics announced via email today the launch of Zuul Studios. The initiative combines Zuul’s operational chops when it comes to ghost kitchens with Figure 8’s expertise around delivery strategy and logistics for restaurants. 

Zuul launched its first ghost kitchen facility in NYC last year for restaurants needing more space to fulfill off-premises orders. Like other major ghost kitchen networks, Zuul provides members with kitchen infrastructure, labor support, delivery fulfillment, and consultations about menu and POS integrations. 

Meanwhile, Figure 8 is a consulting firm for food delivery businesses that works with restaurant operators to analyze their existing strategies and improve upon them. Helping restaurants launch native delivery — that is, delivery orders that originate on the restaurant’s digital properties, not those of third parties — is a key offering Figure 8 pushes.

With Zuul Studios, it seems the two companies have put the best of their respective capabilities together to offer restaurants both the physical space to fulfill more delivery orders and the strategic know-how to build a stronger business around off-premises offerings. Zuul Studios says will help restaurants design, build, and launch ghost kitchen operations, configure an affordable tech stack for off-premises models, and launch virtual restaurant brands.

According to the press release, “Zuul Studios acts as a catalyst for helping restaurants and real estate owners remain competitive and develop sustainable food delivery business models. Combining Zuul’s expertise operating ghost kitchens and Figure 8’s experience in food delivery consulting, Zuul Studios is able to create innovative delivery strategies for their clients.”

Of course right now, the pandemic has turned most restaurants into ghost kitchens that can only serve delivery and takeout orders. And though restaurants are slowly reopening, by and large they won’t return to the pre-coronavirus days of packed dining rooms. For QSRs and fast-casual spots that survive, off-premises will be an important element of the overall restaurant business model of the future. 

Ages ago, Chowly’s Sterling Douglass mentioned that when it comes to ghost kitchens, it’s “a tough business, in some ways tougher than running a traditional restaurant.” That’s still true. A lot of the methodology, whether around operations or financials, that would apply to a dine-in restaurant isn’t relevant in a ghost kitchen setting. Plus, many restaurants aren’t even sure of how to determine whether they have the demand to even warrant a ghost kitchen operation. As businesses shift into this new and very off-premises-focused normal, many of these questions will need to be addressed. 

That makes a consulting firm for ghost kitchens a potentially attractive sell right now. Zuul Studios hasn’t publicly released numbers on how much they charge for consulting fees or kitchen space. To be honest, it’s probably out of reach for many small restaurants, though they probably won’t have the customer demand anyway. For bigger chains now looking to make delivery a bigger part of their business, teaming up with Zuul Studios might be a way to ensure smoother operations and a better off-premises strategy overall going forward.