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The Spoon

Daily news and analysis about the food tech revolution

Ghost Kitchens

The Halal Guys Is Aggressively Expanding Its Ghost Kitchen Strategy for Franchisees

The Halal Guys announced this week it is expanding its ghost kitchen strategy in the U.S., using the concept to make delivery more widely and cost effectively available to its franchisees, according to a press release. The fast-casual chain, which specializes in Middle Eastern dishes and ethically sourced Halal Meats, is working with franchise development company Fransmart to identify new locations in the U.S. where ghost kitchens would be successful.

With the market for online restaurant food delivery expected to reach $200 billion by 2025, restaurants large and small must now offer it to stay competitive. But opening additional full-scale brick-and-mortar locations to accommodate the uptick in orders brought on by delivery is an expensive, time-consuming process most franchisees — even those of well-known national brands — can’t afford.

Ghost kitchens, which are kitchen facilities with no dining room that restaurants typically use to fulfill off-premises orders, are one way for franchisees to include delivery services without opening new locations or overburdening staff at existing ones. “The small footprint and flexibility of cloud kitchens enables franchisees to unlock opportunities in desirable markets, while avoiding typical barriers like high rent or infrastructure costs,” Dan Rowe, CEO of Fransmart, said in a statement. 

The Halal Guys is no stranger to ghost kitchens, as it already operates one out of Kitchen United’s Pasadena, CA facility as well as its own kitchen in Long Island City, NY. It was also one of the initial four restaurants to launch ghost kitchens at DoorDash Kitchens when that facility opened in October 2029. 

The chain was also something of an early adopter of delivery and off-premises orders, launching its mobile app in 2017 and negotiating contracts with third-party services like Grubhub and DoorDash before using those services was the norm. The chain moved into Kitchen United’s Pasadena space in March of 2019 to accommodate more delivery orders and expand the number of potential customers it could reach in Southern California. It launched its own ghost kitchen on the East Coast in the same year.

Working with Fransmart, The Halal guy says it currently has 400 new locations “in the pipeline,” many of which will be delivery-only concepts fulfilled in ghost kitchens. 

3 Predictions for the Ghost Kitchen in 2020

In 2019, the idea of a restaurant kitchen with no dining room that would exist solely for the purpose of fulfilling off-premises orders was an intriguing but little-known concept. Fast forward 12 months, and ghost kitchens are now a major talking point in the discussion around how to meet customer demand for delivery and takeout orders. And it’s not just restaurants getting involved. Third-party delivery services like DoorDash have opened their own ghost kitchen facilities, companies like Kitchen United, who provide kitchen infrastructure to other brands, are expanding across the globe, and even non-restaurant food brands are capitalizing on the craze.

It’s still early days for the ghost kitchen concept, and as I noted with The Spoon’s most recent market map, this is a part of the restaurant industry that will change rapidly over the next year as it becomes more commonplace among both restaurants and consumers.

Here are a few things we expect to see happen in 2020.

Ghost kitchens will become the norm for large restaurant chains. 
Last year around this time, I wrote that “where the [ghost kitchen] concept could really shine in 2019 is by taking on delivery orders for existing businesses, so the brick-and-mortar locations of those restaurants don’t have to shoulder the entire burden.”

Without a shadow of a doubt, that began to happen in 2019. In 2020, it will become the norm. Many early adopters of the ghost kitchen concept in 2019 were national or international chain restaurants with the kind of reach and influence that will compel other establishments to take similar steps. Chick-fil-A already rents space from DoorDash’s ghost kitchen facility. Starbucks has teamed up with Alibaba’s Heme supermarkets in China to run ghost kitchens out of the latter’s stores. The coffee giant is also building out its own express stores that will function largely as ghost kitchens for delivery orders. Fat Brands is using its own kitchens to double as ghost kitchens for sister brands.

All of which is to say, many brands will create many iterations of the ghost kitchen concept in 2020. As we move though the next 12 months, which types of ghost kitchens (commissary, in-house, etc.) make the most sense for which brands will become clearer. 

Restaurant brands will compete with their kitchen providers.
Both large chains and virtual restaurant concepts will quite possibly find a new competitor in 2020: the folks renting out the kitchen space they use.

Much like grocery stores display their own brand of pasta on the shelves along side CPG brands (or, for a more web-friendly parallel, Amazon has its own Amazon Basics brand), ghost kitchen providers will start to use their facilities to house their own virtual restaurant concepts that compete with those of their tenants. 

This is already happening. Travis Kalanick’s CloudKitchens startup, which operates a network of ghost kitchen facilities, provides space for brands like Sweetgreen to fulfill off-premises orders. It also houses its own virtual brands like Excuse My French Toast and B*tch Don’t Grill My Cheese. 

Not all kitchen providers will take this route. For example, Kitchen United said recently it did not want to be a restaurant itself.

But for many kitchen providers, offering their own virtual restaurants allows them to own yet-another piece of the restaurant stack and therefore more revenue and the all-important customer data. And as more and more non-restaurant food brands, from diets to celebrity chefs, try out virtual concepts, launching a virtual restaurant will (in theory, at least) get simpler for these kitchen providers to do without incurring much additional overhead. No, B*tch Don’t Grill My Cheese won’t stand a chance against a big brand like Chick-fil-A if a customer is really craving those waffle fries, but in the future, the two entities won’t be working out of the same ghost kitchen facility anyway.

Which leads us to our next point.

Third-party delivery services will open more kitchens. Big brands will follow.
Remember above when I said we’ll see an explosion of big-name restaurant brands adopting the ghost kitchen model? At some point in the future, most of them will be doing it out of kitchens run by third-party delivery services like DoorDash and Uber Eats. That’s not because providers like Kitchen United don’t offer delivery options (they do), but because the delivery companies themselves are approaching the restaurant chains.

DoorDash is a case in point. When the third-party delivery service opened the doors on its own ghost kitchen facility in Redwood City, CA this year, it had four existing restaurant chains onboard — all of whom it approached because the company had user data that said people were looking for that type of food in the California Peninsula area. Chick-fil-A soon signed a lease for exactly the same reason.

This is almost a no-brainer. Restaurants already working with delivery companies use these services for things like marketing, technical fulfillment, and last-mile logistics. Adding kitchen space to the stack seems almost a foregone conclusion.

The other thing ghost kitchens are likely to encounter at some point in 2020 is a reality check. At the moment, optimism is flowing into the sector alongside the millions in capital companies are raising. Soon enough, though, the questions will start pouring in. Who gets to own the customer data? Can ghost kitchens become sustainable or will they just pile more trash into the ocean via takeout boxes? Is the model actually profitable, and for whom? Expect these and many other questions to surface in the next year as the ghost kitchen goes mainstream. 

What Does Travis Kalanick’s Departure from Uber Mean for the Cloud Kitchen Space?

Just before Christmas, it was announced that Travis Kalanick, the founder and former CEO of Uber, will be leaving that company’s board of directors at the end of this month. Additionally, Kalanick has reportedly sold all of his Uber stock for roughly $2.7 billion.

In the press announcement, Kalanick said “it seems like the right moment for me to focus on my current business and philanthropic pursuits.” One of those business pursuits is CloudKitchens, his secretive startup that does exactly as its name implies; it creates physical kitchen infrastructure locations for delivery-only restaurants. These restaurants can be delivery extensions of existing brands, or virtual restaurants that exist only within a delivery app. CloudKitchens is even creating their own virtual restaurants.

Kalanick’s new calling, however, created a conflict of interest for him and Uber given that Uber Eats has its own potential cloud kitchen and virtual restaurant ambitions. So Kalanick’s departure from Uber’s board isn’t a huge surprise.

As for why Kalanick sold off all his shares in the company he helped build into the juggernaut it is today, who knows exactly what message he is trying to send. Has he lost faith in Uber, which continues to hemorrhage money? Did Kalanick pull a Steve Jobs in selling off shares from the company that ousted him?

What we are more interested in here at The Spoon is what Kalanick is going to do next with CloudKitchens now that he has a bunch of cash and time to focus on it. The cloud/ghost/dark kitchen landscape is one that we watch closely (check out our market map on the topic). CloudKitchens already reportedly raised $400 million from Saudi Arabia’s Public Investment Fund, so money wasn’t necessarily an issue for the startup. Especially considering that rivals like Kitchen United and Virtual Kitchen Co. have only raised $50 million and $15 million respectively.

Kalanick has proven his ability to ruthlessly build an empire before. Freed from any ties to Uber, we’ll now be watching to see how quickly Kalanick expands CloudKitchens. Will he relax the CIA-like levels of secrecy around the company? Will he expand rapidly across the country? Will he launch any new innovations? How will he spur his rivals into action?

One thing is for certain; we’ll be writing a lot about Kalanick and cloud kitchens in the coming year.

Newsletter: What Comes Next for Ghost Kitchens? Plus, Third-party Delivery and At-home Agtech

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I’m not gonna lie: putting together our market map on ghost kitchens was hard. The concept as we know it is relatively new, and the lines between the different categories of ghost kitchen might be easy enough to draw in a graphic but are never as solid in real life. For example, CloudKitchens provides kitchen space but it’s also a network of virtual restaurants. Starbucks runs its own kitchens but relies on Alibaba’s Heme supermarkets to provide the space. Grubhub, Uber Eats, and DoorDash deliver food but also operate in other areas of the stack.

That overlap, though, is a big part of what makes this area of the restaurant industry such an interesting one to watch. Not only is the 2019 ghost kitchen redefining the restaurant experience as we know it, it’s also redefining the way restaurants operate, the technology they use to do that, and even what their menus offer in any given area. Fat Brands, for example, uses Fatburger locations on the West Coast to also fulfill delivery-only orders for sister brands that would normally only be available to customers in the East. 

As we head into the next year, we can expect the overlap of companies and categories to increase as more multi-unit chains try their hand at ghost kitchens, more kitchen infrastructure providers try out their own virtual restaurants, and literal mobility (kitchens on wheels) becomes more commonplace. 

Head over to The Spoon for more predictions on what comes next for ghost kitchens (RIP POS?) and to download the map. And since this is such a nascent market that changes weekly, expect more iterations of this map to hit your inbox in the future.

Third-party delivery is staying put. Sort of.
It’s no secret that consumer appetite for delivery is driving the growth of off-premises orders. And while they may be controversial, third-party services like DoorDash and Postmates are a big part of this growth.

The biggest part, by some accounts. This week, CBRE Group noted in a new report that 70 percent of delivery orders will come from third parties by 2022. That’s a no-brainer. These services provide the tech infrastructure, logistics, and actual drivers that are often too expensive for restaurants to operate on their own. Third-party delivery may be expensive for restaurants and paddling through a sea of bad press lately, but it is in many ways necessary for businesses who want (need, actually) to offer off-premises ordering for customers. 

Like ghost kitchens, this is a messy, fast-changing market whose model will continue to evolve as restaurants adopt hybrid strategies and new laws are passed regulating how these companies do business.  

At-home vertical farms: Big convenience or big expense?
If you still prefer the old-fashioned method of actually cooking food for yourself, Miele’s latest news will be of some interest. As my colleague Chris Albrecht reported this week, the German appliance-maker known for everything from washing machines to coffee systems has acquired Agrilution, a Munich, Germany-based agtech startup known for its Plantcube indoor vertical farm. 

As Chris notes, the Plantcube looks like one of those at-home wine fridges, and like any vertical farm uses software to regulate temperature, climate, water levels, and nutrient delivery to crops. The system grows a variety of leafy greens and fits right inside your existing kitchen infrastructure. 

Question is, Do people want vertical farms built into their kitchens?

Potentially.

No, setting up a grow system in your home is not as convenient as buying a bag of kale from the store. For those so inclined, though, an at-home vertical farm like Agrilution’s means being able to pick fresh, better tasting ones right out of their own cabinetry. Those living in dense urban areas, where the fire escape is the closest thing to outdoor space, could have an actual at-home garden.

First, though, we have to get over the cost hurdle. Right now, price points of various at-home vertical farming systems go for anywhere between roughly $500 (Ponix Systems) and $3,000-plus (Miele). What we don’t have is abundant data on how much these farms cost consumers in terms of electricity, water, or repairs if the system breaks down. There is also the issue of space. Agrilution’s Plantcube may fit nicely into the under-counter space of a single-family home in Nashville. Your average New York apartment, on the other hand, would be hard-pressed to accommodate one.

Still, it’s a great sign that a major appliance-maker like Miele is showing interest in getting cabinet-to-table greens to more homes in the future.

Until next time,

Jenn

Spoon Market Map: Ghost Kitchens in 2019

Just half a decade ago, the phrase “ghost kitchen” referred to restaurants that looked legit on Grubhub and Seamless but were actually digital fronts for unregulated kitchens. In other words, chicken tenders from what appeared to be a local restaurant might actually have been cooked in someone’s apartment.

Then the delivery boom went off, thanks largely to the growth of third-party services like Grubhub and DoorDash, and by the many digital channels through which customers could suddenly get food. Order tickets proliferated for restaurants, but so too did the stress around how to fulfill those orders without over-burdening the in-house kitchen staff.

The answer to the problem? Take the restaurant out of the kitchen.

In the last few years, restaurants have been moving many of their operations around delivery and to-go orders to dedicated kitchen spaces outside the main restaurant location. The name “ghost kitchen” has stuck around, but now it’s a health-department-friendly term for these spaces that act as hubs for off-premises orders.

But actually, there are many names nowadays for the concept: ghost kitchen, virtual kitchen, cloud kitchen, the (slightly nauseating) description “kitchen as a service.” All those phrases amount the same thing: a kitchen facility that exists solely for the purpose of helping restaurants cook and fulfill to-go orders and get them into the hands of delivery couriers. There is no dining room or front-of-house staff in a ghost kitchen, the tech-stack is more streamlined than that of a full-service restaurant, and, increasingly, the location is completely separate from a restaurant’s dine-in location(s). Now, too, there are also kitchens on (literal) wheels, which add yet-another piece of mobility to the business model. 

To help you navigate the evolving world of ghost kitchens, we’ve created a market map for your reference. This market map is intended to be a snapshot of the current ghost kitchen landscape in 2019. It’s not comprehensive, and we expect both it and the overall landscape to change drastically over the next 12 months. That means you can expect to see this map updated regularly. As always, we welcome suggestions for additional companies and players in this space.

Have suggestions? Drop us an email.

1. Kitchen Infrastructure Providers

The largest category in ghost kitchens right now, Kitchen Infrastructure Providers can be likened to cloud computing providers: they rent companies the space and tools needed to run a business, either as a flat-fee model for on a pay-as-you-go basis. 

Kitchen United, for example, charges a monthly membership fee that includes rent, equipment, storage, and services like dishwashing. Reef, which originally made a name for itself reinventing the concept of the parking garage, offers these things as well as direct partnerships with major third-party delivery companies like DoorDash and Postmates.   

Normally these facilities are large, warehouse-like buildings that hold multiple “restaurants” under a single roof. For large restaurant operators with multiple chains looking to fulfill extra demand brought on by delivery or test out new concepts without incurring too much risk, these are ideal.

Multi-unit chains can also use these spaces to reach customers in areas where they might not have a brick-and-mortar store. Chick-fil-A is widening its reach in the SF Bay Area by working out of DoorDash’s newly opened facility.

2. Restaurant-operated Kitchens

For some restaurants, running a ghost kitchen operation themselves makes more sense than teaming up with a third-party kitchen provider. This is often the case with smaller, independent restaurants, whose ghost kitchen might consist of nothing more than an area of the restaurant’s existing location(s) dedicated to fulfilling off-premises orders. Or it might apply to multi-unit chains who simply want to expand to new areas and don’t have the capital or inclination to deal with the burden of a full-service restaurant. Colombian chain Muy is one such company, having started as a dine-in restaurant before expanding its ghost kitchens to serve more areas of Latin America.

The most notable of all the companies in this category right now is Starbucks. In addition to building out “to-go” stores that exist solely for the purpose of fulfilling off-premises orders, the company has also partnered with Alibaba to turn parts of the latter’s Hema supermarkets into ghost kitchens in China.

The boundaries around this category are especially fluid. In other words, just because you operate your own ghost kitchen in one part of the country doesn’t mean you can’t team up with a third-party provider in another, as The Halal Guys and Chick-fil-A have done.

3. Virtual Restaurant Providers

This is where the lines really start to blur between restaurant, kitchen provider, and delivery company. Anyone can make a virtual restaurant, and as the category in our map shows, more than just restaurants are trying their hand at food concepts that can only be ordered through digital channels and are prepared in a ghost kitchen. Whole30, for example, is a diet concept better known for its cookbooks than its dealings with the restaurant industry. The folks behind that brand teamed up with Grubhub and restaurant company Lettuce Entertain You to create a virtual restaurant offering meals with Whole30-approved foods. 

On the other hand, a company like Keatz runs a network of virtual restaurants it houses beneath the roof of its own ghost kitchens. Taster, based out of France, creates native restaurant brands for food delivery companies like Uber Eats and Deliveroo. Food is cooked in Taster-run kitchens.

4. Mobile Kitchens

In slightly more its own category, companies like Ono Food Co. and Zume are creating robotic, self-contained kitchens on wheels that offer restaurant experiences that can be tailored to specific neighborhoods in a city and also plug into third-party delivery services.

Restaurants can also partner with these kitchens on wheels to expand their reach into new markets, as &Pizza has done by teaming up with Zume.

What’s Next for Ghost Kitchens

Ghost kitchens will become the norm for multi-unit chains. With off-premises orders expected to drive the majority of restaurant sales growth over the next decade, multi-unit brands (think Panera, Chipotle, etc.) will find ghost kitchens a cost-effective way to meet this demand without overburdening existing restaurants. The majority of them will rent space from kitchen infrastructure providers, as Chick-fil-A is currently doing with DoorDash. 

There will be an explosion of delivery-only brands. Since ghost kitchens provide a cheaper, faster way for food entrepreneurs and small restaurants alike to test-drive new concepts, we will see an influx of delivery- and pickup-only brands come out of these kitchens over the next year. Many will be born inside the walls of facilities like Kitchen United or CloudKitchens. Meanwhile, the number of virtual restaurant networks like that of Keatz will increase. 

Artificial Intelligence will be designed into the kitchen. AI is a really broad term that’s often misused. That fact aside, its presence in the restaurant industry is here to stay, and in ghost kitchens, it will prove itself valuable for everything from tracking ingredients to helping staff curb food waste. On the consumer end, we expect to see the technology more deeply integrated into the apps and websites from which customers order, improving recommendations and upselling opportunities.  

More non-restaurant food brands will launch virtual restaurants. In keeping with a trend recently made popular by Whole30 and Bon Apétit, food brands, diets, celebrity chefs, and other non-restaurant businesses will team up with third parties to launch delivery and pickup concepts. Grubhub and Uber Eats are two such third parties already doing this. Expect many more such partnerships — soon.

Bonus: The tech stack will get pared down. No front of house means no POS, right? Quite possibly. With less (or no) customer-facing technology like digital menu boards, self-order kiosks, and tabletop ordering, much of the restaurant tech on the market today becomes irrelevant in a ghost kitchen setting. As the folks at Reforming Retail noted recently, “under this scenario the POS is just an ordering node in the cloud that outputs your menu to a consumer and sends orders to your kitchen.”

That doesn’t mean restaurant tech is going by the wayside. Some ghost kitchens, like those of Muy, have a walkup option where customers order at kiosks onsite, and there will doubtless be new solutions created that are specifically for the ghost kitchen. But the tools of tomorrow’s ghost kitchen won’t look a thing like today’s bloated restaurant-management tech stack. For everyone involved, that’s a bonus.

Newsletter: My Smart Thanksgiving was Kinda Dumb, Ghost Kitchens and 3D Printed Vitamin Gummies

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A couple months back, The Spoon got in a little tiff with WIRED writer (and all around great guy) Joe Ray when he bylined an article that said the smart kitchen is very stupid.

As we’re a publication that’s all about the convergence of food and technology, this, naturally, got our goat. But here’s the thing, though. Ray wasn’t totally wrong. I experienced this firsthand over Thanksgiving when I tried my hand at connected holiday cooking.

Thanksgiving is typically the domain of my wife. But with an abundance of guests and a shortage of ovens, I decided to try my (slow) hand at smoking a turkey.

Armed with a Traeger pellet grill equipped with WiFire tech, and a block of Meater connected thermometers, I figured contributing to the holiday feast would be a snap.

I was wrong. I wrote about the whole experience, but the TL;DR version is this: Between getting the thermometers to actually connect (they didn’t) and a less-than-stellar app experience, my smart holiday cookout actually had to rely on the brains in my head and not in any device.

Thankfully, the turkey wound up tasting great, even if it did take a little more time and manual work than I was expecting. It tasted so good, in fact, that smoking another one next year is probably not a dumb idea (I just won’t be using any smart appliances).

Ghost Kitchens Are Very Much Alive
Everyone, it seems, is looking to get in on some of that sweet ghost kitchen action. Travis Kalanick, DoorDash, Chick-fil-A and now grocery retailer Kroger are making use of facilities that specialize in fulfilling meals for delivery (no dining in).

Yesterday, The Spoon’s Jenn Marson wrote about Kroger hooking up with the (fantastically named) meal delivery service ClusterTruck to launch multiple ghost kitchens. As Jenn wrote:

While the partnership is a high-profile one for a regional company like ClusterTruck, which is available mostly in the Midwest at this point, it’s also a smart move for Kroger. The concept of operating virtual restaurants out of ghost kitchens appeals nowadays to not just restaurants but also lifestyle brands, diet concepts, and celebrity chefs. Grocery stores were bound to follow at some point.

The line between grocery store and restaurant is already blurring, with many retailers offering fully prepared hot meals ready to go. So it makes sense that as off-premises dining continues to grow that we’ll see more retailers jump into the ghost kitchen delivery game. Why not order a hot dinner for tonight and get your groceries for the week dropped off on your doorstep at the same time?

Photo: Nourished

A 3D Printed Vitamin Gummy
Everyone eats their kids’ gummy vitamins, right? Or is that just me?

Well, my days of stealing vitamins may be soon be a thing of the past, if Nourished makes it to these shores. As my colleague, Catherine Lamb wrote about today, Nourished makes 3D printed gummies layered with vitamins personalized for your needs.

The vitamins won’t be cheap ($51 for a month’s supply), but Nourished says its 3D printed approached improves the pills’ efficacy. As Catherine writes:

Typically, active ingredients that show up in vitamins — like ashwagandha and Vitamin A — interfere with each other when combined into the same capsule. However, by printing these ingredients on top of each other, Nourished can fuse them into the same bite-sized supplement.

Nourished is only available in the U.K. right now, but the company is heading for the U.S. next year. Just don’t tell my son.

Nourished is actually part of a wave of startups bringing more personalization to the food we eat. The Spoon is giving a nod to that space with Customize, a new one-day summit in NYC in February that will bring together leading innovators across the restaurant, retail, grocery, food and consumer industries to explore how personalization is changing these markets. Get your (personal) ticket today!

Kroger Partners With Meal Delivery Service ClusterTruck to Launch Ghost Kitchen Operations

Kroger joins the growing list of non-restaurant food companies trying their hand at ghost kitchens and virtual restaurants. The grocery retailer announced today it has partnered with Indianapolis-based food delivery service ClusterTruck to launch multiple ghost kitchens that serve up delivery-only meals.

Through the partnership, ClusterTruck will sell its restaurant-quality meals via the Kroger Delivery Kitchen website. Customers can browse the service’s extensive menu, which covers considerably more food types and dietary preferences than many regular restaurants, place an order, and pay online, just as they would with any other food delivery service. From the looks of it, ClusterTruck has essentially taken its existing menu and placed it within the Kroger Delivery Kitchen shop, making it accessible to a wider number of potential customers.

That’s only one aspect of the partnership, though. As we wrote earlier this year, ClusterTruck, which has been operating virtual restaurants since 2015, controls the entire delivery stack of its business, from creating recipes and managing menus to building the software that powers the whole operation. It even employs its own fleet of drivers. The service will bring all of these elements to the new ghost kitchen operation with Kroger, who, as mentioned above, is basically just providing the virtual storefront.

The partnership will launch with four kitchens, one in each of the following cities: Carmel, Indiana; Indianapolis, Indiana; Columbus, Ohio; and Denver, Colorado.

Customers in delivery zones for Carmel, Indianapolis, and Columbus can now go to KrogerDeliveryKitchen.com to browse menus and place orders online. In Denver, where the operation is being handled by Kroger subsidiary King Scoopers, customers access the service through KingScoopersDelivery.com.

Whether Kroger and ClusterTruck will expand this operation to other U.S. cities remains to be seen. We have reached out to ClusterTruck and will update this post with more details as they arrive.

While the partnership is a high-profile one for a regional company like ClusterTruck, which is available mostly in the Midwest at this point, it’s also a smart move for Kroger. The concept of operating virtual restaurants out of ghost kitchens appeals nowadays to not just restaurants but also lifestyle brands, diet concepts, and celebrity chefs. Grocery stores were bound to follow at some point.

In fact, Kroger isn’t even the first supermarket chain to dabble in this area of the food industry. In China, Starbucks is operating ghost kitchens out of Alibaba’s Heme supermarkets as a way to fulfill more delivery orders. Expect more grocery store chains to follow with similar moves soon.

Report: Virtual Kitchen Co. Is Getting a $15M Investment for Its Growing Ghost Kitchen Network

Another day another new ghost kitchen popping up to help restaurants feed the population’s demand for delivery. A new startup called Virtual Kitchen Co. “plans to announce” a $15 million investment from VC firms Andreessen Horowitz, Base10 Partners and others, according to an article published today on Bloomberg. SF Bay Area-based Virtual Kitchen Co currently operates a handful of commissary kitchen facilities, which have no front of house and exist solely for the purpose of renting space to restaurants who need to fulfill more off-premises orders.

Already, there are a few aspects of Virtual Kitchen Co. that set it somewhat apart in the world of ghost kitchen facilities. First, it uses what’s called a hub-and-spoke model, where ingredients are prepped the day before then shuttled to a smaller facility to be cooked and assembled. Compartmentalizing the meal-prep process like this could potentially speed up the work in kitchens, which have fewer tasks to complete compared to, say, a regular restaurant kitchen. The model brings to mind the work of Zume, who pre-makes pizzas in a central facility before sending them to the company’s mobile kitchens for cooking and delivery.

Virtual Kitchen caters specifically to local chains and smaller restaurant businesses, according to Bloomberg. Right now, the company’s (rather bare-bones) website has customer stories from Bay Area restaurants Poki Time, Dosa, and Big Chef Tom’s Belly Burgers as restaurant partners.

Virtual Kitchen was also started by ex-Uber employees Ken Chong and Matt Sawchuk. The latter formerly oversaw Uber Eats, which means he knows a thing or two about restaurant food delivery. Uber itself was experimenting ghost kitchens in Paris earlier this year, but isn’t planning to continue that venture, according to Bloomberg. That doesn’t, however, put Eats out of the game completely when it comes to ghost kitchens. In September, the service partnered with Rachel Ray for a virtual restaurant based on the celebrity chef’s latest cookbook.

And Eats isn’t the only ex-Uber party Virtual Kitchen Co faces in terms of competition: former CEO Travis Kalanick’s CloudKitchens network of ghost kitchens and virtual restaurants reportedly got a $400 million investment from Saudi Arabia and also has the benefit of Kalanick’s net worth, which is more than $3 billion at this point. On top of the that competition is also DoorDash’s newly opened ghost kitchen facility in the Bay Area and Kitchen United’s ever-expanding network.

All of which is to say, Virtual Kitchen Co. faces a rather hot market right now in terms of competition, one that will see many more cooks in the kitchen — literally and figuratively — as ghost kitchens become the new norm for restaurants.

Report: Saudis Pour $400M Into Travis Kalanick’s Ghost Kitchen Startup

Saudi Arabia’s sovereign-wealth-fund invested $400 million into Travis Kalanick’s CloudKitchens startup, according to a new report by The Wall Street Journal. The fund’s agreement was completed in January and could value CloudKitchens at $5 billion.

The sovereign-wealth-investor was also an early backer of Uber, which means Kalanick, who was ousted from the latter in 2017, is reunited with a former investor.

Like Kitchen United, Zuul Kitchens, and others, CloudKitchens operates a network of ghost kitchens facilities restaurants can use to fulfill delivery orders placed via DoorDash, Grubhub, etc. The company also has several of its own delivery-only restaurant concepts, which it also runs out of these kitchens.

According to the WSJ’s sources, the sovereign-wealth-fund, known as Saudi Arabia’s Public Investment Fund (PIF), has helped CloudKitchens expand around the globe, including multiple U.S. cities as well as China, India, and the UK. A spokesman for PIF declined to comment to the WSJ on the story.

The deal had reportedly been in the works since 2018, when Kalanick started discussing it with PIF’s governor Yasir al-Rumayyan, who also sits on the board of Uber. It’s also one that’s steeped in controversy, given the murder of journalist Jamal Khashoggi. The investment in CloudKitchens is the PIF’s first known deal in Silicon Valley since Khashoggi’s killing, according to the WSJ.

On its website, CloudKitchens promises potential restaurant parters things like lower upfront and operational costs. The site lists just seven restaurant brands the company works with and precious-little information in terms of where CloudKitchens actually operates facilities. Secrecy seems to be the name of the game when it comes to how Kalanick runs this business. The company forbids employees to list any affiliation with CloudKitchens in their LinkedIn profiles, and Kalanick himself doesn’t grant interviews on the topic. In that sense, keeping a $400 million investment from a controversial alliance is right in line with how CloudKitchens is choosing to run its business. According to the WSJ, the investment has been “closely guarded” and known to just a few executives at CloudKitchens.

We’ve Seen the Restaurant of the Future. It Doesn’t Look Like a Restaurant

What will the typical American restaurant look like in 2030? Ask the National Restaurant Association, whose new report, “Restaurant Industry 2030” serves up some answers to that question.

Many answers, actually. The 80-page report gives us an in-depth look at everything from how the restaurant workforce will change to technologies that will become commonplace in daily operations, many of which we already see quite a bit of in 2019: self-order kiosks, dedicated areas for pickup orders, and digital drive-thru signage, for example.

Overall, restaurant sales are expected to reach $863 billion in 2019 and grow to $1.2 trillion in 2030, according to the report. The major driver of that growth will be off-premises ordering — delivery, takeout, drive-thru, and other mobile-centric experiences. That will, as the report states, change the definition of the word “restaurant”:

Some restaurants will morph into a hybrid model, offering counter service, full service, takeout and delivery, and meal kits. The delivery-only restaurant is on the rise through virtual restaurants and ‘ghost kitchens.’ New food halls feature retail and restaurant pairings to make it easy for people both to eat and to shop for food they can take home.

All of these things underscore the influence off-premises orders are having on restaurant business models. As the report states, “the shift affects everything from restaurant design to marketingtech investment, operations, and site selection.”

Take ghost kitchens as a prime example. Not so long ago, the idea of having a restaurant without a dining room for anything other than concession-type food was unheard of. Now, restaurants are not only using them to fulfill the influx of delivery orders, they are also testing out brand-new menus and, in the case of multi-brand companies, using the ghost kitchen concept to cross-promote and sell sister brands.

Third-party delivery companies, in particular, are capitalizing on the craze for ghost kitchens, with DoorDash opening its own facility in Northern California and Uber Eats and Grubhub teaming up with non-restaurant food brands to launch virtual concepts.

New business models aside, though, Grubhub et al. face a far more ominous prospect over the next decade: increased regulation of third-party delivery. The National Restaurant Association’s report notes that the restaurant of 2030 will see many a government mandate over the next decade around employees, the environment, and food service-related taxes. But the big one to stand out is the increased regulations for third-party delivery operators.

The debate over stricter regulations for third-party delivery is already in full swing. Earlier in 2019, Grubhub, Uber Eats, and indeed the entire sector came under fire when an oversight hearing was held in New York City that called into question the high commission fees these services charge restaurants. Since then, it’s been one headline after the next proclaiming antitrust issues, biased fee structures for restaurants, caps on delivery fees, ethically questionable tipping policies, and so much more.

The shift towards more regulations is already in place, most notably with California’s Assembly Bill 5, which reclassifies gig workers as employees and was signed into law in September. Third-party delivery companies are fighting AB 5, but even if they succeed, there will be virtually no end to new bills, laws, and other regulatory matters to fight over the next decade. Between that and the constant struggle for profitability for these companies, it’s safe to say the third-party delivery sector of 2030 will be markedly different from the one we know today. Which is to say, the very elements changing today’s food landscape will undergo there own change on the road to 2030.

Colombian Food Tech Startup Muy Raises $15M to Build More Ghost Kitchens

Just in time for Halloween, Colombian food tech company Muy announced a $15 million Series B round today to expand its ghost kitchen operation to other parts of Latin America. The round was led by ALLVP with participation from previous investor Seaya and brings Muy’s total funding to $20.5 million.

Ghost kitchens — also called virtual kitchens, cloud kitchens, and other names — are shared commercial kitchens restaurants can rent out to fulfill more delivery orders and even try new concepts. The defining feature of a ghost kitchen is its complete lack of a front of house — that is, there’s no dining room, cashier, or servers, and often not even a pickup area. They’re also becoming practically mandatory for restaurants in this delivery-crazed era of food.

Muy, which also operates 20 dine-in restaurants around Colombia, uses what it calls a virtual kitchen and smart chef system to serve delivery guests, who can order and customize food bowls via the Muy mobile app. The company also says it uses AI to make internal operations at its restaurants more efficient and predict demand.

The fresh round of funding will see Muy expand the ghost kitchen portion of its concept to Mexico and Brazil to make delivery more efficient in high-density cities like São Paulo and Mexico City. This won’t be Muy founder José Calderón’s first dabble in food delivery. He co-founded Colombian company Domicilios.com, which Delivery Hero acquired in 2014.

Muy won’t be alone in trying to expand the ghost kitchen concept. In Latin America alone, Rappi, iFood, and Pedidos Ya all compete in the delivery sphere and are contending for would-be customers of ghost kitchens. Meanwhile, Uber Eats operates in dozens of cities in Latin America, and, given its recent efforts with ghost kitchens, could likely one day operate some in that region.

Elsewhere, we’ve seen plenty of news about ghost kitchens peeking out of the shadows. DoorDash announced its own facility earlier this month, Uber Eats has teamed up with Rachel Ray to offer a virtual restaurant where food is prepared in a ghost kitchen, and Fatburger is using its sister brands’ kitchens as places to fulfill more delivery orders.

All of which is to say, it looks ghost kitchen industry is about to see scary new levels of competition.

DoorDash Launches Its First Ghost Kitchen Facility for To-Go Restaurant Concepts

With more and more restaurants, food entrepreneurs, and delivery services using ghost kitchens, it seemed only a matter of time before DoorDash built one of its own. So it’s not too surprising that today, the San Francisco-based company announced the launch of its first ever shared commissary kitchen, dubbed DoorDash Kitchens, which will house multiple to-go restaurant concepts under a single roof, according to an email sent to The Spoon.

DoorDash customers can now order from a handful of chain restaurants and either pick up food right at the commissary or have it delivered. This first location of DoorDash Kitchens, located in Redwood City, CA, will serve several cities in the California Peninsula area, including Menlo Park, Palo Alto, and Woodside, among others.

DoorDash has partnered with four restaurant chains for this first run of DoorDash Kitchens: Nation’s Giant Hamburgers, Rooster & Rice, Humphry Slocombe, and The Halal Guys.

The biggest benefit for those merchants, as well as any others that might come onboard in the future is geographic reach. “Over time we’ve heard that our partners have been looking for new ways to grow their business,” Fuad Hannon, Head of New Business Verticals for DoorDash, said to me over the phone. “Launching new geographies is one of the most clear ways that we can help.”

It’s also a cheaper option for a restaurant than building a new location from the ground up, or even retrofitting an existing building. “For merchants, it means reaching new audiences without bearing the high costs of building out more brick-and-mortar locations,” Hannon said of the Kitchens concept.

So, for example, Nation’s Giant Hamburgers has no brick-and-mortar locations currently in Palo Alto. However, operating out of a commissary kitchen nearby allows the chain to reach customers in that area without incurring costs around building infrastructure, permits and licenses, or maintaining a dining room setup. Hannon said DoorDash provides the restaurants with kitchen space and proper equipment, and also handles things like permitting and last-mile logistics for the businesses. “It’s really quite turnkey for our partners,” he said.

A little less clear is how many of these kitchens DoorDash plans to build around the U.S. in future. Hannon wouldn’t say if more locations are already planned. But according to recent numbers, 60 percent of all restaurant orders are now off-premises, and ghost kitchens help restaurants fulfill much of this demand. Just look at Kitchen United’s growing empire, the amount of work Starbucks is putting into the concept, and even efforts from DoorDash competitors like Uber Eats and Grubhub.

All of which is to say that ghost kitchens are starting to become table stakes for restaurants, and it would be more surprising if we didn’t see additional locations from DoorDash in future.