“Hey, honey, have you tried that new restaurant called “Pimp My Pasta” that I told you about from DoorDash?
This seems like an unlikely thing to say to someone, but it’s happening more often than you think. What’s up?
Well, all kinds of strange restaurants are popping up with names like “F*cking Good Pizza”, “Pimp My Pasta” and “Cupid’s Wings” among many others.
Welcome to the new world of ghost kitchens which are basically restaurants without dining rooms – the dining rooms got ghosted. Instead of patrons in the dining room, they prepare meals for delivery and takeout orders.
Restaurants have obviously been hit hard lately – 1 in 6 U.S. restaurants has been forced to close since the start of the pandemic, according to the National Restaurant Association. Ghost kitchens have proven to be a lifeline for struggling restaurants.
Big players in the game
- Uber co-founder Travis Kalanick has been busy since his ouster from Uber. His new startup CloudKitchens has been active for several years now – a recent Wall Street Journal report found entities tied to Mr. Kalanick’s company have already spent more than $130 million acquiring properties like closed restaurants, auto-body shops and warehouses. CloudKitchens was recently valued at over $5 billion following a $700 million capital raise back in 2019, according to PitchBook.
- Deliveroo which recently debuted its stock market listing claims it is the global leader in the business with close to 250 kitchens across eight markets worldwide. The company recently announced plans to more than double the number of locations where it offers kitchens this year.
- Local Kitchens. Former DoorDash software engineer Jon Goldsmith launched ghost kitchen startup Local Kitchens which will soon have three locations in the Bay Area. They raised a seed round of financing last year that included DoorDash chief executive officer Tony Xu, Twitter CEO Jack Dorsey and Yum Brands’ co-founder and former CEO David Novak as investors.
- There are some old hands in the space –REEF Technology and Kitchen United, backed by SoftBank and Google Ventures, respectively, – which have been at this business for years.
- DoorDash only has a single ghost kitchen in Silicon Valley which TechCrunch called “a WeWork for restaurant kitchens.” Uber Eats isn’t active in any ghost kitchens.
A company we wrote about back in September last year is also joining the trend – Strong Roots is selling its products to a ghost kitchen called Ghost Truck Kitchen and is an interesting example of a CPG company promoting its products through ghost kitchens instead of just traditional restaurants.
Popular SF restaurants being ghosted
More than 30 ghost kitchens are operating out of the same address in Oakland in a new development called Oakland Food Hall. This is another operation being run by CloudKitchens and Travis Kalanick. There are 30 different ‘restaurants’ listed on the Oakland Food Hall website as available for pickup and delivery through third party delivery services. The restaurants include local favorites Little Skillet, Montesacro, and Frjtz.
According to CNBC, ghost kitchens could be a $1T market by 2030.