Ghost kitchens flourished during the pandemic. The model helps restaurants meet the growing demand for food delivery with few upfront costs.
Now, ghost kitchens are entering a new phase. Startups and established companies are upending the traditional model of simply renting out kitchen space or franchising brands.
Hungry House in Brooklyn, New York, for example, uses “digitally” native chef influencers to create its menu. Through a licensing agreement, Combo Kitchen works with well-recognized restaurant brands like Saladworks and places their menus in outside restaurants. BLT Kitchens incubates and tests brands before turning them into brick-and-mortar restaurants.
And recently, the parent of Burger King, Restaurant Brands International, opened its first ghost kitchen in Miami. Billed as a digital-first food hall by RBI, Kitchens You Love, or KYLO Food Hall allows delivery and walk-in customers to bundle menus into one order from RBI brands such as Popeyes and Burger King.
These companies are intentionally differentiating themselves from more established ghost-kitchen companies as the space has become crowded and legacy companies havefaced a host of challenges.
Reef Technology has struggled with profitability amid VC pressure to grow rapidly, and CloudKitchens — which Travis Kalanick, the founder of Uber, leads — has faced lawsuits and a talent exodus. On November 1, CloudKitchenslaid off some staff.
Still, the ghost-kitchen model has fans in both restaurant and investment spaces.
For John Meyer, the ghost-kitchen craze has been beneficial to his startup, Ghost Financial. The Texas-based company offers fintech services and educational classes to virtual brands and ghost-kitchen operators looking to kick-start their delivery-focused businesses.
“The ghost-kitchen explosion of COVID — and the people ordering takeout — has not stopped,” Meyer — who operates his own virtual restaurant, Keto Kitchen, out of a CloudKitchens facility in Austin, Texas — said.
Michael Schaefer, a food-and-beverage analyst at Euromonitor who spoke at the second annual Ghost Kitchen Conference in Dallas last week, said the ghost-kitchen and virtual-brand market has grown into a “multibillion-dollar” opportunity. It has the potential to become a $1-trillion global sector by 2030.
CEO: Kristen Barnett
Headquartered: New York City
Funding: Undisclosed pre-seed round last summer from Wilshire Lane Partners, an early-stage venture fund. The startup is expected to announce a new round of funding later this summer or in the fall, Barnett told Insider.
Growth: The first location launched in Brooklyn in November 2021. A second Hungry House opened in the Lower East Side in Manhattan.
Barnett previously held leadership roles at the ghost-kitchen startup Zuul Kitchens and the New York-based healthy fast-casual chain Dig. After Kitchen United bought Zuul, Barnett struck out on her own and created Hungry House. The startup combines her passion for menu engineering and supply chain with her love of food technology, she said. Hungry House develops its frequently changing menu with the help of “digitally native chefs” who are influencers on social-media platforms like Instagram and TikTok.
Hungry House licenses the rights to the brands, and Barnett and her team engineer the menu for profitability and delivery consistency. Hungry House offers these influencer recipes under one menu, which is available for delivery or walk-up ordering via a kiosk at its Brooklyn location and soon-to-be new Manhattan location.
CEO: Hossein Kasmai
Headquartered: Miami, Florida
Funding: Looking for investors for first round of fundraising.
Growth: 200 locations worldwide
Combo Kitchen is a division of Franchise Creator, a consulting firm that helps businesses grow through franchising. As the CEO of Franchise Creator, Kasmai is bringing franchising to the world of ghost kitchens by partnering with well-recognized restaurant brands and placing their menus in smaller mom-and-pop restaurants, which can offer the additional menus for delivery and take-out.
By working with well-established brands that consumers know like Saladworks, Kasmai said “little to no marketing is needed.” Combo Kitchen also partners with well-recognized celebrities to launch new food brands under their name. “We feel that brands associated with A-rated celebrities also have the same marketing advantage,” Kasmai told Insider.
Kasmai believes his model has an advantage over ghost kitchens like Reef, which hires cooks to prepare licensed menus inside food trailers.
“As opposed to the Reef model, you have experienced restaurant operators preparing food for these larger brands for take-out and delivery,” Kasmai told Insider.
By using existing kitchen space and employees, Kasmai said his model allows restaurants to earn revenue without investing in additional labor or rent. Combo Kitchen takes a percentage of sales, or a royalty fee, and shares it with partners like Saladworks. That fee is different for each partner, but is generally 7% or higher, Kasmai said.
One Stop Kitchen
CEO: Vijayaraj Gopinath
Launched: November 2021
Headquartered: Sunnyvale, California
Funding: Raised $2 million in early seed round, including backing by Y Combinator. Raising funds now for Series A.
Growth: 14 locations in the Bay Area
One Stop Kitchen works with restaurants that act as “fulfillment centers.” These fulfillment centers are typically mom-and-pop restaurants in downtowns and high walk-in-traffic locations that use their existing kitchens to prepare 10 or more different menus from one location for delivery, pickup, or dine-in.
Consumers ordering from these restaurants can mix and match food in a single order from popular local dine-in restaurants such as Walia Ethiopian Cuisine and Punjab Café.
“It’s like a virtual food court,” Viggnesh Kandasamy, the cofounder and chief technology officer of One Stop Kitchen, told Insider.
One Stop Kitchen does not use licensing or franchising as part of its model. It acts as a matchmaker, pairing a fulfillment kitchen with multiple brands.
“We pay the brands based on the volume and we pay our fulfillment centers a certain commision or fixed cost from the orders,” Kandasamy said, describing how each business makes money.
CEO: Rishi Nigam
Growth: More than 500 restaurants and hotels under contract. About half are active as Host Kitchens.
Franklin Junction matches underutilized restaurants, which it calls Host Kitchens, with restaurant brands looking for rapid expansion through delivery. Each restaurant benefits because it involves “capital-free revenue growth for both partners,” Nigam told Insider.
“Host Kitchens,” which the company trademarked, make money by using their extra kitchen capacity.
Franklin Junction works with about 30 brands such as Nathan’s Famous, Hooters, and David Chang’s Fuku. Host Kitchens are typically small-to-midsize restaurant chains, hotels, family-entertainment centers, and grocery stores.
“You have to be top-level executors and have availability of scale to support big brands and the big sales that come with them,” Nigam said, adding that Frisch’s Big Boy is an example of a multi-unit Host Kitchen site.
Franklin Junction owns the revenue from each sale, and then pays everyone else a cut, Nigam said. “We’re paying the delivery companies a delivery fee. We’re paying the brands a royalty or a license fee. We’re paying the host kitchens a portion to cook the food,” he said.
Majority owner: Marc Lore
Launched: December 2021
Headquartered: New York
Funding: Closed a $350 million funding round in June.
Growth: Since launching six months ago, Wonder is now available in 22 towns in New Jersey, serving about 130,000 households.
Wonder is part ghost kitchen, part food-delivery van, part meal-kit provider. Its owner, Marc Lore, previously launched Jet.com, which Walmart later bought.
Wonder brings chef-driven meals to consumers’ doorsteps by cooking them in a fleet of vans that roam neighborhoods. These ghost kitchens on wheels, outfitted with cooking equipment and chefs, can be hailed through an app.
“Wonder has a real opportunity to not only completely change how people eat, but also to create a better future with access to the world’s best food in a convenient, affordable, and sustainable way,” Lore said in a LinkedIn post, announcing the Series B round.
Wonder has 19 mobile restaurants serving upper-middle-class neighborhoods of New Jersey meals from Bar Nakazawa, Nancy Silverton’s Pizzeria Mozza, Bobby Flay Steak, Chios Taverna by Michael Symon, Di Fara Pizza, and Tejas Barbecue.
Cofounder: Tommy D’Ambrosio
Headquarters: Phoenix, Arizona
Funding: Bootstrapped so far. Currently looking for funding.
Growth: Two locations in Mesa and Phoenix, Arizona.
BLT Kitchens rents spaces to about 100 tenants, which include food truck owners, virtual brands, and caterers looking for an approved and permitted site to prepare their food. These tenants sell food for delivery and pickup.
D’Ambrosio said restaurateurs use BLT Kitchen to incubate or test brands that might be worth turning into a brick-and-mortar restaurant or a permanent food truck. D’Ambrosio previously tested interest in his Phoenix-based restaurant, Aioli Gourmet Burgers.
The company owns ghost kitchen facilities in Mesa and Phoenix, Arizona that range in size from 10,000 to 14,000 square feet and include food trucks.
KYLO Food Hall
CEO: José Cil
Launched: Fall 2022
Headquartered: Miami, Florida
Growth: One location, so far, at 50 West Flagler Street in downtown Miami.
RBI, the owner of Popeyes and Firehouse Subs, recently opened KYLO Food Hall inside a former Burger King restaurant. The company, which ended its partnership with Miami-based Reef Technology this year, is not labeling the facility as a ghost kitchen. However, the food hall prepares multiple menus for delivery and takeout similar to walk-in food halls run by Kitchen Unitedand Hungry House.
The facility is equipped with kiosks for walk-in orders. The menu features food from Burger King, Popeyes, Firehouse Subs, Spris Artisan Pizza, Ms. Cheezious, and Sergio’s Cuban American Kitchen.
To entice new customers, RBI said KYLO will be offering two exclusive mashup menu items at the food hall: a sandwich pizza by Popeyes and Spris Artisan Pizza and a shortrib melt collaboration from Burger King and Ms. Cheezious.
Are you a ghost-kitchen insider with insight to share? Got a tip? Contact this reporter via email at [email protected] or via Signal encrypted number 714-875-6218.