A Bloomberg article from yesterday reported that Uber has a pilot program underway in Paris where it rents out commercial-grade kitchen space to restaurants selling food through the company’s Uber Eats app.
An anonymous source who spoke to Blooomberg said Uber has been leasing space in Paris on the down low since 2018 and stocking it with kitchen equipment. Uber then rents those spaces out to “restauranteurs planning eateries that cater exclusively to delivery customers.” According to the source, Uber has not publicly announced this pilot program.
Setting aside the potential conflict this could ignite with Uber co-founder and ex-CEO Travis Kalanick — who operates his own ghost kitchen concept in Los Angeles — a heavyweight company like Uber/Uber Eats getting involved in ghost kitchens could majorly impact the rest of the food delivery space.
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As more software, apps, sales channels, and companies enter the restaurant food delivery space, fulfilling the influx of orders remains an operational headache for most restaurants. One food industry player, ClusterTruck CEO Chris Baggot, noted ealier this year, part of the problem is that restaurants treat delivery as an add-on business rather than
Business. But delivery is projected to grow 12 percent per year for the next five years, and does create financial and operational issues for restaurants as they try and accommodate this growth. And lately, both established brands wanting to try new concepts and independent operators who lack the capital for a full-service restaurant are turning to ghost kitchens as a solution.
If Uber were to operate its own ghost kitchens on a widespread basis, it could save many a restaurant some of the hassles listed above. To be clear: we don’t yet know a whole lot about Uber’s kitchens in Paris right now, and the company isn’t publicly discussing the pilot program yet.
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At the same time, it’s not hard to imagine a third-party delivery service taking over more of the operations up and down the operational stack. Uber suggested that much last year when it acquired Ando, David Chang’s delivery-only ghost kitchen restaurant. As Allan Weiner wrote at the time, the acquisition suggested food delivery companies like Uber Eats were on their way to becoming suppliers of “vertical consolidation.”
There’s another phrase for that: “walled garden.” It’s a controversial business concept, chiefly because of the amount of power it gives to the company, who controls the information or product available to a consumer (think Facebook Messenger not chatting with Apple Messages). Translated to the restaurant world, that would mean Uber controlling the choices that pop up when you search “Mexican Food” on their app, thereby limiting the restaurants you see to the ones who work directly with Uber.
But if we go by the Bloomberg article, Uber’s Paris kitchens are aimed at restaurant operators planning delivery-only concepts, which means those “restaurants” aren’t yet on the market. There’s no consumer choice to limit (which is the main objection to walled gardens), because these new restaurants wouldn’t be available without Uber.
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For consumers, then, a vertically integrated Uber delivery stack could actually mean more choice, as they would get a chance to discover new restaurant choices they wouldn’t have otherwise had access to.
The other side of that coin is that it could “uberize” the restaurant industry. It might make financial sense for an independent restaurant to team with Uber and in the process save on costs, but doing so triggers the question of how much control Uber would then get over the restaurant brand. Would the Uber logo have to appear on all promotional materials? On packaging? Would Uber demand a say in the menu? Would it be the one to decide when to pull the plug if business wasn’t up to snuff?
We can’t get the exact the answers based on one lone article. But there’s no denying the presence of third-party delivery services with ghost kitchens. Both DoorDash and Postmates have dabbled in renting out kitchen space to restaurants. Grubhub invested $1 million in 2018 in Green Summit Group, one of the old guard of ghost kitchens. And Deliveroo operates not just its own kitchens in Europe but also a food hall.
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If Uber’s really serious about this walled-garden approach to delivery, we can expect to see the other major players trying out their own vertically integrated restaurants, starting with the ghost kitchen.We use cookies and other data for a number of reasons, such as keeping Sites reliable and secure, personalising content and ads, providing social media features and to analyse how our Sites are used.
Aer pouring more than $20bn into companies that bring meals to your door, such as Deliveroo in Europe, Swiggy in India andDoorDash in the US, tech investors are now looking at the other side of the table: how to make sure the right food is available at the right place at the right time to be delivered.
“The success of Uber Eats, DoorDash and others suggests there is a demographic shi towards consumption of prepared meals at home, ” said Michael Ronen, managing partner at SoBank Investment Advisers. “The time is now to try and stand up supply that is more efficient against that demand.”
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Venture capitalists have all aligned on the best solution: kitchens that only serve delivery customers, known as “cloud”, “ghost” or “dark” kitchens, that use a combination of advanced food preparation, underused real estate and algorithm-driven optimisation to lower overheads and increase output.
Some are focused simply on real estate, setting up and hiring out kitchens in the right urban locations to serve the new demand or commandeering defunct high-street restaurants. These include Uber co-founder Travis Kalanick’s new start-up, City Storage Systems, which trades as CloudKitchens in the US, and London-based Karma Kitchen.
Those property ventures also create a new opportunity for kitchen services companies that focus on making the food, such as Dubai-based KitOpi, which operates in London and the Middle East.
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Eccie Newton, co-founder of Karma Kitchen, likens her concept to “WeWork for kitchens”, renting out space to different businesses at different times of day. “Food delivery is definitely a growing part of our business, especially for the evening shis, ” she said. Shared kitchen space at Karma’s first location in London’s Tower Hamlets neighbourhood can cost about £1, 500 a month, compared with tens of thousands of pounds upfront to build a new kitchen.
Other players offer different combinations of facilities and services. Kitchen United, a Google-backed start-up, plans to open more than a dozen delivery kitchens across the US this year. It charges a monthly membership fee that includes the premises, back-of-house services such as dishwashing and access to its technology system for processing online orders from a range of delivery apps.
“Most quick-service restaurant chains employ 30 to 50 people, ” said Jim Collins, chief executive of Kitchen United. “In our facility, we have designed the service stack so they only need two people per shi. It cuts their labour cost by 75-80 per cent.”
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There is also a benefit for diners: faster deliveries of hotter meals. “Freshness is the killer metric on whether consumers are going to reorder, ” Mr Collins said.
Building on this delivery kitchen infrastructure is a new wave of start-ups hoping to create brands that are as recognisable to users of delivery apps as Domino’s or McDonald’s.
Chefs busy in the Taster kitchen. The company is building a following for its brands, such as Mission Saigon and Out-Fry, on Instagram and through its food packaging, to attract repeat customers © Charlie Bibby/
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“Virtual restaurants” from Taster or Keatz work closely with delivery platforms to identify areas of unmet demand, whether in location or cuisine, then rent out space from an outfit such as CloudKitchens or Karma.
“The market is mature enough to build a delivery-only brand, ” said Anton Soulier, a former Deliveroo executive who founded Taster in 2017. “My ambition is to create the Five Guys of Vietnamese food or the Shake Shack of Korean fried chicken . . . These [delivery] platforms need guys like us because they can’t rely on burgers and sushi at some point, they need a bit more diversity in food.”
Taster uses its own algorithms to forecast each week’s sales, bringing efficiencies in ordering ingredients. It is building a following for its brands, such as Mission Saigon and Out-Fry, on Instagram and through its food packaging, to attract repeat customers. With some advance preparation, Mr Soulier claims a Taster kitchen can turn around an order in three minutes, compared with 15 minutes at a traditional restaurant.
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“The beauty of the model is restaurants and food are the least scalable business in the world, ” he said. “We are trying to make it more scalable and expand very quickly.”
But the food delivery companies themselves, such as Swiggy, Deliveroo and Uber Eats, are also looking to bite off certain parts of this food tech “stack”. Deliveroo has beentesting dozens of “Editions” — oen preparing food in converted shipping containers in car parks — for two years, while Uber Eats recently opened its first kitchen in Paris.
That is where the strategies of SoBank and Naspers, two of the biggest investors in these food delivery apps, begin
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