Do you care where your food comes from or who makes it? When you go out to eat, do you go for the food or the experience? If you just want the food, or the food is served in a post-modern industrial cafeteria, then there is no need to go out. If you don’t need to go out, then you don’t need a restaurant…in the traditional sense.
Back to the Front
The old formula was Restaurant = Dining Area + Kitchen Area. Those in the know refer to these as Front of House (FOH) and Back of House (BOH). An increasing number of restaurants are moving towards only BOH. Nowadays delivery service is expected. Everyone agrees that the food delivery market is massive.
If the restaurant is only about the food anyway, then BOH only makes sense. The business of restaurants is shifting to delivery. Restaurants are not set up for delivery, and now have to shift. This presents a huge opportunity. This presents a huge opportunity. This presents a huge opportunity. What I say three times is true. What I say three times is true. What I say three times is two.
Ghost Kitchens: A New and Exciting Concept
Big Idea: A restaurant that is only a kitchen. You will encounter three main terms for the concept: ghost kitchens, cloud kitchens, and virtual kitchens. I found two companies trying to corner the market by putting the concept into the name of the company. I have not found any companies called Ghost Kitchens, but I will keep hunting.
According to Bloomberg, among others, Travis Kalanick is building an Uber-adjacent cloud kitchen company called CloudKitchens. Another virtual kitchen is Virtual Kitchen Co. that was started up (start-uped?) by former Uber’s Ken Chong, Matt Sawchuk, and Andro Radonich.
Both companies offer more than “just renting out kitchen space.” They promise to use technology and data analytics to grow sales and forecast demand ahead of time so the kitchens can plan accordingly. Without technology, they would just be boring real estate companies. That argument worked well for WeWork.
The Key Word is Optimize
Restaurants, as we know them today, are not optimized for delivery. The kitchen is there to support the dining area and, at best, can accommodate to go. Cloud/Ghost/Virtual kitchens are made for delivery. No more For Here, only To Go.
“And with this rise of new delivery platforms, restaurants can now reach new customers and grow their sales, without having to worry about how many seats they have in their dining room,” says Andrew Chen, General Partner, Andreesen Horowitz Capital Management, L.L.C. in a letter to investors.
Better than a Food Truck (Maybe)
Ken Chong, Virtual Kitchen Co. CEO, told Bloomberg Television it is difficult for restaurants that were designed for eating in to expand into delivery. Delivery apps, like Uber Eats, put a strain on restaurants. Virtual kitchens are helping restaurants expand their services and offerings.
Customers get a greater selection of high quality food without having to sacrifice the convenience of delivery. Delivery apps are expanding their selection and “delivering the best experience possible to their customers,” Chong said (pun intended?)
If you like Uber and all things Kalanick, invest in CloudKitchens. You can be like the Saudi sovereign wealth fund. If you’re looking for a venture less virtual than the name would suggest, invest in Virtual Kitchen Co. You can be like Andrew Chen. But what does he know?
Both non-existent kitchens invite you to be their partner on their websites. I sent both my own invitation and neither has sent me an RSVP. Maybe they don’t speak French. You can watch my less than epic fail here if you dare.
Forget those cloudy virtual kitchens and invest in my business idea: Someone comes to your house, on demand, to make you food. Food + Uber = Fooder. Full disclosure this is only an idea. Provided (at best) for informational purposes only.
How will you invest in cloud/virtual/ghost kitchens? Let us know down in the comments.
This article originally posted on GREY Journal.