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Will Ghost Kitchens Flame Out? 🔥

Will Ghost Kitchens Flame Out? 🔥
December 16, 2021

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In a former life, I was a small food-business owner in the Bay Area. Using family recipes to disrupt the reputation of English food, I served up handheld meat pies to hungry tech employees, beer connoisseurs, and tired festival attendees. Without a bank loan or trust fund, I did what many restauranteur hopefuls do: I opened a pop-up and delivery-only business out of an incubator kitchen. Ghost kitchens, as they’re now known, are an increasingly popular business model, collecting rent from a multitude of makers, all hoping to turn meat and potatoes (or flour and butter) into viable businesses. Tending to the market of misfits crazy enough to start food businesses, these kitchen operators handle the insurance, licensing, and upkeep of fridges, freezers, and stoves.

Reef is one such company. It allows food entrepreneurs to maintain a home base in densely populated neighborhoods to grow their delivery businesses. The company also partners with existing kitchens to bring in those kitchens' own brands for meal prep and delivery. But Reef is currently under fire for multiple incidents of explosive propane burners resulting in injuries.

Regardless, Reef has raised over $1.5BN from Softbank and others, but whether the company will deliver VC expected returns remains to be seen. Reef is cooking up more locations and making strategic acquisitions of parking businesses to fuel its real estate desires and diversify its revenue streams.  However, issues like slow wait times for permitting and towing fees necessary to access clean water for the trailers are eating away at profits. There’s also always the issue of food quality, with even big-name brands like David Chang’s Fuku receiving lukewarm reviews.

Still, as the pandemic rambles on and the cold winter months halt indoor dining plans, ghost kitchens are serving up iterations on the business model. For more companies in the realm, search the “ghost kitchen” keyword on our database.

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