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Ghost Kitchen Pop-Up Trend

Ghost Kitchen Pop-Up Trend
October 29, 2020

Food delivery has transformed, growing 300% faster than dine-in over the last 5 years (and for obvious reasons) were the only choice during the pandemic. With delivery services like DoorDash and Grubhub helping usher in the trend, it has also given birth to a new type of business—the ghost kitchen. 

Photo by Michael Browning on Unsplash

What is a Ghost Kitchen? Ghost kitchens, in short, are kitchen facilities that virtual brands can leverage to sell their food items exclusively online and through delivery apps without being bogged down by a brick and mortar location or dine-in costs. 

Different ghost kitchen models
Aside from companies that offer kitchen space out exclusively as ghost kitchens, other brick and mortar locations are carving out space for ghost kitchens. Meanwhile, some companies offer optimization software to manage ghost kitchen operations. 

Commissary ghost kitchen companies like Ex-Uber CEO Travis Kalanick’s Cloud Kitchens offer real estate space with individual mini-kitchens that are rented out to different brands as the WeWork of mini-kitchens. It received a whopping $400MM equity fund in November 2019.

Kitopi, headquartered in UAE, uses the same approach offering well-furnished kitchens, staffing options, software to manage the ordering process, and even ingredient sourcing as a package for virtual brands to start cooking and delivering. It received $60MM funding in February this year. 

Zuul, headquartered in New York, also operates in the rental ghost kitchen space. It received $9MM equity funding in July this year and has since partnered with some of NYC’s largest property developers for white-label solutions and virtual food halls. 

Leveraging existing space
ClusterTruck which operates ghost kitchens has proprietary software to manage and optimize the kitchen for delivery operations. Headquartered in Indianapolis, the company inked a deal with Kroger in late 2019 to begin operations inside Kroger stores of metropolis locations. 

Turnkey solution
Ordermark, markets a turnkey solution for business owners looking to open a ghost kitchen, marketing about thousands of kitchen partners they already have in their portfolio. This has turned the eye of Softbank’s Vision Fund, helping Ordermark secure a $120MM round of funding this month. 

Room service options
Butler Hospitality, a New York startup, takes ghost kitchen delivery to hotels offering hotel room service delivery options without the high costs associated with running a restaurant. It does this by leasing restaurant operations at a central hotel and then transforming it into delivery hubs for other nearby hotels. It secured $15MM Series A funding in July this year and has since kicked off in Chicago after operating in NYC for five years. 

The bottom line
A lot of investment is being poured into the ghost kitchen concept as takeout becomes a norm for consumers. But with many brick and mortar restaurants rumored to also be looking into the possibilities and even delivery platforms operating their own ghost kitchens, it is becoming a crowded market. At the same time, while the cost to start the business is low, establishing a brand's name without a shopfront may be difficult for a new virtual brand.

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Funding & Deal Highlights:

 

$100MM+ funding 
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