How restaurant operations are innovating

June 24, 2021

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Something about outdoor dining under canvas tents feels very 2012. But the industry that made it possible -- commercial kitchens, coupled with supporting software, renting space to fledging food businesses -- is having its moment in 2021. Today we’re looking at the ghost kitchen concept popularized by events like Smorgasburg (returning to Williamsburg on Saturday) but also enjoying a renaissance in a post-COVID world.

The business model of restaurants and commercial kitchens renting kitchen space, equipment, and time to fledgling businesses is beneficial in several ways: first, as a way for an existing restaurant to capitalize on its space, reducing overall expenses. For a new business, it’s a great way to test out menu items, a brand concept, and gain some initial customers through events like Smorgasburg.

Image from Time Out

In a previous life, I was one of those small business owners, running a British meat pie company out of an Oakland commercial kitchen, and serving pies to startups in SF through partnerships with ZeroCater and Cater2.me. With $600 in startup cash I was able to rent a space, buy ingredients and borrow a restaurant space to host my first popup, launching me to a 5-year run, in which I had a profitable small business with low overhead and a month-to-month lease.

After the devastating setbacks and many closures created by Covid, now might prove to be a ripe time for new businesses to try their hand at becoming the next generation of the Halal Guys or Luke’s Lobster.

Here’s a look at the top private companies in Ghost Kitchens:

Cloud Kitchens: Uber’s notorious founder, Travis Kalanick, founded this company on the heels of being ousted at Uber. His company already has employees quitting en masse. In 2019, it raised a $400MM equity round from Saudi Arabia Public Investment Fund at a $5BN valuation.

Ordermark: We should all be thanking this company for making it easier for restaurants to accurately fulfill our orders. It has created software that puts all 3rd party ordering apps into one simple dashboard. The firm raised $120MM from SoftBank Vision Fund last year.

Butler Hospitality: Room service can feel like the pinnacle of luxury, and hospitality aims to please. This startup connects hotels with ghost kitchens in other hotels for more extensive menu options. So next time you order, you might see that silver platter rolling in from across the street. The New York-based company is valued at $45MM.

Zuul: Describing itself as a virtual food hall (very 2021), Zuul offers restaurants and chefs the opportunity to fulfill multi-brand delivery orders from one platform. The New York-based private company started in 2018 and is already valued at $40MM.

Kitchen United: Operating out of six cities across the U.S., Kitchen United has created a platform called MIX, for ordering from a variety of restaurants in one order. The company was valued at $150MM during its last raise, a $40MM Round B in 2019.