"The hubris. It's delicious." | spooky kitchens #27

Happy Friday y’all,

First thing’s first: the news is officially back. Summer sleepies no more.

And just a quick reminder: all green text is linked.* (*not always to anything important)

So what happened these past two weeks? (TL;DR)

• A bold new fighter enters the mobile kitchen ring. Is it really a ring worth entering?

• Also, Nextbite’s layoffs, ghost kitchens in grocery stores (and airports) work, and C3’s big updates.

Cruising Kitchens & Ghost Financial follow perilously in Wonder’s confounding footsteps

"Ghost Financial injects $100M into food truck manufacturer Cruising Kitchens" (Emma Liem Beckett, Restaurant Dive).

Ghost Financial is a new player with decent press, but little background. A big investment like this is definitely one way to make a (bigger) splash. $100M certainly says, “I’m serious” — but does not necessarily say “We know what we’re doing.”

The concept is a bit of a combo of Virtual Kitchen Co and Wonder, both creating the mobile kitchens as well as new virtual brands inspired by “celebrities, influencers and athletes.” A real idea of the zeitgeist. Which doesn’t lend tons of confidence — that they’ve essentially gone, “Well, virtual brands are popular, and Wonder dropped 9 figures on mobile kitchens…2+2=millions, right?”

“Mobile (ghost) kitchens” — or food trucks that deliver — are not a new concept. I’ve mentioned the spectacular experiment of Zume previously; and there was brief fanfare in 2019 for Wayback Burger-mobiles. I doubt these ideas were just poorly executed or before their time (especially in Softbank-backed Zume’s case), and to me, neither Wonder nor Cruising Kitchens is doing much different in a way that would inspire new confidence.

It is still too early to call this a “fad.” Because maybe, just maybe, there’s something at work here that makes this concept tick where others with as many 0’s behind them have tried and failed. I’ll leave room for that. But at this moment, I can’t see it.

Lastly and least, there’s this absolute dinger of a quote from the CEO of Cruising Kitchens: “We are primed now to completely take over the ghost kitchens space.” The hubris. It’s delicious. But seriously, do not trust a person that talks like this.

(a veritable pu pu platter of) sides

👍 Kroger’s ghost kitchen success study yields surprisingly clear results (“Kroger’s ghost kitchens have been a big success, new study says” Steve Watkins, Cincinnati Business Courier). Let’s be honest: good news hasn’t been exactly the trend in ghost kitchens lately. The unfortunate cosmic conjunction of diminishing COVID (and thus diminishing delivery demand) and perpetual economic shakiness have hit this niche, and food tech at large, hard. But this new study by Placer.ai – which analyzed traffic at Kroger stores with both Clustertruck and Kitchen United ghost kitchens compared to “normal” Kroger stores in their vicinity – distinctly demonstrates the value of these offerings to grocery chains. The first Kitchen United partner store in particular (in LA, next to the UCLA campus), saw visits “skyrocket” and a 50% increase in foot traffic against other stores nearby. Finally, a (seemingly) clear success case for ghost kitchens (with the million-dollar follow-up questions: Do those visits translate into dollars? And are those increased numbers sustained over time, or driven by novelty?).

• Related: Kroger’s next store with Kitchen United Mix opens in Dallas (“Kitchen United Mix opens in Dallas Kroger” Catherine Douglas Moran, Restaurant Dive).

🤢 Nextbite isn’t immune from the tech layoff trend (“SoftBank-backed food-tech startup Nextbite is cutting staff, restructuring operations” Nancy Luna, Insider). Nextbite has reached a maturity point in its lifetime as a business. The company formerly known as “Ordermark” (one of the first providers of order aggregation services that funneled all of a restaurant’s third-party delivery orders into a single tablet and, crucially for restaurant operations, a single ticket printer) is restructuring and undergoing a round of layoffs — as are many tech companies this summer. The timing makes sense, as Nextbite only recently rebranded to Nextbite (the virtual brand creator / purveyor) and is focusing more of its efforts on that business line over Ordermark’s (most major point-of-sale providers have also long since figured out order aggregation, making Ordermark’s competition increasingly tough). Frankly though, much like in 2019 after the WeWork IPO debacle, the Uber IPO disappointment, and the early 2020 pandemic scare, these tech layoffs as a market trend feel entirely reactionary. Despite TechCrunch’s insistence that the “experiment of force-feeding late-stage startups infinite money is wrapping up,” (if it’s an experiment, it’s an awfully long one), these layoffs are a typical short-term cost-cutting measure straight from the ridiculously brief VC playbook (For growth? Add money! For profits? Cut people!), before they inevitably return to the safe, cozy embrace of spending gargantuan amounts of oversight-free cash on visionaries with superapps.

• Related: “ChowNow CEO: More restaurant tech industry layoffs are coming” ChowNow employees be like 👀👀👀

🧑‍🎤 “Why are so many celebrities opening restaurants?” (Adrienne Katz Kennedy, Tasting Table). The answer (for virtual brands, at least): because it’s the easiest sh** in the world for the celebrity. They don’t have to do anything besides lend their name to the title and say “Oh, I’ve liked pizza, or cookies, or whatever this crappy restaurant makes, for my whole life! My mom used to make the best pizza or cookies or whatever garbage we sell, and I always wanted to open my own place to honor her. Ain’t that sweet?” for the press release. Again, on a novelty and short-term basis, it probably works fine. It’s just, on a grander moral scale…UGH.

👀 Let’s look at Phoenix’s ghost kitchen players (“Phoenix-Area Ghost Kitchens: A Running List” Thomas Triolo, Phoenix New Times). Phoenix is a city with a relatively high ghost kitchen presence — which makes it a fun study in the various types of kitchens entrepreneurs are throwing at the market. There are the requisite Kitchen United & Cloud outposts (Cloud’s is Tempe Food Court); a big host kitchen in Thirsty Lion Gastropub (boasting 4 virtual concepts); a few one-off virtual brands from popular local restaurants; and a new local ghost kitchen called, originally, Phoenix Ghost Kitchen. Lots of convenient options for your local Phoenicians.

✈️ Raleigh’s HUBB Kitchens opens an airport outpost…with REEF (RDU Website). Firstly, I won’t short shrift HUBB Kitchens here (the Raleigh ghost kitchen in question). Looks like they’re running a solid local ghost kitchen operation with an entirely area-based team of industry vets. The news is that HUBB recently opened their second location, a co-operated REEF kitchen/virtual food hall at Raleigh’s airport.

It’s just…uh… look at the place. What’s going on here gang. Who’s done the branding and design? Why is it “get REEF?” With a space between the words? That is REEF’s web address but why is that the sign? What’s with the yellow lettering? The neon purple interior lighting? What? Why? How? Ah!

Anyway, ghost kitchens at airports are a decent fit. While many airports across the country are leaning into local concepts (which I love — see the Austin and New Orleans airport dining options, whew), eating fast food before a flight is also a national pastime. And when you can squeeze 8-10 chain options into a space previously occupied by one restaurant, leaving plenty of room for the other local options, that seems like a (rare) complementary fit for a ghost.

🙊 C3 quietly fires its Chief Strategy Officer and loudly announces international expansion (“C3’s chief strategy officer is out” Emma Liem Beckett, Restaurant Dive).

🧑‍⚖️ CloudKitchens’ legal team grows as its strategy continues to exemplify the pop-culture definition of insanity (“Travis Kalanick’s Real Estate Startup Looking for Legal Talent” Brian Baxter, Bloomberg Law). If it’s broke, don’t fix it. Behind the increasingly transparent veil of secrecy at “Stealth Startup,” things are…well, exactly the same at Cloud. At least in the realm of litigation. The company continues to deploy vast resources in its fight to bully municipalities into letting it operate the way it wants; that is, recklessly.

• Related: “Travis Kalanick's $15 billion ghost-kitchen startup, CloudKitchens, tapped a new revenue chief and is gearing up for a sales hiring spree” (Meghan Morris, Insider). It seems Legal isn’t the only department hiring at Cloud (and taking advantage of the broader tech layoffs).

✔️ Tattle confirms that delivery is last on consumers’ minds (“Guest Sentiment Shows Off-Premises Dip” Nicholas Upton, Food On Demand). The headline is unsurprising, but it’s nice to have confirmation. Delivery is the least bang for your buck method of acquiring food away from home; and in this so-far-shallow downturn, is not showing any supernatural ability to cling to consumers’ wallets. The double-whammy of greater COVID immunity and a market recession is, in fact, whamming.

😱 “Will Amazon’s Grubhub deal kill Uber and DoorDash’s food delivery dreams?” (Brett Schafer, Motley Fool). Hahahahahahahaha, ahh…no.

That’s spooky kitchens.

Boo ✌️,

Mitch

P.S. If you’re just jumping into ghost kitchens and want to learn more, check out my ghostly glossary and spooky kitchens ghost kitchen cheat sheet. They’re there to help make sense of this weird and wild west.

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