With Kitchen United’s Zuul Acquisition, Ghost Kitchen Space Begins to Take Shape

After years of proliferation, with new entrants to the space continually emerging to challenge the handful that were beginning to gain traction, the ghost kitchen space may be consolidating. On Monday (Oct. 4), ghost kitchen company Kitchen United announced that it is acquiring Zuul, a food delivery and virtual kitchen solution.

Kitchen United partners with many leading restaurant brands, including White Castle, Wendy’s and Panera Bread, to create delivery-only locations, and in August the company announced a partnership with Kroger, the largest pure-play grocer in the United States, to allow consumers to order restaurant foods for pickup or delivery from the grocer’s stores.

“As one of the first ghost kitchens in the New York City market, Zuul has laid a foundation that will further enable expansion of this type of business model in a massive, key market,” Michael Montagano, CEO of Kitchen United, said in a prepared statement.

For its part, Zuul made headlines throughout 2020, first for acquiring digital ordering platform Ontray Technology in January, and then, after the start of the pandemic and the rise of delivery orders, for its $9 million fundraise and for its launch of a virtual food hall in New York city. Earlier this year, the company announced that it was launching its virtual food hall software as a standalone product for restaurant operators.

Read more: Kroger Brings Ghost Kitchens To Stores With Kitchen United Partnership

See also: Celebrity Ghost Kitchens Acclimate Consumers To The Delivery-Only Model

The Context

While ghost kitchens initially hit the scene as far back as 2015, the space has grown enormously since March 2020, with consumers’ avoidance of physical restaurants making it easier for locations with no consumer-facing presence to succeed. A host of ghost kitchen providers, including not just Kitchen United and Zuul but also Ghost Kitchen Brands, Franklin Junction, Reef Technology, CloudKitchens, Kitopi and All Day Kitchens, among others, have been competing to win share of restaurants’ newfound interest in the space, now that digital order volume is soaring.

See also: Restaurant Rethinks: Industry Leaders On Ghost Kitchens’ Post-Pandemic Future

Learn more: Kitchen United CEO On Restaurants’ eTail Future

What Experts Are Saying

“We knew that the direction the restaurant industry was moving was all about accessibility,” James Walker, the senior vice president of restaurants for Nathan’s Famous, recalled in an interview with PYMNTS, discussing the brand’s move into ghost kitchens. “Drive-thrus and delivery and off-premises — you could just see the numbers escalating. And we said, we don’t want to jump on that train. We want to get there before the train.”

“The dynamic of the 1950s where somebody would cook six square meals a week and maybe go out once a week is going to be totally the opposite,” Marc Choy, president of Ghost Kitchen Brands, told Webster in a conversation last month. “This is how people are going to know how to get their food — by ordering.”

By the Numbers

Findings from PYMNTS’ Restaurant Readiness Index, created in partnership with Paytronix, indicate that orders from restaurant aggregators and delivery orders from restaurants’ sites cumulatively make up more than a quarter of restaurants’ total sales. Additionally, research from our report, The Bring-It-To-Me Economy, created in collaboration with Carat from Fiserv, finds that consumers are now 31% likelier to eat their restaurant orders at home than they are to dine at a restaurant. Digital ordering has become the norm.

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Read on: Bring-It-to-Me Economy Ascends as Consumers Embrace Home-Centric Lifestyles