Retail

Shared Kitchens Help Restaurants Capture Growth Of The Food Delivery Market

Food Delivery

Restaurants may want to reach more delivery customers by expanding into new markets, especially as the market for food delivery could grow to $17 billion by 2020. Yet it doesn’t always make sense for restaurants to open new brick-and-mortar locations.

Instead, restaurants are deciding to share kitchen space with other concepts — and accepting deliveries from those locations. To fill this demand, companies such as Kitchen United are creating facilities that focus specifically on the off-premise needs of restaurants.

When designing its new Pasadena, Calif. location, it included three kitchens, a 1,600-square-foot refrigerator and freezer as well as a host of other features — “all things that are part and parcel to our understanding of some the challenges of trying to figure out how to run a remote facility for a restaurant,” Jim Collins, CEO of Kitchen United, told PYMNTS.com.

 

Delivery Focus

To learn how delivery companies like Seamless, Uber Eats and Grubhub work, Kitchen United Chief Business Officer Atul Sood decided to get a first-hand perspective: He signed up as a driver for a few food delivery services.

“And we learned a ton,” Collins said. “That’s a hard job, and those guys are under appreciated.”

As a result, Kitchen United created signage to offer drivers easy access to water, coffee and restrooms — as well as dedicated parking spaces and places to sit near screens that tell them when an order will be ready. Those may seem like small changes to a facility like Kitchen United’s, but those features could impact the customer experience.

“The benefit … is faster food delivery by happier drivers, which is important to our restaurant clients,” Collins said.

Kitchen United will even guide its members through the delivery business. They are able to consult with its member companies on crafting a delivery menu, determining the correct packaging for different types of food and helping them understand their managerial requirements.

The new space comes as food delivery has become a booming business. Uber Eats, the food delivery branch of the ridesharing company, was on track to post more than $3 billion in gross sales by the end of 2017, The Financial Times reported. Introduced in 2014 alongside a handful of other experimental services, Uber Eats operates worldwide in 29 countries.

And Grubhub has been in expansion mode, gobbling up Boston-based Foodler, Groupon’s OrderUp and Yelp’s Eat24 in 2017. At the same time, former retail rivals (now partners) Grubhub and Yelp agreed to a five-year alliance that includes the integration of Grubhub ordering into Yelp’s listings.

 

Target Market

Kitchen United comes as digital restaurants that have zero customer seating and operate purely on a delivery-only model using a third party for delivery are becoming more widespread. Manhattan-based Green Summit Group, for example, operates nine restaurants out of one kitchen. And while this delivery-only model is catching on, Collins said his company tends to serve restaurants that already have one or more brick-and-mortar locations.

“So far, we’ve been focused more on restaurants that actually already have a market presence, and they’re just looking to expand,” Collins said.

Beyond working with some restaurants that already have a retail presence, Kitchen United also seeks to enable its members to offer late-night eats. As a result, the kitchen will be open 24/7 all year to create the option for kitchen crews to work around the clock.

“It’s up to the restaurant partners to staff when it’s practical to staff and, of course, a lot of that is demand-driven,” Collins said.

 

Future Synergies 

While Kitchen United has nationwide expansion on its horizon, the company is currently “laser-focused” on learning everything they can from Pasadena. Already, Kitchen United sees the potential to work with companies in the area — and it doesn’t even have to go down the street.

“In our own building, we have sister companies that are building robots that cook food and all kinds of stuff,” Collins said. “They will provide cost-benefit opportunities to the marketplace and convenience opportunities … as we go forward.”

While Kitchen United hasn’t nailed down which markets it might want to enter, it is having conversations with national restaurant partners who will help the company choose new cities. But, regardless of geography, big changes are ahead in the restaurant industry.

“I think there is a giant sort of tectonic shift happening in food service, food delivery, food preparation — how people eat, where people eat, how they want to see choice — all those kinds of things,” Collins said.

Amid those changes, Collins said the company is in a unique position in that it doesn’t compete with restaurants or delivery services. “And I think we have a unique position in that space that’s going to allow us to become part of that change and, in some respects, even potentially a catalyst to it,” Collins said.

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