‘Ghost Kitchens’ Set Up Shop In Malls

Property builders are constructing kitchens in empty malls to help fill food-delivery orders, a new strategy to service the flourishing business segment of driving restaurant meals to people’s homes, the Wall Street Journal reported on Sunday (Feb. 2).

Two industries forever changed by eCommerce — restaurants and malls — are coming together to develop an affordable system to meet the rising demand for online meal delivery. So-called “ghost” kitchens can take over retail, mall and warehouse space abandoned by struggling merchants.

Developer Simon Property Group and hotelier Accor told the WSJ that together they are partnering with hospitality firm SBE Entertainment Group to develop some 200 ghost kitchens at malls and hotels. The first kitchens are being rolled out in New York, Chicago, San Francisco, Los Angeles and Miami, said Sam Nazarian, chief executive of SBE.

SBE is the biggest stakeholder in the consortium Creating Culinary Communities, owned by SBE, Accor and Simon. Accor has a 50 percent stake in SBE. The consortium is making plans to create remote kitchens in available space at Pennsylvania’s King of Prussia Mall, Lenox Square in Atlanta and the Sanderson London hotel.

The group is expecting to open 85 kitchens in 2020 and a minimum of another 100 before 2021 is over.

In Manhattan, a ghost kitchen in a Brookfield Properties development will service Hudson Yards and other nearby businesses. Delivery-only spots are also being developed in mall parking lots, storage areas and unused retail space.

The group is contracting with the delivery-kitchen CloudKitchens, headed by ex-Uber chief Travis Kalanick, to rollout more delivery hubs in Los Angeles, executives said.

“It’s relooking at all real estate that is obsolete,” Nazarian said.

An analysis by Bernstein indicates that of the $282 billion U.S. fast-food sector, delivery makes up about 9 percent. Delivery expansion is happening at a quicker pace than dine-in and drive-through sales.

Sweetgreen joined Wendy’s and Chick-fil-A among chains looking at ghost kitchens so they can deliver food beyond their restaurants’ physical boundaries.

“It’s about unlocking additional demand,” Sweetgreen CEO Jonathan Neman said in an interview with WSJ.

One of the hottest trends in food commerce now is the rise of ghost, or virtual, kitchens. As the world of quick-service restaurants (QSRs) and gets more mobile, new technologies and ordering methods will come into bigger play.