Ghost Kitchens: The Future of Restaurants is Here

Emerging Technology
Ghost Kitchen

Revenue in the online food delivery segment is projected to reach US$2,780 million in 2021 with an estimated market volume of US$3,472 million by 2024.

Revenue in the online food delivery segment is projected to exceed US$2.7 billion in 2021, with an estimated market size of US$3.5 billion by 2024. This explosive growth is driving innovation and evolution in the food service industry, most recently through ghost kitchens.

Ghost kitchens, or virtual restaurants, can either be an existing restaurant launching a completely separate digital-exclusive brand and menu, or a facility solely made for producing virtual brands. Examples of these ghost kitchens are CloudKitchens, Ghost Kitchen Brands (GKB) and JustKitchen (TSXV:JK).

Ghost kitchens: Already disrupting the food industry

Ghost kitchens are slowly disrupting the mainstream food industry. In late 2019, former Uber (NYSE:UBER) executive Travis Kalanick invested approximately $130 million into CloudKitchens via real estate company City Storage Systems. CloudKitchens is a Los Angeles-based startup that operates ghost kitchens across 17 different US cities. In late 2020, Ken Chong and Matt Sawchuk, also former Uber employees, raised $20 million for San Francisco-based All Day Kitchens (formerly Virtual Kitchen).

In October 2020, grocery giant Kroger announced it was converting 1,000 square feet in two of its stores to ghost kitchens, while popular hot dogs and crinkle-cut fries brand Nathan’s Famous is set to open 100 ghost kitchen locations in partnership with privately held REEF Technology by the end of 2021. And in Europe, Amazon (NASDAQ:AMZN) made a landmark £575 million investment in Deliveroo (LSE:ROO), which has a ghost kitchen subsidiary called Deliveroo Editions.

Even celebrities are launching their own ghost kitchens. Stars like Gwyneth Paltrow and celebrity chef Guy Fieri have all ventured into this new type of restaurant experience. Paltrow’s Goop has launched a new delivery-only restaurant in Santa Monica, California, while Fieri recently launched a new ghost kitchen concept called Guy Fieri’s Flavortown Kitchen.

Canada is also participating. In 2021, Toronto-based private company GKB teamed up with Walmart Canada to bring freshly prepared meals in store and online for contactless pickup or delivery from more than 20 well-known brands. GKB’s first ghost kitchen within a Walmart has already opened in Ontario, with additional locations slated to open in the near future.

Ghost kitchens: A $1 trillion global opportunity by 2030

According to Euromonitor, ghost kitchens could create a $1 trillion global opportunity by 2030 by capturing 50 percent of drive-through service, 50 percent of takeaway foodservice, 35 percent of ready meals, 30 percent of packaged cooking ingredients, 25 percent of dine-in foodservice and 15 percent of packaged snacks. All these segments that used to be individually serviced will now be supplied by ghost kitchens, resulting in a very large market size.

One company uniquely disrupting the restaurant industry is JustKitchen. The company focuses on its Hub-and-Spoke operating model, which takes semi-prepared food from its full-scale commercial kitchens, or “hubs,” and then distributes them to “spokes” for completion upon orders being received for delivery to end consumers. The firm also offers delivery-only meals under its own proprietary menus alongside established restaurant brands, including world-class Michelin star establishments.

The company is headquartered and operates primarily in Taiwan, allowing it to leverage the country’s low overhead and operating costs and high market exposure, which includes a US$16 billion dining market and high-density consumer base. The company has plans to expand to other geographic markets like Hong Kong, into neighboring Asian countries, and the US.

In a press release, Jason Chen, co-founder and CEO of JustKitchen shared, “As we rapidly approach the milestone of fulfilling 100,000 food orders per month, the JustKitchen management team is confident in the Company’s proven business model and is ready to execute on the next parts of the Expansion Plan. Entering the United States, Philippines and Singapore will be great achievements in the near term and we will be working hard, both this year and next, to prove that the Expansion Plan can add meaningful value to the company.”

JustKitchen has been seeing steady growth in sales volumes and reported $4,135,451 in sales from October 1, 2020, to March 31, 2021, and has also announced that former Uber GM and Cloudkitchens Regional GM Warren Tsang has joined the company’s advisory board as APAC expansion advisor.

Ghost kitchens: Investor takeaway

Investors who appreciate early entry into a market that represents a potential $1 trillion global opportunity by 2030 should follow the ghost kitchen sector. Early investments from Amazon, Kroger and Uber executives suggest there is support from a broad section of investors because of the potential to reach billions of customers worldwide. When innovation offers benefits to consumers and businesses, they both thrive, making the ghost kitchen sector one to definitely watch out for.

This INNSpired article was written as part of an advertising campaign for a company that is no longer a client of INN. This INNSpired article provides information which was sourced by INN, written according to INN's editorial standards, in order to help investors learn more about the company. The company’s campaign fees paid for INN to create and update this INNSpired article. INN does not provide investment advice and the information on this profile should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled. If your company would benefit from being associated with INN's trusted news and education for investors, please contact us.

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