Kitchen United, a ghost kitchen and restaurant tech company, has announced it has raised $100 million in a Series C funding round, bringing the company’s total funding to approximately $175 million. The Series C funding will support the company’s proprietary solution stack and expansion plans in Miami, New York City and beyond.
The Pasadena-based company’s investor roster has grown significantly with this round, with Alimentation Couche-Tard/Circle K, Kroger Co., Restaurant Brands International, B. Riley Venture Capital, Simon, Phillips Edison & Co. , and Javi Group. Investments were also made by Kitchen United founders Harry Tsao and John Miller, Kitchen United CEO Michael Montagano and former NFL quarterback Peyton Manning.
“This Series C funding further solidifies Kitchen United’s leadership position in the industry,” Montagano said in a statement. “Kitchen United is located at the intersection of technology, food and real estate. It works as a physical infrastructure.”
The funding was announced in late July.
new place
Atul Sood, Kitchen United’s chief business officer, told Business Journal in an email that he plans to put capital in to set up new stores that span the format of grocery stores, traditional stores and food halls. said.
“We aim to have 500 sites in the next five years, and are working hard to build several from Texas to Miami to New York,” Sood wrote. “Additionally, we allocate dollars to power our unique tech stack, which allows our customer to order from multiple concepts in his single order.”
Ghost kitchens or cloud kitchens are shared cooking spaces rented by delivery-only restaurants. Often found in secondary retail or industrial spaces. (Kitchen United’s Pasadena location is located in a former culinary school.) Kitchen United gives these restaurant operators not just a kitchen, but a line of staff such as his cooks and managers, projects to help launch restaurants, and his managers. also provides
The company also offers delivery and takeout services that allow customers to purchase meals from multiple restaurants all on the same bill. The company, which has about 200 operational kitchens in 20 regions, markets the service as Kitchen United Mix.
“We believe that our centralized location, multi-format offerings, experienced management team and mature technology stack set this business apart from other industry players. This is consistent with Circle K’s mission to make everyday life a little easier for Alimentation Couche-Tard, said Kevin Lewis, Chief Marketing Officer, Alimentation Couche-Tard.
Kitchen United rose to popularity in 2020 as restaurant operators launched ghost kitchens to bring convenience and safety to their customers during a particularly uncertain time for public health in the early stages of the COVID-19 pandemic. Part of a booming industry. It also helped that ghost kitchens were and still are a way to set up a restaurant with very little overhead. Establishing a location with Kitchen United costs $30,000 to get started, whereas a traditional restaurant can cost hundreds of thousands of dollars to get up and running.
According to Rob Ury, senior vice president of Beta Agency, a commercial real estate firm in El Segundo, the momentum in Kitchen United and the ghost kitchen industry could continue.
“I think ghost kitchens peaked when no one was allowed to leave their homes, but they remained pretty strong,” Ury says. “I think people get used to certain habits. Convenience is definitely addictive. Plus, the economy has been strong enough until recently that people have a few extra bucks to get the meals they want delivered to their homes.” had enough disposable income to justify paying
Ury noted that the popularity of ghost kitchens did not cause operators to move large amounts of money to establish such operations, but added that the influence of the industry piqued a lot of curiosity. I was.
He recalled a client in Los Angeles with several traditional restaurant locations who rigorously tested how Ghost Kitchen would work for the brand in terms of delivery. “It was quite a success, and I think it made us more seriously consider opening a full-fledged restaurant in the area.”
crowded field
Kitchen United isn’t alone in the burgeoning ghost/virtual kitchen space, it has a local competitor in LA-based CloudKitchens.
Former Uber Technologies CEO Travis Kalanick acquired a majority stake in City Storage Systems, CloudKitchens’ parent company, about four years ago.
Business Insider reports that CloudKitchens raised about $850 million last November and formed a shell company to avoid the rental site being linked to its parent company. In this round, he valued the startup at $15 billion.
“I think what we’ve seen is similar to the evolution of the ride-sharing industry and how Lyft and Uber are just two companies that have emerged as industry leaders,” he said. Ury said. “I expect to see similar trends at Cloud Kitchens and Kitchen United.”
Another major player in the space is Beverly Hills-based C3, a ghost kitchen company that launched in 2019. C3 transforms the dormant kitchens of shopping malls and restaurants into shared cooking areas for food brands.
Despite the money flowing into ghost kitchen companies, Kitchen United and its contemporaries still have to contend with challenges, according to Jeffrey Miller, associate professor and coordinator of the Hospitality Management Program at Colorado State University. Hmm.
“I think agility and awareness of market trends will be a big issue for them. Cash flow, like anything else, hides a lot of issues,” Miller said. “So if you have structural problems, rents that are too high, labor costs that are too high, etc., that will be a problem.”
Miller noted that inflation could also affect Kitchen United’s success. He added that customers are particularly sensitive to restaurant prices.
Food price increases this year are expected to surpass those recorded in 2020 and 2021, according to a US Department of Agriculture report. It also found that food prices in grocery stores are expected to rise by about 10.5% this year.
Ury said we need to remember that consumers go to restaurants and eat out for different reasons.
“Given how people consume food, it’s clear that these ghost kitchens aren’t even half the restaurants,” he said. “People use restaurants for a variety of purposes.”
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