A Blog by Jonathan Low


Sep 4, 2020

The Reason Pandemic Take-Out Meals Are Increasingly Prepared in 'Ghost' Kitchens

Outsourcing has long been a staple business strategy, but it is now being used by restaurants as a way to increase volume and save costs as delivery becomes a growing share of their volume and diners are less likely to know or care who made the food as long as it comes from the place they ordered. JL

Florence Fabricant reports in the New York Times:

Since the pandemic began, many restaurants have pivoted to providing takeout and delivery. It’s a move that shows no signs of diminishing. To accommodate this increased demand, they are depending more on off-premises kitchens. Ghost kitchens are off-site meal-preparation facilities that are untethered from physical restaurants. (They) allow restaurants to outsource making takeout and delivery meals, without cannibalizing the stoves and prep areas needed to serve seated diners. Cooks prepare the food according to the restaurant’s recipes, but no restaurant personnel are involved
Since the pandemic began, many restaurants have pivoted to providing takeout and delivery. It’s a move that shows no signs of diminishing, even as they reopen for dining in one form or another. To accommodate this increased demand, they are depending more and more on various types of off-premises kitchens.
“I think it will continue,” said Daniel Boulud, the high-end chef and restaurateur who occasionally delivered special-occasion meals but has now established a new regular delivery service for his restaurants.
Several companies are counting on it. Their inventory is so-called ghost kitchens — off-site meal-preparation facilities that are untethered from physical restaurants. They predate the virus, but are multiplying now, and taking many new forms.
Ghost kitchens allow restaurants to outsource the making of their takeout and delivery meals, without cannibalizing the stoves, walk-ins and prep areas needed to serve seated diners outdoors or in. With national reach, they’re also promising to expand a restaurant’s footprint and brand recognition beyond the immediate neighborhood.
Reef Kitchens is one of these. It was started in June 2019 in Miami, using parking lots and garages. Today it has some 4,500 parking sites across the country where it is installing mobile pods — roughly the size of shipping containers — that it calls kitchen vessels. The same space might house cooks preparing delivery orders from several restaurants, whether the food is Indian, Mexican, Italian or burgers.
Reef has three modular kitchens up and running in New York City. It expects to more than double that by the end of the year, and hopes to get its nationwide total to 300.
When a customer orders online through the website of a Reef Kitchens client or one of the delivery apps like UberEats or Postmates, the information goes to Reef, but the customer never interacts directly with Reef (though the service is adding pickup at some of its locations). The company started before the virus hit, but Carl Segal, the chief operating officer, said that what it is doing feels more urgent now.
For a restaurateur, establishing a second kitchen would be expensive, given the costs of rent, construction, utilities and staffing, but with Reef, the restaurant has no upfront expenses.
“It doesn’t cost them anything,” Mr. Segal said. “We enter into a partnership with them, we keep the revenue and pay them a royalty percentage every month.” (He would not specify the percentage.)
Reef’s cooks prepare the food according to the restaurant’s recipes, but no restaurant personnel are involved, and the restaurant has no control over how the food turns out.
This strategy may not appeal to every chef or restaurant, but there are now several willing to give it a try, including Michael’s Genuine in Miami and Saucy Asian in San Francisco. Teaming up with Reef will allow Jack’s Wife Freda, in New York City, to deliver meals to customers in Brooklyn, something the Manhattan-based restaurant group would be unable to do without a costly third-party delivery system.
Another relative newcomer to the ghost-kitchen business is Zevv. Max Crespo, its founder, got his start in 2013 with Neapolitan Express, a pizza truck. Now he runs a fleet of mobile kitchens — 10 next-generation food trucks, so far — that he opened in May, working with the chef Daniel Humm, Eleven Madison Park and the nonprofit food distributor Rethink Food, to serve food for workers to pick up at Lenox Hill Hospital and other New York City medical centers.
“We can go where the people are, to be in one place at lunch and somewhere else for dinner,” Mr. Crespo said.His mobile units, each 8 feet by 20 feet, are designed to produce no emissions. Restaurants or chefs pay $30,000 to $50,000 to start, with a six-month contract and a small monthly fee. Mr. Crespo said his price was much less than it would cost a restaurant to create and maintain its own outside kitchen.Sometimes there is a partnership with a chef. “We can promote a great young chef who doesn’t have a restaurant yet and showcase the talent,” he said.
Food is prepared in his units, usually by the restaurant’s own employees, though Zevv has its own list of chefs who can participate. His units prepare food for pickup on-site; there is no delivery. “People want high-end quality, and it’s hard to achieve with delivery,” he said.
Unlike kitchens for hire, a company with a fistful of its own restaurants can take an entirely different approach, making food off-site for its own restaurants. Sam Nazarian, the founder and chief executive of SBE Entertainment, a major hotel and restaurant management company, has formed a new unit, C3, to add to SBE’s collection of restaurants worldwide, in part by using this model.
Its umbrella already covers Umami Burger, Sam’s Crispy Chicken and Krispy Rice, all its own brands. So when someone orders from Umami Burger, the food will be prepared in one of the outside kitchens, where there is no Umami Burger storefront.
Mr. Nazarian’s company has signed the chef Dani García, who ran a restaurant in Spain that won three Michelin stars, to help develop more food-service restaurant brands, including Minük, for quick service.
The company’s portfolio also includes restaurants by the chefs Masaharu Morimoto, José Andrés and Katsuya Uechi. Some of those restaurants will be opening, pandemic restrictions permitting, at Citizens, a 48,000-square-foot food hall designed by David Rockwell that is expected to open in the next few weeks as a centerpiece of Manhattan West, the Brookfield Properties development across 10th Avenue from Hudson Yards.
For C3’s virtual kitchens, one of which has already opened on West 57th Street in Manhattan, the company is taking advantage of its partnerships with the hotel chain Accor, and Simon, a company that owns malls and other facilities. With a goal of 200 kitchens by the end of the year, it is finding underused spaces like catering kitchens at some of the hotels.
“This all takes a big investment, but I think we’ve already made all the mistakes,” Mr. Nazarian said. Because of the scale of his operation, he said he is able to negotiate reduced delivery fees with big platforms like Grubhub and DoorDash. The company is also working on the kind of specially made packaging that suits delivered meals.
“Even before Covid, consumer habits were changing,” he said. “With delivery, they now want high quality.”
Mr. Boulud recently dusted off one of his operations, Daniel Boulud Kitchen, which at one time sold kitchen equipment and other products, and has turned it into the delivery division for his brand, efficiently offering only one menu that changes frequently. The preparation is done in a work space attached to his Daniel restaurant on the Upper East Side, where there is now sidewalk dining.
Mr. Boulud said that with delivery, he has been able to rehire some chefs he laid off at the beginning of the pandemic shutdown. “I’m looking for it to expand on a wider scale,” he said. “I’m happy to have the business.”
For deliveries beyond the New York region, he has just signed on with Goldbelly, a seven-year-old e-commerce company that ships specialties like pies and lobster rolls nationwide from hundreds of restaurants and food companies, usually fresh, and is now selling more elaborate dishes. Mr. Boulud’s lavish bouillabaisse, delivered ready for a final heating, is one of them.
In the past few years, other groups of ghost kitchens for restaurants to rent have been established, including Kitchen United, and CloudKitchens, which was started by Travis Kalanick, a co-founder of Uber.
DoorDash is also getting into the virtual-kitchen game with DoorDash Kitchens. It has a division, Kitchens Without Borders, that supports restaurants owned by immigrants and refugees, giving them discounted rates. And a consulting firm, The Food Corridor, is ready to help restaurants navigate the increasing number of kitchen options.
“Delivery is part of our whole life now,” Mr. Nazarian said. That goes for the restaurant and the consumer as well.


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