When Kitchen United received $40 million in funding led by RXR Realty during the summer, it became clear the two-year-old shared kitchen startup is paving a path for rapid expansion. The company will partner with the real estate company to open kitchens in New York City and the tri-state area.
This partnership fits within Kitchen United’s overall goal of opening 400 kitchen centers and 5,000 kitchens within the next few years. But it certainly isn’t alone in opening virtual kitchens, or restaurants without a traditional retail storefront. Grubhub, DoorDash and Uber Eats have all been trying their hand in delivery-only restaurants over the last two years.
"What virtual kitchens, or the Kitchen United concept does, is create a new economic model, where no longer do [restaurants] have to invest in expensive real estate and fancy front-of-house overhead and dining rooms, [they] can share kitchen space, optimize capital that is there and hopefully create a more profitable model for delivery," NPD Group Vice President David Portalatin told Restaurant Dive.
But what differentiates Kitchen United from the third-party delivery platforms is its system includes back-of-house labor and a technology stack that integrates with delivery providers and a restaurant’s ordering platform.
"It was clear to us right out of the gate that first of all, it had to be simple," Kitchen United CEO Jim Collins told Restaurant Dive. "If we just built a space and then went to restaurants and said 'here's a kitchen,' the restaurant would have been like 'I have no idea how to operate that.'"
That also means providing capabilities beyond just delivery, including carryout and catering. Even though delivery is getting a lot of attention these days, it's only a small piece of the off-premise market, Collins said. So instead of just having delivery drivers come in and out of the kitchen centers, customers can also pick up their orders if they want, Collins said.
"If you're able to give restaurants access to all those revenue streams, then the likelihood that they're going to achieve success along their lines of their revenue projections is high," Collins said.
And the concept has been catching on among chains, with Chick-fil-A, sweetgreen and Wetzel's Pretzels renting spaces inside its kitchen centers. Kitchen United typically fills a mix of local, regional and national providers within the same site based on data science about the demand for different types of food in that particular region, Kitchen United Chief Business Officer Atul Sood previously told Restaurant Dive.
As Kitchen United grows, some of the challenges it will face is making sure it provides a good experience not just for restaurants, but also its customers.
"Customers want a frictionless experience of pulling out their app to place their order," Portalatin said.
Demand for its spaces has been extremely high and all of its kitchen centers are basically full, with openings not available until sometime next year, Collins said. Even though they might not be able to fit everyone in, Kitchen United will provide a roadmap to prospective restaurants on how they can incorporate a lot of the off-premise trends in the meantime, such as dealing with menu changes and packaging, Collins said.
Even with so much demand, the company isn't expanding as much as it could.
"There's about 152 buildings that we have right now on a list of properties that we could pull the trigger on if we decided that it made sense," Collins said. "What we're really basically trying to do at the moment, to be candid, is let the businesses that we have open teach us how to be great at running these businesses."
And those that it isn’t able to accommodate right away could turn to its competition. Former Uber CEO Travis Kalanick, for example, is expanding his CloudKitchens concept throughout the country as well as abroad.
Regardless, with so much expansion of virtual kitchens, it is clear that Kitchen United is here to stay and ripe for growth, especially because of what it could do to the restaurant industry.
"If you're a chef, no longer do you have to invest millions of dollars in brick-and-mortar restaurants," Portalatin said. "You can try something out in the virtual world and see how the customers respond. I think it will be an innovation engine."