The Rise of Cloud Kitchens for Third Party Delivery Platform Such as Uber Eats and GrubHub

Cloud or ghost kitchens are fully equipped commercial kitchens that exist to produce food for solely for delivery or takeout. There is no brick and mortar location or dine in facility. As online delivery platforms such as GrubHub, Uber Eats and DoorDash have grown, so has the number of cloud kitchens, especially quick serve (qsr) cloud kitchens. The  number of dine-in customers has also decreased as many people prefer to order online, receive delivery and eat at home.
A shift is beginning to take place in the restaurant industry as food becomes far more important than the dining experience. Cloud kitchens are specially popular overseas, especially in areas such as Beijing, where space is at a premium. Deliveroo, the London-based delivery service that was recently invested in by Amazon, also operates cloud kitchens which it delivers from.
Earlier this spring, Bloomberg reported on a pilot program Uber is testing in Paris. They’re renting out fully equipped, commercial-grade kitchens to serve businesses that sell food on the Uber Eats platform.
In the US, Uber cofounder Travis Kalanick has invested $150 million in a startup called City Storage Systems. The company is re-purposing distressed real estate assets and turning them into spaces for new industries, such as food delivery. They own CloudKitchens, which leases commercial kitchen space and offers services such as data analytics (to assist with digital ordering) for additional fees.
Cloud kitchens are able to offer competitive menu prices and ultimately may cause meal prices to fall. They can operate extremely efficiently and not have to generate revenue to cover investment in other areas of the business. They also offer business opportunities for new or small scale businesses to rent kitchen space and focus on creating and selling specialty items (gluten free, keto, etc).  This in turn might mean more competition between restaurants and also more diverse food options.
However there’s a downside to cloud kitchens; they can have a negative effect on communities. While high end restaurants and larger chains will be okay, small mom & pop and local restaurants can be at a distinct disadvantage to cloud kitchens. Even when doing a portion of their business via digital orders, they still have higher costs, as they need more space. Also they have serving staff and decor.  Generally, the restaurant industry has slim margins and ghost kitchen may simply squeeze single restaurant operators out of business. Also a big concern, is that cloud kitchens add to the gig economy, relying on delivery workers and food preparers who aren’t afforded health care and are often contracted on a pay per job basis.
It will be interesting to see how restaurant industry jobs and public spaces are transformed over the next few years as online ordering continues to grow.
One report in 2018 predicted that in 2020 restaurants who don’t offer online ordering & delivery will lose over 70% of their customers. Sintel Systems’ has cornered the market with its omni channel solutions. It’s flagship product, the Direct-to-POS online ordering system allows vendors to have a personalized, secure website for orders. It also offers the creation of a custom mobile application to support customer ability for making orders on the go. Orders placed on a website or mobile app immediately appear on a vendor’s POS system along with in-house orders. If a customer decides to alter their order, they can easily contact the vendor directly. No customer confusion about whom to call. Private cloud services protect and back up vendor data. Let Sintel Systems help grow your online presence, food order and delivery business with a fully integrated Direct-to-POS system.