CloudKitchens is Having Trouble Wooing Restaurant Chains

(Photo by Pylyp Sukhenko on Unsplash)
(Photo by Pylyp Sukhenko on Unsplash)

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A specter is haunting ghost kitchens.

According to a Financial Times report on Tuesday, Uber founder Travis Kalanick’s startup CloudKitchens is having a rough 2023. Sources told the FT that the startup, which leases out kitchen space to restaurants as one of the big players in the ghost kitchen economy (also known as dark kitchens), has laid off staff and abandoned some of its larger real estate.

Ghost Kitchen Nightmares

A major issue for the startup is keeping large restaurant chains interested. Sources said that in one instance, Domino’s tried out the service at a location in Las Vegas, but let the lease on the new kitchen lapse rather than form a lasting partnership. Domino’s confirmed to the FT that it had conducted a “preliminary test” with CloudKitchens but decided not to proceed any further.

It’s never easy getting ghosted, but large restaurants may be carrying emotional baggage from Kalanick’s ex. The Wall Street Journal reported this week that restaurants big and small are running into skirmishes with delivery platforms like Uber Eats and DoorDash over how much they charge for their menus:

  • Restaurateurs told the WSJ they’ve had to mark up delivery menu items because food inflation combined with the 15%-30% cut that platforms like DoorDash take would otherwise result in a loss.
  • Platforms aren’t happy about this. Uber Eats has penalized restaurants that mark up their prices by explicitly telling consumers when delivery prices are higher than at the restaurant, and the WSJ viewed emails from DoorDash where the company threatened to bust restaurants that significantly marked up their food by pushing them lower on the app so they’d be less visible.

Delivery apps entrenched themselves when the economy was rosier and funding was easier to come by so long as they promised nigh-endless growth, but you can see why restaurants might not be so eager to hive off another section of their industry to the gig economy.

Vendi Vidi Vici: CloudKitchens isn’t totally incapable of attracting a big-name chain. Insider reported in June that it was building out kitchens with Starbucks — although there hasn’t been any news since then on whether the match will last…