Grub Huhb Top Round Roast Beef
The Rise of the Virtual Eatery
Food delivery apps are reshaping the restaurant industry — and how we eat — by inspiring digital-but establishments that don't need a dining room or waiters.
SAN FRANCISCO — At 9:thirty on about weeknights, Ricky Lopez, the head chef and owner of Top Circular Roast Beef in San Francisco, stacks upwardly dozens of hot beefiness sandwiches and sides of curly fries to serve hungry diners.
He too breads chicken cutlets for another of his restaurants, Red Ribbon Fried Chicken. He flips beef patties on the grill for a 3rd, TR Burgers and Wings. And he mixes frozen custard for a dessert shop he runs, Water ice Cream Custard.
Of Mr. Lopez'due south four operations, 3 are "virtual restaurants" with no concrete storefronts, tables or chairs. They exist only inside a mobile app, Uber Eats, the on-demand meal delivery service owned by Uber.
"Delivery used to be maybe a quarter of my concern," Mr. Lopez, 26, said from behind Summit Round'south counter, equally his staff assembled roast beefiness and chicken sandwiches and placed them in white paper bags for Uber Eats drivers to deliver. "Now it's most 75 pct of it."
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Food delivery apps like Uber Eats, DoorDash and Grubhub are starting to reshape the $863 billion American restaurant industry. Every bit more people order food to consume at home, and every bit delivery becomes faster and more convenient, the apps are changing the very essence of what information technology means to operate a eating place.
No longer must restaurateurs rent space for a dining room. All they demand is a kitchen — or even only function of one. And so they can hang a shingle inside a meal-delivery app and marketplace their food to the app's customers, without the hassle and expense of hiring waiters or paying for furniture and tablecloths. Diners who social club from the apps may take no thought that the restaurant doesn't physically be.
The shift has popularized two types of digital culinary establishments. One is "virtual restaurants," which are attached to real-life restaurants like Mr. Lopez'due south Peak Round just brand different cuisines specifically for the delivery apps. The other is "ghost kitchens," which have no retail presence and essentially serve as a repast preparation hub for delivery orders.
"Online ordering is not a necessary evil. It's the most exciting opportunity in the restaurant industry today," said Alex Canter, who runs Amble's Deli in Los Angeles and a start-up that helps restaurants streamline delivery app orders onto one device. "If yous don't use delivery apps, you don't exist."
Many of the delivery-only operations are nascent, simply their effect may be far-reaching, potentially accelerating people'southward plow toward order-in food over eatery visits and preparing home-cooked meals.
Uber and other companies are driving the alter. Since 2017, the ride-hailing visitor has helped beginning 4,000 virtual restaurants with restaurateurs like Mr. Lopez, which are sectional to its Uber Eats app.
Janelle Sallenave, who leads Uber Eats in North America, said the company analyzes neighborhood sales data to place unmet demand for particular cuisines. Then it approaches restaurants that apply the app and encourages them to create a virtual eatery to meet that demand.
Other companies are also jumping in. Travis Kalanick, the sometime Uber chief executive, has formed CloudKitchens, a start-upward that incubates ghost kitchens.
Still fifty-fifty as delivery apps create new kinds of restaurants, they are hurting some traditional establishments, which already contend with high operating expenses and roughshod competition. Restaurants that use delivery apps similar Uber Eats and Grubhub pay commissions of fifteen per centum to as much as thirty pct on every society. While digital establishments save on overhead, small-scale independent eateries with narrow profit margins can ill afford those fees.
"There'due south a concern that information technology could exist a arrangement where restaurant owners are trapped in an unstable, unsuitable business model," Mark Gjonaj, the chairman of the New York City Council'southward modest-concern commission, said at a 4-hour hearing on tertiary-political party nutrient delivery in June.
Delivery apps may also undermine the connexion between diner and chef. "A chef tin occasionally walk out of the dining room and find a diner enjoying his or her food," said Shawn Quaid, a chef who oversaw a ghost kitchen in Chicago . Commitment -only facilities "accept away the emotional connexion and the creative redemption."
Uber and other delivery apps maintain that they are helping restaurants, not hurting them.
"We exist for demand generation," said Ms. Sallenave. "Why would a restaurant exist working with the states if we weren't helping them increase their orders?"
D elivery-only establishments in the United States appointment to at least 2013, when a start-upward, the Green Height Group, began work on a ghost kitchen in New York. With Grubhub'southward backing, Greenish Top produced food that was marketed online under brand names like Leafage (salads) and Butcher Cake (sandwiches).
But Green Summit burned through hundreds of thousands of dollars a month, said Jason Shapiro, a consultant who worked for the company. Ii years ago, it close down when it couldn't attract new investors, he said.
In Europe, the nutrient-delivery app Deliveroo also started testing ghost kitchens. It erected metal kitchen structures called Rooboxes in some unlikely locations, including a derelict parking lot in E London. Last year, Deliveroo opened a ghost kitchen in a warehouse in Paris, where Uber Eats has also tried commitment-only kitchens.
Ghost kitchens have also emerged in China, where online food delivery apps are widely used in the state'due south densely populated megacities. China's food delivery manufacture hit $70 billion in orders last year, according to iResearch, an analysis business firm. One Chinese ghost kitchen commencement-upward, Panda Selected, recently raised $50 million from investors including Tiger Global Management, according to Crunchbase.
Those experiments have spread. Over the final 2 years, Family unit Manner , a food start-upward in Los Angeles, has opened ghost kitchens in three states. It has created more than half a dozen pizza brands with names like Lorenzo's of New York, Froman's Chicago Pizza and Gabriella'south New York Pizza, which can be establish on Uber Eats and other apps.
CloudKitchens, which Mr. Kalanick founded afterwards leaving Uber in 2017, has leased kitchen space to several established restaurants in Los Angeles, including the subcontract-to-table chain Sweetgreen, to try the commitment-only model. The Los Angeles facility is 1 of several ghost kitchens used by Sweetgreen, whose principal executive, Jonathan Neman, has spoken enthusiastically about them.
And Kitchen United, a ghost-kitchen company in Pasadena, Calif., is working with brick-and-mortar restaurants to fix up delivery-only establishments. It aims to institute 400 such "kitchen centers" across the state over the next few years.
When it comes types of food, "consumers don't appear to be maxim they're looking for additional options," said Jim Collins, Kitchen United'southward chief executive. "They appear to be looking for new modes of consumption."
For Paul Geffner, the growing popularity of food-delivery apps has hurt. He has run Escape From New York Pizza, a small eating place chain in the Bay Surface area, for three decades, relying on delivery orders every bit a major source of revenue.
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After he offered delivery through the apps in 2016, his business teetered. Two of his five pizzerias, which together had generated almanac profits of $50,000 to $100,000, lost every bit much as $40,000 a year every bit customers who had ordered directly from Escape From New York switched to the apps. That forced Mr. Geffner to pay the commissions.
"We saw a direct correlation between the delivery services and the reduction of our income," Mr. Geffner said . "It was like death by a g cuts."
In May, he closed the two locations. Later that month, one was replaced with a kitchen that mostly does delivery.
Mr. Lopez opened Top Round, a franchise that originated in Los Angeles, in 2017 in San Francisco'south Mission neighborhood. For the offset 8 months, he said, he lost tens of thousands of dollars.
Last year, Uber approached Mr. Lopez and told him at that place was demand for late-nighttime orders of burgers and ice cream in his area. Uber, which does not provide financial help to virtual restaurants, has claimed that the digital operations increase sales for restaurateurs by an average of more than l percent.
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Mr. Lopez said he figured he already had the ingredients for burgers and ice cream in stock. Then it was a no-brainer to create the virtual restaurants for Uber Eats.
Now he uses Peak Circular's kitchen to serve hundreds of new customers beyond San Francisco. Though he wouldn't disclose financial information, Mr. Lopez said he had hired another employee to handle the influx of delivery orders. Those orders take stabilized the restaurant's income so that he no longer works 110-hour weeks only to keep the business adrift.
"Nosotros used to shut at 9 p.thousand., but demand has pushed u.s. to stay open later — we shut at 2 a.m. now," Mr. Lopez said. "Most of the night, the kitchen is banging."
Mike Isaac reported from San Francisco, and David Yaffe-Bellany from New York. Raymond Zhong contributed reporting from Dongguan, People's republic of china.
Source: https://www.nytimes.com/2019/08/14/technology/uber-eats-ghost-kitchens.html