Virtual kitchen company partners with restaurant members to grow off-premises business
Kitchen United has big plans for expansion of its virtual kitchens across the United States. Delivering a way for restaurants to expand off-premises business, Kitchen United has been opening kitchen centers across the Western United States, and turns its eyes on the Northeast.
In June, it expanded to Tempe, Ariz. Now, Kitchen United is setting its sights on major cities, including on the East Coast. In September, it struck a deal with RXR Realty to grow in New York and Connecticut (This interview was conducted prior to that deal and published in Restaurant C-Suite Magazine). Speaking with Craig Cochrane, EVP of Marketing for Kitchen United, we dive deeper into the off-premises trend and how Kitchen United is igniting its explosive growth.
Restaurant C-Suite: Please tell us where you see restaurant delivery going. Is it true that we are in the infancy of the business and consumers will continue to look for optimal convenience when eating restaurant food?
Craig Cochrane: Without a doubt, restaurant delivery will continue to gain momentum. In fact, William Blair projects third-party ordering platforms will source over $43 billion of delivery orders in the U.S. by 2022, up from its 2018 estimate of $13 billion. People are busier than ever and convenience reigns supreme. For example, once someone has decided they are staying in and not cooking for the evening, they will find a way to order dinner for delivery. If their favorite restaurant doesn’t deliver, or doesn’t have their preferred item on the delivery menu, that person will find another restaurant in the same category to order from.
We are in the early stages of delivery yet, and have a lot of opportunities for learning and developing ways to make it even more convenient – as evidenced by the creation of new commercial kitchen models like Kitchen United. Autonomous vehicles and drones are no longer science fiction. With further testing these could one day be viable methods for minimizing delivery time. As with any evolving industry, delivery models will change as consumers and restaurant operators demand more and varied services.
At Kitchen United, we see a variety of customers—people of all ages, income levels and physical locations. What Generations Z and Y bring to the table is overt demand. While people in their 50s, for example, order for delivery with frequency, it’s the younger generations that created the demand for the convenience of delivery thanks to their fast paced lifestyles and ability to master technology quickly.
RCS: Tell us about some of the growing pains that restaurant chains have been having and how you address those concerns.
CC: There was major saturation in the restaurant space over the past five to ten years, and with that, we’ve seen some recent closures and consolidations. Additionally, restaurant operators, many of them smaller in size and without the know-how or budgets to take on new initiatives to drive business, deal with razor-thin margins. When they have service and technology providers knocking at their door to introduce a new CRM tool or digital ordering solution, there’s quite often a sense of reticence. How will we operate this technology? How does it really help my business?
At Kitchen United, we work with established and growing restaurant brands that want to expand their market reach without the cost of a stand-alone build, or offload congestion from their existing, traditional restaurant set-up, or both. We’ve seen the most success with brands that have a good understanding already of what delivery operations require, and brands that have existing demand for delivery.
We’ve all experienced the headaches of getting lunch at a busy restaurant when customers and delivery couriers are wrestling for their respective orders. The traditional four walls of the restaurant were not built for this level and type of traffic. Kitchen United allows restaurants to capitalize on off-premises business via a streamlined model. Our kitchen centers are built for operational ease—for our restaurant partners, for delivery drivers and for consumers. We literally handle almost everything—cold storage, cleaning, trash removal and more—but the cooking and driving.
RCS: What are three challenges that restaurant chains have right now outside of your solution and that also need resolving?
CC: Creating a tech stack that makes restaurant operations run smoothly is quite the task—sort of like a puzzle. Technology can help make sense of orders coming to the restaurant from so many different sources (web, app, in-person) and being prepared for so many scenarios (pickup now, pickup later, delivery, dine in, catering, etc.). This technology is still evolving as restaurants are fulfilling more orders “on demand.”
Labor is another challenge impacting the industry. With implementation of a $15 per hour minimum wage, high turnover and low unemployment rates, restaurants are having a hard time hiring and keeping staff. Lastly, I’ll refer back to my previous comments on market saturation and restaurant brands that have limited resources both in regard to budget and personnel.
RCS: What are the next steps for Kitchen United and where will we see your virtual kitchens next?
CC: We have aggressive growth goals and expect to open up to 400 locations over the next four years. We are thoughtfully and carefully scouting each market we believe will be successful for our model. We’ve announced leases in Austin, Los Angeles and Columbus, to name a few, and will be opening a second location in Chicago.
RCS: Tell us about a planned future presence on the East Coast if there is one.
CC: Kitchen United has plans to be in all major cities in the U.S., and we use data to pinpoint where within each city. We’ve got our eyes on New York City, Boston, Washington D.C., and Philadelphia, just to name a few. New York truly is unlike any other market, and we think we’ll see particularly great opportunities there.
RCS: How does your solution address the way chains expand in the future and their use of real estate?
CC: We aim to serve as an easy and cost-effective opportunity for expansion for established restaurant brands. As demand for delivery, pick-up and catering continues to grow, restaurants will increasingly find the need to expand market reach or to offload congestion. Kitchen United (virtual kitchens) will serve as a logical extension of their traditional restaurant models.
Photo credit: Kitchen United
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