
An Inside Look at CloudKitchens - MKais
https://superfood.substack.com/p/exclusive-an-inside-look-at-cloudkitchens
======
kippinitreal
I’m pretty bullish on this concept finding market fit, probably less confident
about the business model being great. The super interesting feature IMO is how
much this lowers the cost to enter the market. I imagine this are super short
term leases (maybe...per shift?), no need for POS, simple bulk ordering etc.
shifting capex to opex for small businesses will open up the market to a lot
of new entrants. I think a comparison to AWS is fair here.

On the financial side, it sort of seems like a race to the bottom for the
landlords. I don’t think they’ll have anything like the lock-in AWS has and
given how significant the expense will be I would imagine teams being pretty
willing to jump for a small savings (which goes to straight to the bottom
line). IMO this would be a great move by one of the apps to own, as
controlling distribution would lock tenants in.

~~~
ss3000
I'm bullish on the concept and business model from an investment standpoint, I
think they are likely going to become very successful, but as a consumer I
can't say I'm looking forward to delivery platforms being flooded with these
"cloud kitchens".

It seems to be designed to enable mediocre restaurants to "pivot" at a
moment's notice and rebrand themselves after building up a well-deserved
crappy reputation, ready to start anew and fool more unsuspecting consumers.
On the other side of the coin, well-loved restaurants could disappear at a
moments notice because the owner/chef got tired of making the same type of
cuisine and want to experiment with something new or more lucrative/trendy.

I think the agility this model offers restaurants is both a blessing and a
curse in this sense, as with traditional restaurants the physical presence
involved makes the brand more enduring, for better or worse.

~~~
petra
>> well-loved restaurants could disappear at a moments notice because the
owner/chef got tired of making the same type of cuisine and want to experiment
with something new

So let's say you're such an owner. Just sell your business, and start
something new.

But this could make things really interesting: What if you could order any
meal you read about on the web, from anywhere ?

It's not possible for every dish, for the lack of local ingredients. But maybe
it's possible for many dishes ?

~~~
keenmaster
A robotic ingredient picker could be really useful in that context. Make a
large kitchen with a ton of ingredients. When an order comes up, a robot
picker automatically brings the sauce ingredients to the saucier, the sautee
ingredients to the sautee station, etc...

------
kyrra
For those that haven't been following this, CloudKitchens[0] is a still
somewhat stealth "startup". It was started by Travis Kalanick (of Uber fame)
and he has been doing a fairly good job keeping it hidden[1].

[0] [https://www.cloudkitchens.com/](https://www.cloudkitchens.com/)

[1]
[https://www.ft.com/content/769409f1-fb0b-4761-b2aa-e75b9792c...](https://www.ft.com/content/769409f1-fb0b-4761-b2aa-e75b9792c514)

~~~
foobarian
Wonder if one part of their secret sauce will be skirting health code.

~~~
thebean11
Do you mean the kitchen skirting codes or the tenants?

I don't know that much about health codes, but my guess is that they are not
expensive to follow beyond the cost of having suitable equipment, which is
something they probably won't be able to avoid.

~~~
notyourday
Health codes in saner municipalities which are the municipalities occupied
with people that have the most disposable income are extremely expensive to
follow as they dictate enormous number of variables, ranging from what can be
stored and how to what kind of cooking process one must follow.

For example, AC banned partially pre-cooking of poultry around 2012(?) at
which point Revel's restaurant had to can its most ordered and one of the most
profitable dishes as its guests were not interested in waiting for nearly an
hour for a chicken to be cooked from scratch. They used to partially cook it,
stick it into the fridge, wait for the order and finish cooking it in ~15-20
minutes. It was a total disaster for the restaurant.

------
adamonkey
Rent is typically only 7% of total restaurant operations costs. See Chipotle's
quarterly earnings filings for example, and any restaurant industry analyses.

Labor and food costs make up 60% of costs, with them being roughly equally
divided. Restaurant margins are around 5-7%. I don't see how CloudKitchens is
supposed to fundamentally alter the restaurant industry, making it cheaper.
Maybe I'm missing something.

~~~
clean_send
One of the biggest problems of a kitchen is having food go bad. Nightly we
have to throw away food because we don’t have another purpose for it. When
serving a singular cuisine it is tough to find ways to create new dishes that
fit into the menu. Ghost kitchens become interesting because assuming you’re
running 3-10 “restaurants” out of the space, the overlap in ingredients
becomes large which allows us to reuse and repurpose ingredients easily. This
plus the volume of orders allows us again to reduce overhead costs of
purchasing. Often times, it takes the same amount of effort to cook for 50
covers vs 500 but clearly the latter yields more profit.

~~~
vidanay
I'd like to see a willingness for restaurants to say "I'm sorry, but we are
out of that this evening." This would help eliminate food waste by not having
to make a batch of something for only 1-2 customers.

~~~
rootusrootus
Some restaurants do. I've certainly run into exactly that response on a number
of occasions.

------
yalogin
Many of the restaurants that can go delivery only already did, like pizza
places and some Chinese restaurants. But the problem is two fold, many food
items don’t lend themselves to delivery, and then delivery itself is expensive
and doesn’t scale either.

A large part of the restaurant experience is dining in, even if that doesn’t
include the hospitality, the freshly prepared food will be irreplaceable. The
moment it’s packed in boxes a lot of the food loses its edge and items
prepared by many chefs will all seem similar. If this concept takes it will
take the quality of food down globally.

However I am highly skeptical about it and the main reason is delivery, which
I still think is a fundamentally unviable business.

~~~
santoshalper
The problem I have with arguments that are bearish on food delivery is that
they are all focused on supply-chain challenges and ignore the obvious massive
demand for the product. Of all the problems you can have in business, the only
one that cannot be overcome is a lack of demand.

Widespread 1-day delivery of retail goods would have seemed totally absurd and
unscalable just 20 years ago ("What, are we gonna FedEx overnight everything?
Ridiculous!") and yet here we are. When there is demand, supply will rise to
meet it almost every time.

Someone will figure out the logistics to make this work and become the Amazon
of food (perhaps Amazon?).

~~~
yalogin
Well theoretically you are right but practically speaking even amazon couldn’t
really change distance. The whole allure of shipping things from a warehouse
and not paying rent is true but at the end of the day amazon ended up setting
warehouses all over the country to meet the demand for same day delivery. So
it did reduce the real estate costs but it’s still has to stock all items
close to the customer. So the efficiency is in cutting display and showroom
costs. Food doesn’t fall under that category as it’s very different even from
perishable grocery items. That is the source of skepticism. I agree there is
demand but it only means that the business will never die, doesn’t mean that
it’s going to overhaul the industry. Let’s see though. I do hope some
innovative idea comes along.

------
gorgoiler
At some point in my life I became extremely fussy about wanting to know where
my food came from — particularly the meat — and the conditions under which all
of it was produced. Vegetables, cereals, meat, dairy, the lot.

No more spring onions from farms employing exploited labour. Certainly nothing
imported from countries without labour regulations or farming standards. No
more indoor only “free range” chicken etc.

I’ve met the cows I eat and the hipsters who grow my cabbage. Both are very
pleasant and show no signs of duress. All my suppliers have first names and
Instagram accounts. There’s lots of evidence, alongside the produce itself, to
cross reference their credentials. The market exists for more expensive, more
carefully reared and more kindly cultivated produce of all kinds.

I trust only a handful of restaurants to get these details right and have had
to accept that eating out is even more of a luxury than it used to be. None of
the trusted restaurants are the local ghost kitchens, nor are they likely to
be. Competing on price and efficient goes completely against the, ahem, grain.

I don’t want food to be cheap, fast, or efficient, and rarely — if ever — _to
be prepared by strangers I will never meet._

~~~
RankingMember
This is an amazing level of privilege to the point that it almost seems like
Silicon Valley parody. I completely agree with the aim (animal welfare, fair
wages), but just want to note that 99.9999% of the population don't have the
means (money, time, local availability, etc.) to live this way.

~~~
gorgoiler
I disagree that I am privileged to have access to the fat of the land, but if
you want to talk privilege then remember this in the context of:

1/ paying someone else to cook for you

2/ paying another person to deliver this food to you

3/ funding a fleet of SWEs and marketers to run the whole thing for you, by
paying a double digit surcharge over what you might have paid if you’d gone to
the restaurant in person.

I would say that the privileged are those funding the Seamless / Deliveroo
serfs. I can’t afford to.

~~~
RankingMember
Maybe things are different in the UK, but in the US the only people with the
time and money to be as choosy as you seem to be are the very privileged.
Millions of people barely have their heads above water and they'll take the
most efficient (in terms of time and money) calories they can get. Having the
time to do the kinds of vetting you seem to do is a privilege itself. I hope
the day comes where everyone has the means to be this conscious of their food,
however, as I agree with your motivations (at least insofar as I understand
them in an online post :P).

~~~
gorgoiler
Ironically, aren’t jobs like _ghost kitchen line cook_ and _gig economy
delivery rider_ behind the lowering of the quality of life for the “have-
nots“?

All this while, at the same time, the “haves” continue to order their brunch
using Colins-Organic-Chicken.app.

------
0898
"It will soon be just as cheap to have your food prepared and delivered as
going to the grocery store and making it yourself."

I doubt this very much.

~~~
crazygringo
Exactly.

Until preparation and delivery become roboticized, it is _absolutely not
true_.

I live in New York City, eat meat, and it's easy to spend only ~$300/mo. on
groceries for the month if you're paying attention to prices and cooking
yourself.

That's $3.25 per meal. Please show me how exactly I can get nutritious full
prepared meals at this price, _let alone_ delivered...

~~~
spideymans
Thought exercise: I’ve often thought that some sort of “CDN for food” would be
necessary to make food delivery competitive with groceries and home cooked
meals.

How it would work is:

1\. You tell the service that within a certain time slot, you’d like your
order of [insert order here] to be delivered.

2\. All your neighbours do the same

3\. At the time slot, a vehicle (or robot) deposits the food in some kind of
storage locker for you and several of your neighbours to pick up.

This would substantially drive down the per-order delivery cost.

A dense city where everyone lives in apartments, such as New York, would be an
ideal place for this idea, since orders for everyone in your building could be
dropped off at one point

~~~
crazygringo
It sounds great in theory.

The problem is that people want 30 different types of food (Chinese, Italian,
Ethiopian), they don't want it cold, and while NYC is dense it's not dense
_enough_.

Even in a building with 100 apartments (which is much larger than the norm),
at _most_ maybe 2 apartments will want the same type of food in the same half-
hour slot. It's not going to be much different from what a delivery driver
already does, which is take out 3 orders from the same restaurant to 3
different buildings at the same time.

And remember that's just the delivery aspect. The costs of food prep are
massive too.

~~~
petra
What if you had 30 different restaurants at the same place ?

~~~
spideymans
Exactly what the OP article is about, but yes, that would be perfect for this
type of application.

Cloud kitchens, with dozens of restaurants, delivering food to a single drop
point, serving dozens of residents at once, would enormously drive down
delivery costs. Likely to well under a dollar per order.

I think the biggest stumbling block with this idea is that enormous amount of
customers that would be needed to make this operation efficient. You’d need to
convince hundreds of people within a neighbourhood or apartment block to give
up cooking, and rely on the delivery service

------
throwanem
I hope the copy writer got paid up front. With almost half a billion in VC
debt, GhostKitchens can afford it.

~~~
bhupy
The writer is ex + early Uber, I'm sure he's doing fine.

~~~
throwanem
Well, they do say organic is best if you can get it.

------
trynewideas
Cloud kitchens also consolidate geographically associated, demographically
rich, heavily identifiable consumer data in ways we haven't seen outside of
retail, and with more richness and more intimacy than retail is capable of.

Amazon might sell you everything else ever made, but they aren't feeding you a
hot meal, not learning what you're in the mood for, what you like to share
with your friends and family, what experiences you prefer and reject down to
individual condiments on an individual item, not yet, and then find you and
physically go to you where you live, and where you work, and where you hang
out — these vertical cloud kitchens will.

This is a goldmine for a very narrow slice of the tech economy, and like many
tech disruptors the efficiency gains wrung out of the model won't make your
life better as much as it will hurt the places you already use, all to benefit
someone else the most.

The price or quality won't (and in places where these are already common,
doesn't) matter as much as the information these extremely vertical operations
can aggregate.

------
welearnednothng
I was introduced to the idea of ghost kitchens a couple years ago. Initially,
I was pretty keen on the idea. But at the time, we already had ghost kitchens
operating in LA, and since then we've seen more open up. What have I not seen?
Cheaper costs as a result. Now, delivery apps are flooded with a bunch of
companies I've never heard of, I don't know if they're good, I don't know if I
can trust them, and at the end of the day they're simply not cheaper for the
consumer (one of the touted advantages).

I still think the idea has potential, and it sounded like Cloud Kitchens was
genuinely doing some innovative stuff (I interviewed with them﹡), but I'm not
convinced that potential will actually be realized. If the market shows it is
willing to bear $X for some Nashville hot chicken, what motivation does an
operator in a ghost kitchen have to undercut that rather than try to increase
their razor thin margins?

At the end of the day, my excitement around the idea is around enabling
entrepreneurial chefs, but it's sort of like a talent show - for every 1 great
talent, there will be hundreds of less stellar entries, plus the inevitable
business folks. It's an interesting idea, and it'll be interesting to see how
it plays out over the coming years. That said, I'm more likely to support good
brick and mortar companies that help build up the neighborhood community
(especially in a city like LA that generally lacks a sense of community).

﹡They spent more time touting their FAANGU(ber) employees than selling the
company and ultimately the in-person experience was one of my most loathed
interview experiences. This was awhile ago, things could have improved since
then.

~~~
Nextgrid
> They spent more time touting their FAANGU(ber) employees

To me this seems like a major red flag and one more sign of them planning to
build an engineering playground as opposed to actually solving the problem
their business claims to want to solve.

------
oramit
How often do other HN users get takeout and delivery in an average week?

For myself I usually grab one takeout meal a week. I haven't had food
delivered in years.

The proliferation and mainstreaming of food delivery with all the food apps is
one of those big trends that totally passed me by. I'm not really happy about
the whole thing since it seems to only be working because of squeezed
independent restaurants, low paid gig-workers, and lots of VC cash injections.
In it's current incarnation, it's not really sustainable but with Covid
killing off a huge swath of restaurants that calculus has totally changed.

I expect that to only last for a while though. Restaurant people are an
independent and cantankerous group. Ghost kitchens might be a good place to
start - like food trucks - but most will want to move on to their own place
eventually.

~~~
tmpz22
Even before COVID there were a lot of trends supporting food ordering among
the working class: depression, anxiety, car-lessness, weed legalization, etc.
I'm not happy about the volume I've been hitting ranging from maybe 2-5 times
a week.

~~~
oramit
Yeah, if you don't have the space to cook in, or are shuffling between
multiple jobs and don't have time to shop/cook then takeout is the only real
option.

I'm not knocking takeout and delivery at all. The huge proliferation of it is
just alien to how I operate so it's interesting to hear what other people are
up to.

~~~
tmpz22
I knock the monopolistic-capture by organizations like Ubereats who have to
take a huge chunk to justify their VC investment. Restaurants need every ounce
of margin they can get if they're ever going to have a hope of adequately
compensating waiters, linecooks, and other staff, who are extremely exposed to
covid and poorly treated in general - not to mention drivers.

------
rsynnott
> As with any new technology,

Not a technology.

> the naysayers have already published conclusive takes on why this is an
> episode from Black Mirror

This is a fairly dismissive treatment; it's quite reasonable to raise concerns
about this sort of new business practice.

All in all, a strange, low-content article.

~~~
AlexandrB
I think they mean "technology" in the modern Silicon Valley sense of financial
tech, commodification of services, and eventual monopoly rent seeking.

------
johngalt
This seems very ambitious:

"It will soon be just as cheap to have your food prepared and delivered as
going to the grocery store and making it yourself."

It depends on how many variables you bake into the equation. Such as the total
time cost spent shopping/storing/cooking/cleaning vs ordering. The amount of
food waste in a home kitchen vs commercial. Economies of scale implied in
commercial food preparation vs home etc...

It's certainly conceivable to have the overall costs be similar. Or at least
close enough that it becomes an irrelevant change to improve convenience. In
the same way that we could all grow our own potatoes for less than the store
cost, but we don't.

------
lancesells
> better for restaurants and chefs by lowering the entry barrier to start a
> business

Ultimately this winds up better for the owner of the CloudKitchens and worse
for restaurants and most likely consumers. Already these services create their
own restaurants to compete with the businesses paying them for the space.

How long before they are using the data of a successful place to create a
knockoff that ranks higher? It's probably already happened.

------
LaserToy
Is anyone interested in working there? I know they are looking for strong
SWEs. dm me (y<username> at gmail.com) if interested.

~~~
AlexandrB
It's crazy how easy it is to rehabilitate your image in the valley. There's
literally a book written about early Uber's toxic work culture yet I'm sure
you'll get tons of message from those willing to work for Kalanick.

~~~
LaserToy
I did read the book and i didn't find anything too toxic.

Especially is you compare it to other industry giants (hello stack ranking and
sports team mentality.)

------
balthasar
Not sure if this is mentioned but it sounds similar to another restaurant
disruption that gained ground recently, I'm talking about redesigned food
courts. The idea was an artisanal food courts that chefs could rent stalls in.
I am sure they are still around but I know there was a lot of fuss over their
exploitative practices.

------
panabee
ghost kitchens serve companies, but who has the ingredients (pun intended) to
serve consumers with fresh, personalized meals?

* fresh ingredients? * locations near consumers? * food and cooking licenses? * space for cooking equipment?

amazon, by way of its whole foods acquisition. whole foods already uses humans
to create personalized coffee, juices, sandwiches, and burritos on demand.

it would be unsurprising if they are exploring robots to automate simple meal
preparation and expand into other areas.

------
pragmatic
"It will soon be just as cheap to have your food prepared and delivered as
going to the grocery store and making it yourself."

That's a strong claim.

------
chrisgd
In 18 months, if there is a vaccine, won’t the demand for delivery decrease? I
order food now for delivery I have no interest in delivering once it is safe
to go out.

------
Ericson2314
WeWork for kitchens is an interesting mixed bag.

> It will soon be just as cheap to have your food prepared and delivered as
> going to the grocery store and making it yoursel

The techno-utopianist I cannot beat out of me is excited. It is rediculous
that we avoid economies of scale to save money.

> Drivers

Damn, to think the rest of the US is doing car delivery is ridiculous. NYC's
ubiquitous bike delivery is a great example of why density is just more
efficient.

> > The “ghost kitchen” would change all of that. In place of small businesses
> there would only be a series of tractor trailers staffed with
> interchangeable “freelance contractors” cooking, presumably with no benefits
> or fixed hours.

Lol I don't think much people get benefits at restaurants already. Still, the
quote is absolutely correct, they won't start getting it either. IMO every
"gig work" company should be pushing hard as hell for universal healthcare
etc., as removes a huge competitive advantage of their competition. Do it for
the $$ not the altruism, if you must.

\-----

Here's what I'm wondering about. The food seen for rich people has
dramatically improved in the last 30 years. One way to think of this is rich
Californians setting an example of "slow-food" / embracing unproductivity at
every link of the supply chain to side-step all the grain subsidies and other
perverse incentives.

What we're seeing now is the beginning of others cooking for you as a non-
luxury item. This is good. I think this means a lot of that bad stuff will be
harder to at the same price-point. This is bad for me but perhaps good for
society. Anecdotally, I feel like after getting better for a long time,
delivery food has been getting worse in NYC as the margins get tighter and
competition fiercer.

There's two outcomes;

\- we all eat like shit, as increasingly not only is ordering cheaper than
cooking, but the expectation of ordering means people will not be able to
afford to take time off to cook[1]

\- Or, since nothing motivates political action like the loss of privilege
within leaving memory, this will put new wind in the sails of the fight
against the grain subsidies.

[1]: Employment always takes a greater share of our time despite productivity
improvements, probably due to
[https://en.wikipedia.org/wiki/Jevons_paradox](https://en.wikipedia.org/wiki/Jevons_paradox).
this is Capitalism's #1 bug.

~~~
9nGQluzmnq3M
> _others cooking for you as a non-luxury item_

Interestingly, this sounds more like a regression, since in most urban but
poor countries it's already cheaper to eat out than prepare food yourself.
This comes down to the cost of labor: a restaurant can buy in bulk cheaper
than you can and prepare in batches larger than you can, so they'll be cheaper
than you as long as their labor cost doesn't obliterate the advantage. In
Europe or Australia it does, so eating out is a luxury; in India or China it
does not.

Obviously this is a generalization, there are countries that buck the trend
(eg Japan) and some meals that are still cheaper to DIY. But I don't think
we'll get to techno-utopia here until robotic food preparation goes from
gimmick to mass market, and we're still a long way off.

~~~
Ericson2314
Yes I absolutely agree. While I think it's generally good when luxuries become
widespread, this isn't so good if just means some sort of mass middle class is
exploiting some underclass. And we must always be vigilant for low labor costs
being laundered as some sort of efficient tech (e.g. Uber in suburbs/rural is
just inherently inefficient). It's a cruel irony as-under priced labor is
_the_ bellwether for _in_ efficiency.

That said, I hope there's something between now and full italicization that
can be economically while paying the few remaining chefs well. Cities should
absolutely price-control the shit out of these cloud kitchens since they will
be so dependent on the public good that is efficient land use.

------
Ijumfs
>It will soon be just as cheap to have your food prepared and delivered as
going to the grocery store and making it yourself.

No, no it won't. Why would a person claim something so ridiculous? I can
understand if you never leave your little Soho / Bay bubble, but do real
actual people honestly think this?

~~~
ricardobeat
This seems to be already the case in India with the Dabbawalla system [1], so
it's not an outrageous idea - it's simply replacing home cooks with tiny
commercial kitchens. They can buy produce in bulk at _much_ cheaper rates than
you'll find at your grocery store.

[1]
[https://en.wikipedia.org/wiki/Dabbawala](https://en.wikipedia.org/wiki/Dabbawala)

~~~
Ijumfs
It's not the case, because it's not possible for food to be cheaper after prep
and delivery. It's cheap, but not cheaper than making your own food from
scratch. And there's no oversight or health inspections for this mass prepared
food either.

But you know this, it's why you said "seems to be" instead of "is," very
nicely done.

~~~
ricardobeat
You're completely ignoring the food cost I just mentioned. For example, the
cost of a Big Mac is around 1 dollar. Try making a burger with ingredients
from the supermarket for $1, it is impossible. Things easily cost 5-10x as
much in retail vs their bulk prices, it is _much_ cheaper to cook for 50
customers at once than for a single meal.

This system is removing all of the other costs of operating a restaurant, so
unless you also buy ingredients in 50kg bags for your home, they can
definitely make it cheaper.

