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Travis Kalanick's Ghost Kitchen Concept Hits Some Speed Bumps

By most accounts, ghost kitchens are and should be faring well during the coronavirus pandemic.

With state and local officials enacting stay-at-home orders in order to prevent the coronavirus from spreading, more people are ordering food for takeout or delivery.

UberCEO, Travis Kalanick
Travis Kalanick

But former Uber CEO Travis Kalanick's ghost kitchen concept, CloudKitchens, has hit a few snags.

Ghost kitchens, also known as virtual kitchens or virtual food halls, are facilities that house several restaurant operators who want to prepare food for takeout or delivery only.

Because the cost of running a traditional brick-and-mortar dine-in restaurant is high, ghost kitchens allows a restaurateur to share space with other owners while creating food for takeout or delivery. They also help restaurants to build a brand, with minimal risk and capital.

After resigning from Uber in 2017, Kalanick debuted new startup City Storage Systems a couple of years later in an attempt to get a piece of the $35B a year food delivery industry.  

According to several reports, Kalanick has already acquired 70 to 100 facilities worldwide to turn into ghost kitchens. The Wall Street Journal reported Kalanick has invested $300M of his fortune into CloudKitchens. Last year, his company received more than $400M from the Saudi Arabian Pension Investment Fund.

But currently only 10 are up and running, according to tech news site The Information, which added that several properties Kalanick acquired need extensive rehab and renovations. 

In one of CloudKitchen's reported recent gaffes, earlier this month, several media outlets received a press release with a website celebrating the opening of the Internet Food Court ghost kitchen in the Koreatown neighborhood of Los Angeles. An hour later, Kalanick and his team removed the website, social media pages and disavowed the actions of what they say came from a "rogue employee."

“One of CSS’s employees developed a website and press release that included numerous errors and misrepresentations,” Kalanick spokeswoman Devon Spurgeon said to the Financial Times. “It was created and disseminated without the company’s knowledge and we have launched an investigation.”

A Bisnow request for comment was not returned.

Still, despite CloudKitchens' early struggles, the ghost kitchen concept is picking up.

Dubai-based ghost kitchen operator Kitopi raised $60M earlier this year to expand to more than 150 locations. A JV of SBE, Accor and Simon Properties created Creating Culinary Communities or C3 as its brand to open 200 ghost kitchens by 2021. And Kitchen United, a Google Venture-backed ghost kitchen company, continues its growth plans in the U.S.