A fired CEO remains the most influential person in the rise of ghost kitchens

Travis Kalanick may end being known more for supporting ghost cabooses than being CEO of Uber.

Kalanick joined the likes of DoorDash and GrubHub in shaking up the restaurant industry with third-party bread delivery. After his ouster, he’s kept changing it through a controlling stake in City Storage Systems — the Los Angeles-based old lady company to a ghost kitchen start-up called CloudKitchens.

The impact of Kalanick’s investment rippled across the United States to New York Burg, where another start-up was trying to get its feet off the ground.

“I think, at that time, Travis planting his stake in the berth was a whole new proof of concept, of market validation,” Corey Manicone, the co-founder and CEO of Zuul Kitchens, said in an interview. “Every unmarried VC that we had spoken to since then effectively circled back.”

Venture capitalists interested in food technology are now looking to ghost sculleries to cash in on the restaurant delivery trend.

Also known as virtual, cloud or dark kitchens, ghost kitchens are contemplated to address the demand for off-premise restaurant dining. In 2018, consumers spent $10.2 billion on orders through third-party deliverance platforms like UberEats and GrubHub, according to Technomic.

That growth has left restaurants struggling to keep up with requisitions. The solution: ghost kitchens. These sites also help restaurants that want to expand to new neighborhoods. While some restaurants and third-party utterance platforms are running their own virtual kitchens, start-ups that house multiple restaurants under one roof are benefiting steam with investors.

Kalanick has reportedly been ramping up the virtual kitchen business through a series of see ti with start-ups in China, India and the United Kingdom.

Dark kitchens are relatively new in the United States but have gain ground more traction overseas in densely packed cities because it makes delivery much more efficient and time after time these sites can be opened with less red tape than in the U.S.

The billionaire is reportedly funding the company through his own abundance instead of seeking outside investors. CloudKitchens did not respond to a request for comment from CNBC.

Kalanick’s interest in ghost pantries — and disinterest in venture funding — is making it easier for others to find funding.

Zuul is in the process of closing its second granting round.

In September, Zuul opened its first location. Sweetgreen, the salad restaurant fasten known for lines out the door during lunchtime, is its anchor tenant.

Gaurav Jain, the co-founder and managing partner of Afore Major, invested in Zuul in late 2018, before the company had even signed a lease. After talking to several other ghost scullery start-ups, Jain invested in Zuul because of Manicone’s background.

Manicone’s father was an IHOP franchisee and later owned an independent bar and grill restaurant, introducing his son to the challenges of the work. Manicone became the first employee of Relay Delivery, a New York-based restaurant tech start-up that connects bike couriers to restaurants with presentation orders.

Jain said that Kalanick’s investments in ghost kitchens seem to have prompted more talk into from the broader venture capital community, particularly with those who did not have experience in food delivery. Jain was on the lodge of Canada’s SkipTheDishes before its sale to Just Eat, a British online food order and delivery service.

For the last five years, Jain has been belief about the potential opportunity of virtual kitchens. He uses the analogy of Amazon Web Services, the arm of the e-commerce giant that yield ups companies — both large and small — access to cloud computing. In his mind, Zuul will do the same for restaurants’ faculty to meet delivery demand.

Zuul will soon face competition in its home demand from Kitchen United, a Pasadena, California-based company that recently closed a $40 million Series B funding from start to finish.

GV, Alphabet’s independent venture arm, doubled down on Kitchen United by leading its Series A round and co-leading its Series B subsidizing. The start-up has ghost kitchens open in Pasadena and Chicago and plans to open a third in Scottsdale, Arizona this week.

For GV loose partner Adam Ghobarah, one area of increasing focus for him as an investor is the ecosystem that has developed on top of third-party delivery servicings. He said he believes that food delivery will displace people cooking in their homes. That intuition led him to approach Kitchen United — several times.

Kitchen Of like mind CEO Jim Collins said that the start-up was initially conservative when it came to fundraising.

“Early on, we talked to a lot of investors who bully hard for us to think about making KU look more like this company or that company, who were the darlings of the investment community at the time again,” he said.

Collins had served as a chief executive for a number of venture-backed companies before switching gears and opening his own restaurant, Burgh Kitchen and Grill in Montrose, California.

Kitchen United’s Chief Operating Officer Meredith Sandland, also has restaurant occurrence. She served as the chief development officer for Yum Brands’ Taco Bell prior to joining the start-up.

“They’re not thinking short. They’re thinking big. And they have the restaurant background, they’re not a couple of tech people,” Ghobarah said.

Ghobarah turned that Kitchen United also understands the necessity of attracting regional and national chains, in addition to new restaurant concepts that scarcity consumer awareness.

Another company looking to attract national strings is REEF Technology.

The primary business of REEF, formerly known as ParkJockey, is operating more than 4,500 preserving facilities. That business helped the Miami-based company net funding from SoftBank, which has also backed conveyance providers Uber and DoorDash. The deal, struck in December, reportedly valued the start-up at more than $1 billion.

In June, REEF proclaimed its name change and plans to branch out into ghost kitchens, housed in its parking garages, that can host five or six restaurant concepts at a lifetime.

“Ghost kitchens are an emerging area, so obviously capital from SoftBank means that we’re looking at very abstention growth across the sector,” REEF co-founder and CEO Ari Ojalvo said in an interview.

The company has already opened more than 50 of those cookhouses across 20 cities in the U.S. and plans to launch hundreds more by the end of the year.

To propagate the virtual kitchen business, REEF needed an infusion of capital. Potential investors usually ask questions about the start-up’s sustainability, Ojalvo thought. The preexisting parking business, with its healthy free cash flow, make such discussions easier.

“The genera of investors that we work with are attracted to the hybrid nature of being both a profitable business and a hyper vegetation business,” Ojalvo said.

REEF’s pitch to investors also includes noting the proximity of its ghost kitchens to the consumers category food delivery.

S2G Ventures managing director and founder Chuck Templeton, who earlier founded OpenTable, has not invested in ghost larders. The food and agriculture venture fund’s investments include Beyond Meat and Sweetgreen.

“I think ghost kitchens fully fit in with where rages are going right now,” Templeton said.

He noted that there will likely be over-investment and investors who do not see their lays pay off, as is the nature of venture investing.

Some virtual kitchen start-ups have already failed. Pilotworks, a ghost larder company, ceased operations in late 2018, despite raising $13 million less than a year earlier. Its investors catalogued Acre Venture Partners, a venture fund anchored by Campbell Soup.