A depiction of a Kitchen United room in a Kroger grocery store
Kroger, the country’s largest supermarket chain, and the ghost kitchen start-up Kitchen United are working together to prepare takeaway and delivery in some of its grocery stores.
The partnership announced on Wednesday combines Kitchen United’s goal of aggressive expansion with Kroger customer demand for more freshly cooked meals.
Both companies saw demand spurt during the pandemic but are now facing challenges as consumers return to dining in restaurants. Industry experts predict slowing delivery sales that could dampen restaurants’ desire to partner with Kitchen United, while Kroger and its portfolio of brands could lead consumers to cut their grocery spend.
Ghost kitchens, also known as cloud, commissary or dark kitchens, allow restaurants to prepare food for delivery only, sometimes with multiple brands under one roof that share a kitchen. The model is touted as more efficient and reduces labor and rental costs for restaurants. The pandemic’s delivery boom has fueled investor and operator interest in ghost kitchens, but some experts are concerned about increased competition and oversaturation.
The first kitchen center under the partnership is due to open this fall at a Ralphs location in Los Angeles, with additional locations planned for the remainder of the year. Kroger’s extensive portfolio includes Harris Teeter and King Soopers.
The kitchens will feature a mix of up to six local, regional and national restaurants. Customers can order their food to be picked up or delivered.
“Our collaboration gives participating restaurants access to millions of Kroger customers and the ability to better serve off-premises demand in a convenient supermarket format – a common destination for most consumers,” said Michael Montagano, CEO of Kitchen United, in an explanation.
Kitchen United has raised $ 50 million in funding since its inception in 2017 and has Alphabet’s Google Ventures among its investors. So far, it has opened six locations nationwide and plans to open its first New York kitchen in midtown Manhattan this fall.
Kitchen United’s presence already includes a contract with another retail company. Earlier this year, California’s Westfield Valley Fair Mall announced it would use Kitchen United’s technology to facilitate take-out orders. Other malls have also turned to ghost kitchens to increase pedestrian traffic and boost restaurant sales. In 2020, shopping mall operator Simon Property and hotelier Accor teamed up to create C3, a virtual kitchen company.
Nor is this the first partnership that Kroger has had with a ghost kitchen company. In 2020, an agreement was made with ClusterTruck, which has a different business model than Kitchen United, to open kitchens on-site at Kroger locations. Other investments to bring fresh meals to its customers include the acquisition of Home Chef in 2018 and an agreement to bring a handful of Saladworks restaurants to stores in the Midwest.
Kroger’s shares are up 34% this year, giving the company a market value of $ 31.8 billion.