DoorDash, on the other hand, has expanded into physical spaces in other ways, such as virtual convenience stores called DashMarts, which are micro fulfillment centers that sell essential goods delivered by the company in at least nine cities. For instance, Uber Eats, which began offering flower delivery in the US this week, is trying to position itself as delivering everything in a short amount of time. In the US, companies are expanding their businesses with the hopes of reaching profitability some day. Globally, food delivery is a $127 billion industry. With most of the restaurants partners, DoorDash takes a share of their revenue.
#GHOST KITCHEN FULL#
So DoorDash is now absorbing more of the costs, as it essentially takes on the full end-to-end operations.
But restaurants felt the costs of staffing and operating kitchens were still too high, says Isenstadt. When DoorDash launched its first permanent ghost kitchen in Redwood City 2019, it started renting out individual kitchen spaces to restaurants who would operate the facilities themselves. When delivery workers are able to pick up multiple orders from one place rather than various restaurants, it could also potentially maximize the number of delivery orders performed per hour, says Alex Frederick, a senior analyst at PitchBook, a research firm. If DoorDash is successful with this model, it will help create closer relationships with restaurants while also allowing the food delivery company, which remains unprofitable, to take a larger slice of restaurant sales. Outside the US, the model is more established with food delivery companies like Deliveroo, in the UK, as well as Zomato and Swiggy in India, with the latter hosting 1,000 ghost kitchens in 14 cities. Other restaurants are interested in using the ghost kitchen to try out a new market.īut ghost kitchens haven’t had much uptake with US-based food delivery companies yet, since it’s a new business model. But in the past year, more restaurants have been reaching out to DoorDash to learn more about how the company can support the delivery operations they’ve built up during the pandemic. When DoorDash launched its first ghost kitchen in 2019 in Redwood City, California, restaurants weren’t yet familiar with the concept, says Isenstadt. The facilities allow restaurants to expand their footprint in a low-cost and flexible way, without the costly real estate and labor required of customer-facing locations. Now that number is expected to climb to 21%, according to a May report from CBRE, a real estate firm. Pre-pandemic, they were expected to account for 10% to 15% of the $66 billion US restaurant industry by 2025. So-called ghost kitchens-which are essentially restaurants without a storefront-are a burgeoning business. Once it is up and running, restaurants could ask DoorDash to launch their take-out operations in any region and the food delivery company will make it happen for them, says Ruth Isenstadt, the director of DoorDash Kitchens.
#GHOST KITCHEN TRIAL#
If the trial is successful, DoorDash may expand the concept.