Throughout the worst days of the COVID-19 pandemic, many unbiased restaurateurs leaned on supply platforms and ghost kitchens to maintain their companies afloat. On the planet of ghost kitchens, a slew of manufacturers positioned themselves as potential business saviors, together with Reef, Toast, and Uber founder Travis Kalanick’s CloudKitchens, which Kalanick proclaimed on the time would make proudly owning a meals enterprise simpler and extra inexpensive than ever. However now, in response to a report from Insider, some CloudKitchen customers are suing the corporate for failing to satisfy its obligations — and plenty of, in response to sources, are fleeing it in droves.
When it launched in 2016, CloudKitchens promised a novel alternative for unbiased restaurant house owners: It might remodel warehouse areas into “cloud kitchens,” or eating places that solely supplied supply and pick-up, at a a lot decrease value than a standard house with a eating room. Based on the Insider report, although, in 2022, a lot of these kitchens lacked primary sanitary services like bogs and dealing sinks, and plenty of have been plagued with technical glitches that made it troublesome for potential prospects to really place orders.
Operators allege CloudKitchens has additionally been plagued with a wide range of safety and security points, starting from burglaries to arson to bodily altercations. In a single excessive incident, the house owners of a Houston restaurant sued the corporate after an worker of CloudKitchens, who labored operating meals between the restaurant and supply drivers, allegedly punched, kicked, and scratched the house owners in an altercation that apparently started over a card sport. Based on filings with the Harris County district court docket, the worker additionally vandalized the house owners’ two autos, slashing all their tires and carving into the paint with a knife.
A part of CloudKitchens’ gross sales pitch is that it’s a lower-risk, lower-cost entree into the world of restaurant possession. However operators informed Insider that hire for every of those kitchens ranges from $3,500 to $10,000 monthly, relying on location. CloudKitchens additionally takes a 3 % lower from each single order, which means that many homeowners discovered themselves unable to show a revenue even when they have been capable of overcome the security and sanitation points. In the meantime, CloudKitchens is valued at greater than $15 billion, and secured $850 million in new investments within the final quarter of 2021 alone.
CloudKitchens isn’t the one ghost kitchen firm to face authorized woes in current months. In Might, Insider reported that its competitor, Reef, was being sued by a vendor for greater than $3.5 million in unpaid invoices. It’s additionally confronted comparable points with sanitation and security — a 2021 report from Restaurant Dive discovered that a 3rd of Reef’s vans in California alone had been cited for “high-level well being and security infractions.” In Might, the corporate laid off 5 % of its workforce, citing “macroeconomic challenges.”
Now that issues within the eating world are a bit extra secure, it’s changing into abundantly clear that ghost kitchens are a fairly horrible addition to the restaurant panorama. They’re not good for staff, they’re not good for restaurateurs, and infrequently, the meals itself is fairly horrible. Proper now, it looks like CEOs like Kalanick are the one ones benefiting from the “way forward for eating.”