Restaurants continue to suffer from the unpredictability of COVID-19. However, the ghost kitchen restaurant concept has not only enabled many of these restaurants to remain in business, but they have opened up new restaurant leasing opportunities for those landlords who are also struggling with pandemic uncertainties. The ghost kitchen idea, in which one tenant buys or leases kitchen space for multiple restaurant brands to complete food preparation for delivery-only purposes, continues to expand and encompass new concepts. These can include incorporating food hall configurations, overtaking empty restaurant and hotel kitchen spaces, utilizing parking lot space and even occupying industrial spaces in distressed neighborhoods. The ghost kitchen concept has been boosted by the popularity of restaurant delivery service apps. These apps had been widely used by millennials in pre-pandemic times but have now found a new audience of Generation X and baby boomers thanks to continuing dine-in restrictions. Look for national ghost kitchen brands such as C3 by sbe (“Creating Culinary Communities” by SBE Entertainment Group), Kitchen United, REEF Technology and CloudKitchens to continue to disrupt restaurant dining expectations with their unique real estate options.
Ghost kitchen provider C3 by sbe looks to open up to 100 new units in 2021. The company will be expanding these kitchens into Las Vegas, Miami, San Francisco, New York City and Los Angeles. C3 utilizes not just shuttered restaurant spaces, but also re-uses old food courts, nightclub restaurant spaces, parking lots and empty spaces in malls — including shopping centers owned by Simon Property Group. C3 plans to open ghost kitchens that also provide customer walk-up windows, such as with its food hall Citizens, which is set to open in a 40,000-s.f. space by early to mid-2021 in Brookfield Properties’ Manhattan West mixed-use project in New York City’s Hudson Yards district. C3 partnered with famed Chef Dani Garcia, who will helm two of the brands to be featured in the upcoming Citizens ghost kitchen/food hall: Minük, featuring rotisserie chicken plates and Casi Dani, featuring Mediterranean foods. The Minük brand will also be featured in up to 100 other C3 ghost kitchens. Another smaller version of this ghost kitchen/food hall will also open in the same time frame in Venice, Calif., in a 2,800-s.f. ground floor mixed-use retail space with a consumer-facing, walk-up customer component. C3, which owns eight of its own virtual restaurant brands, plans to add up to seven more by the end of 2021. The company purchased 22 of the Specialty Café & Bakery locations in December after the bakery declared bankruptcy. These locations, each averaging 5,500 s.f., will become future C3 ghost kitchens and are located throughout California, Seattle and Chicago.
Kitchen United, the shared kitchen brand whose ghost kitchen storefront customer pick-up spots are named Kitchen United Mix, expects to open up to 20 new ghost kitchens per year over the next five years. The company leases approximately 7,000 s.f. of ground-floor retail space for its ghost kitchen. The space can also be subterranean or mezzanine, provided there is at least 200 s.f. at street level to serve as its pick-up center. Ideal space would be within one block of “main street” in major metropolitan markets, especially Atlanta, Seattle, Boston, Miami, San Diego, San Francisco, Dallas and Houston. Space needs to be close to major thoroughfares, and can be in light industrial or commercial areas, including in older buildings. Daytime population density should be 5,000 per square mile. Kitchen United is also open to leasing distressed mall space, especially if it has underutilized open-air food service or patio areas, as the brand is also interested in providing outdoor food court seating areas for customers in the future. There are currently four Kitchen United Mix units located in Pasadena, Calif., Scottsdale, Ariz., Chicago and Austin. With funding by Alphabet Inc.’s Google Ventures, Kitchen United works with brands such as PF Chang’s, The Halal Guys, Wendy’s and Wetzel’s Pretzels.
REEF Technology purchases empty and underutilized parking lots and garages for its ghost kitchen modular truck configurations, and it expects to open up to 10,000 of these “Neighborhood Kitchens” throughout the country over the next five to 10 years. Look for San Francisco, New York City and Denver to be the focus for immediate growth. All markets are sought after, especially spaces in urban metropolitan neighborhoods near offices and mixed-use spaces. Its 2021 goal is to also unveil its first outdoor entertainment venue in Austin. The company anticipates up to 300 of its neighborhood hubs also providing customer walk-up dining and retail offerings in an open-air shopping mall format. In the future, REEF foresees providing more than just ghost kitchen delivery spots within these spaces, but also healthcare clinics, such as it did with its partnership with Carbon Health in September to open 100 pop-ups. REEF also plans to use its spaces for last-mile retail fulfillment centers. Well-known national restaurant brands that participate in REEF’s truck hubs include Saladworks, Aloha Poke, BurgerFi and Nathan’s Famous. REEF raised $700M in late 2020 from investors such as UBS Asset Management, Mubadala Capital, Target Global and SoftBank Vision to help with its expansion goals.
CloudKitchens, founded by the former Uber CEO, also purchases rather than leases its spaces for its ghost kitchens. The company is especially interested in purchasing distressed office buildings, auto shops and warehouses in Tier 2 cities near college campuses and major interstate highways. CloudKitchens also looks for space near luxury apartment complexes in major metropolitan markets, within a fifteen-minute drive from suburban markets. Spaces it seeks can range anywhere from 10,000 to 35,000 s.f. Look for growth into secondary markets in Ohio, Florida, Washington, Colorado, California and Arizona. CloudKitchens also will be experimenting with utilizing prefab structures in both mall and college parking lots to create drive-thru versions of its kitchens. Noted restaurant brands that utilize CloudKitchens facilities include sweetgreen, Fat Sal’s Deli and Coolhaus Awesome Ice Cream.
