As the vaccine rolls out and people return to public life, businesses and consumers alike are facing a turning point. Many are discovering to what extent the future will be a return to normalcy — and to what extent it has been permanently changed by the events of the last 15 months. For restaurants, this means negotiating the place that digital and off-premise ordering, which surged during the lockdown, will hold going forward as customers return for dine-in.
As restaurants negotiate their omnichannel future, All Day Kitchens (formerly known as Virtual Kitchen Co.) recently raised $20 million in Series B funding to power its expansion. The company, which describes itself as a “distributed restaurant platform,” brings restaurants’ food to tens of satellite kitchens for takeout and delivery.
“When the pandemic hit, we saw this reaction from the industry as a whole, which is, ‘Okay, what can we do, and how do we transition to the digital and last-mile fulfillment world very quickly?’” Ken Chong, CEO of All Day Kitchens, told PYMNTS in a recent interview. “Now, all of these restaurant brands are thinking about, ‘How do we reopen in a sustainable, long-term way and capture all of the learnings from last year?’”
Beyond the Ghost Kitchen
Though All Day Kitchens’ satellite locations are delivery- and takeout-only, the company does not describe these as ghost kitchens, and no longer describes them as virtual kitchens.
“With the pandemic accelerating the increased demand in consumer behavior, I think we’re sort of skipping forward into the post-ghost kitchen era,” said Chong. He added that by centering the language on the distribution aspect of the business, All Day Kitchens keeps the focus on the scale, saying that restaurant partners “don’t go from one to two or two to three” locations. Instead, they “go from one to 10 or one to 20.” He added that this is the “power of the platform,” allowing restaurants to grow their reach “in a turnkey way.”
In addition to bringing restaurants’ cooking to its network of kitchens, the company’s software also processes orders and allows the digital locations to operate. Another aspect of running a successful digital kitchen, Chong said, is serving transportable foods. He noted that top-performing e-restaurants consider “menu design for off-premise consumption.” Nobody wants to get a souffle 45 minutes after it has been cooked, for example.
Growing Toward Omnichannel Permanence
“When we were at Uber, we saw the restaurant feedback, especially on the Uber Eats side,” said Chong. “What they told us was that the incremental revenue from delivery is great, but as demand grew and order volume grew, we start seeing cracks in the system.”
He added that this model, a brick-and-mortar restaurant running a digital delivery business on the side, was flawed in that the physical restaurant “was really a model that was built for something else.” Over time, he reflected, “It became really clear that new innovations had to happen in order to enable this sort of digital ordering delivery and pickup world.”
Now, as restaurants are looking for ways to take advantage of consumers’ increasing accustomedness to digital ordering to capture their post-pandemic meal spend, these issues are weighing on many restaurant operators’ minds.
Chong explained that “really savvy restaurant brands” are asking: “How do we make this a core part of the business, a core part of the strategy, and make sure that we’re resilient to any sort of events in the future, and ultimately just serve the customer in more ways?’”
The Slow Build Toward Restaurants’ Digital Future
All Day Kitchens is using its latest funding round to power its national expansion. The company currently works with restaurants in Chicago and San Francisco and is looking to grow its Bay Area presence. It also aims to grow into other areas in California and to launch in Texas in the near future.
“I think there is a ton of innovation that has to happen in this space in order for it to grow for the next five to 10 years,” said Chong. “I think it’s going to be a long transition, because that’s what we saw in retail — with eCommerce, we’re still seeing innovations — and so we are at probably the earliest beginnings for the food and beverage industry to transition to this sort of model.”
Chong predicted that over the next several years, more restaurant brands will find ways to grow their digital presence through their social channels, online ordering platforms and websites, as well as by integrating digital technologies. Down the line, he believes that delivery times will get faster and that previously discrete food categories will blend, moving toward an integrated “eats” ecosystem in today’s connected economy.
“We’ll see this convergence of hot foods, ready-to-eat foods, convenience items and groceries, and maybe eventually packages, in this large, micro-fulfillment system,” said Chong. “We’ll probably see that for everything that’s last-mile and hyperlocal.”