Ghost Kitchens Assisting Restaurant Chains Aiming To Boost Sales During Pandemic

Financialnewsmedia.com News Commentary

PALM BEACH, Florida, Aug. 20, 2020 /PRNewswire/ -- Ghost Kitchens were a hot topic well before today's Pandemic completely upended the restaurant industry. Operators first started trying them out a couple of years ago as it became clear consumers were increasingly looking to have their food delivered. Many of those initial attempts, often created by brands that only existed in the virtual space, didn't succeed. But then larger players began giving ghost kitchens a go, frequently housing multiple concepts in one shared space. An article in Restaurant Business Online spoke to industry insiders who said: "It has proven to us that this model can be extremely successful… We've already begun expansion efforts… That we can open a new urban point of distribution during an economic downturn speaks to our confidence in this strategy," said one insider. It continued saying: "It provides us a unique opportunity to further expand in a certain market," he said. "You can go in and pop up four of these in 60 days… You're not necessarily saying it's a long-term solution. We're not going to pay rent for the full space. But if we can rent out some kitchens and work through distribution channels already set up, you can prove out that market or not. And then you can find a permanent solution."  Active companies in the markets this week include ShiftPixy, Inc. (NASDAQ: PIXY), US Foods Holding Corp. (NYSE: USFD), Grubhub Inc. (NYSE: GRUB), Brinker International, Inc. (NYSE: EAT), Uber Technologies, Inc. (NYSE: UBER).

Another article in the Washington Post said: "Making a kitchen or food hall "ghost" is about reducing operating expenses by forgoing service staff and an attractive interior… Although the coronavirus hastened the rise of food-industry trends already in the making, (an industry insider) said the concept of ghost food halls will probably remain successful after the pandemic wanes. Fine dining has already been declining for years, he said, and months of self-quarantine have changed people's perception of what makes a good meal."

ShiftPixy, Inc. (NASDAQ: PIXY) BREAKING NEWS:  ShiftPixy Announces Corporate Relocation to Miami, Florida - ShiftPixy Labs Ghost Kitchen also to be located in Miami area – ShiftPixy, a California-based gig engagement platform provider, today announced that the Company will be relocating its corporate headquarters to the city of Miami, Florida. The relocation is part of ShiftPixy's strategy, along with ShiftPixy Labs, to expand its business into the thriving East Coast restaurant industry.  Additionally, the Company is pleased to announce that the new ShiftPixy Labs Ghost Kitchen will also be located in the Miami area. The location was selected due to the Miami area's rich and diverse food culture, which the Company expects to provide a strong customer base for both the Ghost Kitchen Incubator Project and the Incubator Contest. After the relocation, ShiftPixy's Irvine, California office will remain open to continue serving the Company's growing West Coast customer base.

"Since our launch in 2015, we've been proud to call the city of Irvine our home. Here, ShiftPixy has been able to build a strong customer base throughout the West Coast, and the Company's beginnings in the great state of California will always be important to us," said ShiftPixy Co-Founder and CEO Scott Absher. "With that said, we are excited to begin the Company's next growth chapter in the thriving city of Miami.  Establishing our new headquarters in one of the East Coast's largest cities will provide the perfect foothold from which to launch our expansion to cities up and down the Eastern Seaboard."

Mr. Absher went on to say, "Miami has long been on our roadmap because of inquiries we have from operators in Europe and Latin America, and the city is ideal as our base not only for Eastern US expansion, but for new markets beyond our borders.  I'm also excited to be so close to our new Ghost Kitchen venture, and we look forward to sharing more exciting news and details in the coming weeks and months."

Through ShiftPixy Labs, the Company expects to provide additional layers of services and engagement, from business start-up clear through to customer meal delivery. The new functionality builds on the traditional ShiftPixy gig engagement platform, which empowers restaurant operators to take full advantage of their human capital with cutting-edge tools to handle payroll, compliance and native delivery.  The Company's new corporate address will be as follows:  501 Brickell Key Drive, Suite 300 - Miami, Florida 33131  - Read this and more news for ShiftPixy at: https://www.financialnewsmedia.com/news-pixy/  

Other recent developments in the markets this week include:

US Foods Holding Corp. (NYSE: USFD), a leading foodservice distributor, recently announced the launch of US Foods Ghost Kitchens, a program designed to guide restaurant operators every step of the way when opening their own operation, helping them easily add a new revenue stream. With the addition of this program, US Foods customers now have access to exclusive resources developed to streamline the process of starting a ghost kitchen, including proprietary technology to help identify menu opportunities, a detailed playbook to guide decision making, dedicated marketing support, webinars and one-on-one consultations with US Foods specialists.

Ghost kitchens, also referred to as dark or virtual kitchens, are professional kitchen facilities set up to support delivery or carryout meals only, offering restaurant operators an opportunity to start an additional revenue stream. Currently, with dine-in restrictions due to Covid-19, most restaurants are experiencing challenges managing through the minimum dining room capacity operators say is needed to make reopening work financially. As a result, 75% of restaurant operators now consider off-premise dining to be their best growth opportunity.

Grubhub Inc. (NYSE: GRUB), a leading online and mobile food-ordering and delivery marketplace, recently announced financial results for the second quarter ended June 30, 2020 and also posted a letter to shareholders on its investor relations website. The Company reported revenues of $459 million, which is a 41% year-over-year increase from $325 million in the same period last year. Gross Food Sales grew 59% year over year to $2.3 billion, up from $1.5 billion in the same period last year.

"Our singular focus for the second quarter was to support our restaurant partners as much as possible in their time of need. With a little help from increased demand, we are proud to announce we were able to spend approximately $100 million supporting and keeping restaurants, drivers and diners safe during these difficult times," said Matt Maloney, Grubhub founder and CEO. "In June, we announced our acquisition by Just Eat Takeaway.com which will create the largest and only profitable online food marketplace outside of China. We are excited to join forces with a team that has demonstrated it can grow this business sustainably on a global basis and who is also focused on capturing a disproportionate share of the profitable growth in the U.S. going forward."

Brinker International, Inc. (NYSE: EAT) recently provided a business update related to the first quarter of fiscal 2021 and announced results for the fourth quarter and fiscal year 2020 ended June 24, 2020.  "Our continued strategic focus on value, off-premise, digital and scale is allowing us to successfully navigate through the pandemic," said Wyman Roberts, Chief Executive Officer and President of Brinker International. "Leaning into these existing strategies with a clear focus and continually prioritizing the safety of our Team Members and Guests has allowed us to accelerate our performance and deliver industry leading results."

Fiscal 2021 First Quarter-to-Date Highlights were: During the first quarter of fiscal 2021 Chili's and Maggiano's continue to operate with reduced dining room capacities due to state and local mandates related to COVID-19. The following represents a business update from our first period of fiscal 2021 ended July 29, 2020, related to Company-owned restaurants; As of July 29, 2020, there were 885 Chili's and 52 Maggiano's Company-owned restaurants with dining rooms or patios open, representing 84.0% of total Company-owned restaurants. Capacities are limited in accordance with state and local mandates; It's Just Wings, a virtual brand offering through our partnership with Doordash, launched nationally in 1,050 of our Company-owned restaurants on June 23, 2020. Its Just Wings sales are included in comparable restaurant sales for restaurants operating the virtual brand; and Brinker had total liquidity of $576.2 million as of July 29, 2020.

Uber Technologies, Inc. (NYSE: UBER) and Postmates Inc. recently announced that they have reached a definitive agreement under which Uber will acquire Postmates for approximately $2.65 billion in an all-stock transaction.  This transaction brings together Uber's global Rides and Eats platform with Postmates' distinctive delivery business in the U.S. Postmates is highly complementary to Uber Eats, with differentiated geographic focus areas and customer demographics, and Postmates' strong relationships with small- and medium-sized restaurants, particularly local favorites that draw customers to the Postmates brand. Additionally, Postmates has been an early pioneer of "delivery-as-a-service," which complements Uber's growing efforts in the delivery of groceries, essentials, and other goods.

For restaurants and merchants, Postmates and Uber Eats will together offer more tools and technology to more easily and cost-effectively connect with a bigger consumer base. Consumers will benefit from expanded choice across a wider range of restaurants and other merchants. And delivery people will enjoy more opportunities to earn income, with increased batching of orders to make better use of their time. Following the closing of the transaction, Uber intends to keep the consumer-facing Postmates app running separately, supported by a more efficient, combined merchant and delivery network.

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