Throughout the worst days of the COVID-19 pandemic, many impartial 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 keeping with a report from Insider, some CloudKitchen customers are suing the company for failing to meet its obligations — and plenty of, in keeping with sources, are fleeing it in droves.
When it launched in 2016, CloudKitchens promised a novel alternative for impartial restaurant house owners: It will remodel warehouse areas into “cloud kitchens,” or eating places that solely supplied supply and pick-up, at a a lot decrease value than a conventional area with a eating room. Based on the Insider report, although, in 2022, many of those kitchens lacked basic sanitary facilities like bathrooms and working sinks, and plenty of had been plagued with technical glitches that made it troublesome for potential clients 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 recreation. Based on filings with the Harris County district court docket, the worker additionally vandalized the house owners’ two automobiles, 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 instructed Insider that hire for every of those kitchens ranges from $3,500 to $10,000 per 30 days, relying on location. CloudKitchens additionally takes a 3 % minimize from each single order, which means that many house owners discovered themselves unable to show a revenue even when they had been in a position to overcome the security and sanitation points. In the meantime, CloudKitchens is valued at more 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 latest months. In Might, Insider reported that its competitor, Reef, was being sued by a vendor for more than $3.5 million in unpaid invoices. It’s additionally confronted related points with sanitation and security — a 2021 report from Restaurant Dive discovered that a third of Reef’s trucks in California alone had been cited for “high-level health and safety infractions.” In Might, the company laid off 5 percent of its workforce, citing “macroeconomic challenges.”
Now that issues within the eating world are somewhat extra steady, it’s turning into abundantly clear that ghost kitchens are a pretty terrible addition to the restaurant landscape. They’re not good for workers, they’re not good for restaurateurs, and infrequently, the food itself is pretty terrible. Proper now, it looks as if CEOs like Kalanick are the one ones benefiting from the “way forward for eating.”