This year may go down as the year of the ghost kitchen, but 2022 is looking pretty ghostly, too. As evidence, ghost-kitchen operator Kitchen United opened its ninth location in Santa Monica, Calif., and inked a new national deal with Fuku.
Kitchen United CEO Michael Montagano said its latest shared-kitchen facility embodies the company’s ghost kitchen thesis of operating not in some light industrial wasteland, but alongside other restaurants, retail and residential spaces. There are few places as dense with all three than the new location at Third Street Promenade, a stone’s throw from the iconic Santa Monica Boulevard.
“It’s in one of the most marquee trade areas in the country,” Montagano added. “It definitely fits our mantra of being where people live and work. Our focus is obviously on capturing off-premises [volume] in the trade area but also walk-up traffic, and there’s an incredible amount of walk-up traffic.”
While it’s only been a week, he said there is also good traction from nearby businesses looking to cater as nearby office workers return. At the heart is the ability to mix and match from various restaurants and retail goods all on the same ticket. That’s been another mantra for the company for years, and it’s a major part of the branding here, too.
“It continues to make a very meaningful part of our underlying order volume. Well over half of our orders come from a mix, and our average order volume tends to be higher, which makes the economics of delivery work even better for our customers,” said Montagano.
As far as the facility, the ninth for the company, things are starting to look pretty standard. The company inked a deal with Kroger over the summer for small-format, in grocery-locations, but the Santa Monica location took over a food hall to stamp out another large format, 10- to 14-kitchen location.
There’s a central conveyor belt to ferry meals from kitchens to the front of house. Out front there are kiosks, an attendant and retail items to compliment the meals coming out of the kitchens. A week in, there are four kitchens operating there along with Mix Snacks, the company’s retail goods outlet. In the mix are ghost-kitchen experts Wao Bao, Camile Thai, Continental Empanadas and Fuku, with which the company just inked a national expansion deal.
For Fuku CEO Alex Munoz-Suarez, the partnership is a bit of a homecoming. Fuku formerly operated a location at the same address.
“Kitchen United shares our passion for executing a fast-to-market strategy while maintaining incredibly high brand and kitchen operations standards,” said Munoz-Suarez. “Through this partnership, we get to serve our Santa Monica fans once again and create countless new fans around the country.”
Fuku, for those unfamiliar, is David Chang’s answer to big chicken. The celebrated New York chef created the core chicken “sando” as a secret sandwich at his Momofuku Noodle Bar. Now, it’s the approachable entry point to the sweeping David Chang food empire. Munoz-Suarez took over as CEO in 2019 to push the brand out nationally and expand David Chang’s overall brand recognition.
“Even pre pandemic, myself and my leadership team we always sort of had the thesis of can we push the brand and David’s name in markets around the country?” asked Munoz-Suarez. “What happened is we’ve been able to test it in some markets and the response is quite robust, the appetite and hype for David and the Fuku brand has been quite strong. We’re excited to continue that with Kitchen United.”
He said the brand has done a lot of testing in the ghost kitchen space and, if anything, the demand has been overwhelming. Reports of long waits, messed up orders and other issues have him moving slowly on the new location. One key consideration, he suggested, is not letting orders get ahead of driver capacity.
“In the early launches, and the hype that goes along with Fuku, you are going to run into issues with the DSPs and the lack of drivers, no matter how quick you can cook food. We had markets where we could have cooked 150 to 200 deliveries in an hour, but didn’t have enough drivers,” said Munoz-Suarez.
He said a nice trick to the operating system behind the several Kitchen United facilities Fuku operates out of is the ability to throttle demand as things get started.
“I think the perfect example is what we’re doing with Michael and his team to relaunch Fuku in Santa Monica: coming out of the gates quite slowly,” said Munoz-Suarez. “Turning those on little by little allows the flowthrough of orders as you continue to train people to minimize any real bottlenecks as it relates to new people cooking assembling and giving that a little time to organically grow.”
The tactics are working to keep orders flowing in parallel with drivers and the grand strategy is clicking, too, namely getting the brand to markets where David Chang’s many fans live. Munoz-Suarez looks for college-educated urban or high-growth trade areas. Those are popular markets to be sure, but because of the foodie halo around the brand, he can go into a market via a ghost kitchen and still blow the proverbial doors off without a traditional brick-and-mortar outlet—the dream for national ghost kitchen operators with a strong brand. He has some big goals to push Fuku further in 2022.
“I’d like to get to 60 to 100 kitchens in the next 12 months. A lot of that will be in conjunction with Kitchen United, but we also signed on with markets where Kitchen United doesn’t have a presence,” said Munoz-Suarez.
For Kitchen United, building kitchens for brands like Fuku is the No. 1 goal. It’ll be a combination of the now-traditional facility and grocery facilities.
“I’m most excited about expansion,” said Montagano. “We’ve been more measured, our business model has proven to, at least to me, be not just successful but the leading business model in the space. This will be a big year of growth in particularly with our partnerships with Kroger in settings where we’ll have our own stores and further expansion in Texas and New York.”
While 2021 may be the year of ghost kitchens reaching the mainstream, 2022 may be a year of even more rapid growth.
