Let’s skip the fluff and avoid a bunch of “new normal” and “COVID changed everything” cliches. It’s clear as day, especially when it comes to service industries like food and beverage, events, or hospitality. There’s a more pressing discussion that we should be having.
Where do we go from here?
The needs are pretty clear. To stay viable going forward, kitchen operators need new and sustainable ways to generate revenue. Out of work culinary professionals need more opportunities with low barriers of entry. Individually, we are looking at two substantial challenges. However, if you connect the dots, perhaps they each provide the solution the other is looking for.
Whether it’s a local restaurant or an international hotel brand, everyone has been forced to adapt on the fly. While many have found ways to make it work, most of these efforts are just short sighted bandaids.
“Third-Party Delivery Services”, such as Uber Eats, have satisfied the spike in demand for convenient delivery options but the model is a disaster. No one really wins. Doordash, Grubhub, Postmates…none of these companies are actually profitable, despite taking 30% of every delivery sale that they facilitate.
It may appear that restaurant operators benefit but that 30% fee is coming from a tiny slice of profit margin pie. Traditional menus are not designed to be profitable when you take 30% right off the top. In some instances, this causes an order with a razor thin profit margin to become a loss.
As for the consumer? They are certainly paying for convenience. Users regularly note how taxes, fees, and tip end up doubling their food subtotal.
This adaptation isn’t sustainable for restaurants. It’s an example of a change made in order to survive. We need to think beyond abrupt adaptation and create new ways for the service industries to thrive!
Innovation comes from times like these. The same conditions that force quick-fix adaptations also spur more creative ideas that go on to become the new standards.
New concepts are getting food to consumers more efficiently while leveraging the market demand that exists on delivery apps. REEF Kitchens resemble an RV/Food Truck hybrid that can function either as a traditional food truck or as a pickup location for online orders, acting as a “ghost kitchen”.
Travis Kalanick, the co-founder and former CEO of Uber, has his own spin. CloudKitchens essentially takes an urban warehouse and segments it into dozens of delivery-only kitchens. An operator can rent a kitchen bay to broaden their delivery distribution while avoiding the traditional overhead of building a new free-standing restaurant.
Each is a step in the right direction, as they provide a wider variety of delivery options for consumers. For national brands, it is a great way to expand their reach. Unfortunately, neither concept has addressed the real challenges facing the industry.
How is your favorite local mom-and-pop restaurant doing these days?
Restaurants are failing, leaving kitchens empty and culinary professionals out of work. A survey released by the National Restaurant Association in September showed that nearly 1 in 6 restaurants is closed either permanently or long-term. Nearly 3 million employees were out of work and by the end of the year, the industry is projecting a loss of $240 billion in sales.
So…where do we go from here?
The initial investment that comes along with starting a new restaurant is insurmountable for most culinary professionals. Even CloudKitchens requires a food entrepreneur to pay for their own equipment, as well as a bill that exceeds $5,000/mo. How do you make that work without having a bucket of money to burn before you ever make a sale?
Can a sharing economy work for commercial kitchens and culinary professionals?
Airbnb made it work for homes. Turo has done the same for cars. Instead of building new kitchens, why don’t we more efficiently use the kitchens that already exist? Early attempts to connect food entrepreneurs with “shared kitchens” are out there.
The Kitchen Door is a basic listing site that allows you to search for shared kitchens. Most results are your traditional commissary kitchens. Unfortunately, several listings lead to dead ends and it’s hard to say The Kitchen Door does anything more than a simple Google search would.
Kitch and Cook it Here go as far as to compare themselves as the Airbnb/matchmaker for food businesses. In reality, their current form is a more robust listing site that points you in the right direction with less search results but more reliability than The Kitchen Door.
Regardless of which route you take, it’s still on the food entrepreneur to directly contact a kitchen, determine if the kitchen meets their availability, equipment, and storage needs…and then negotiate a price.
As for the shared kitchen operators, listing sites are an easy way to toss out a line and potentially generate a lead. Still, shared kitchens have to manually pre-screen leads for proper compliance and insurance, as each state has its own requirements for renting a commercial kitchen.
Each of these individual efforts are the ingredients that can form a new recipe for success.
Ingredients offers a Shared Kitchen Management platform that allows kitchen operators to passively monetize their kitchen while it is not being used. Various automated features, as well as a client management team, create a new revenue stream without disrupting day-to-day operations. Shared kitchen operators can sleep easy knowing that each lead has been pre-screened for proper compliance and insurance.
Food entrepreneurs can access kitchens-on-demand, reserving and paying for space, storage, and equipment on the spot. Onboarding specialists work with members to ensure that they are kitchen-ready, assisting with barriers that may be holding their food business back. Ingredients members also have the opportunity to receive discounted kitchen rates, as well as additional business services.
If you’d like to learn more, visit Ingredients.Kitchen
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