Photo: C3/Krispy Rice
Can ghost kitchens inject new life into mall food courts?
Brookfield Asset Management and Simon Property Group have both become investors in C3 (Creating Culinary Communities), a food tech platform aiming to lease 1,000 “ghost-kitchen” locations to malls and hotels across the country by year end.
C3, led by former hotelier Sam Nazarian, last week announced an $80 million funding round co-led by Brookfield and REEF Technology, a SoftBank-backed operator of food delivery kitchens. The funding follows a round led by Simon Property and Accor Hotels.
Ghost kitchens enable a single location to house food preparation for multiple restaurant concepts to maximize efficiency and profitability. The concept took off during the pandemic as indoor dining faced restrictions and demand for delivery soared.
C3 has more than 40 digital take-out brands, including Umami Burger, Krispy Rice and Sam’s Crispy Chicken. C3’s Citizens Go app allows consumers to place a single delivery order for items across seven to 10 virtual restaurant brands. C3 plans to open larger food hall locations, in part, to support the branding of its virtual restaurants.
A ghost kitchen can help a hotel expand its room service options. Ghost kitchens also promise, however, to shore up the profitability of mall food courts, which often face rapid turnover of banners as trends change. Operators may also see an opportunity to explore off-premise delivery, utilizing restaurant staff during downtime periods when shoppers take a break.
“Ultimately, consumers need to be able to ‘touch’ a digital concept for it to last, and C3 has found a way to convert their extremely successful digital brands into lifestyle experiences,” Kevin McCrain, managing director, real estate at Brookfield, said in a statement.
Westfield Valley Fair in Santa Clara, CA, in February added ghost kitchen technology to its food court in a partnership with Kitchen United. A conveyor belt transports orders within three minutes from the second floor food court to delivery drivers on the first floor.
Kate Diefenderfer, marketing director of marketing for Westfield Valley Fair, said in a statement, “With the flexibility to place one order with multiple restaurants simultaneously, regardless of location, restaurants have the ability to capitalize on the demand for food to-go, while our guests receive a customized dining experience.”
- C3, the Fastest-Growing Global Food Tech Platform Secures New Institutional Funding for Expansion from Preeminent Global Investors – C3/PRNewswire
- Shopping-Mall Giants Back Expanded Delivery-Only ‘Ghost Kitchens’ in Food Courts – The Wall Street Journal
- Brookfield Bets on Ghost Kitchens to Help Save Malls – Commercial Observer
- Ghost Kitchens Find a Home in Empty Hotels – The New York Times
- Westfield Valley Fair Joins Kitchen United to Unlock New Off Premise Restaurant Experience – Westfield Valley Fair/Business Wire
- Kitchen United Hits On A New Ghost Kitchen Format: The Mall – Restaurant Business
- Are the benefits of ghost kitchens more spectral than real? – RetailWire
- Chipotle’s expansion plans include adding ‘digital-only’ restaurants to its menu – RetailWire
- Are cloud kitchens the next evolution of food delivery? – RetailWire
Discussion Questions
DISCUSSION QUESTIONS: Can ghost kitchens recast the food court opportunity for malls? Do you still see strong growth opportunities post-pandemic for ghost kitchens?
Poll
Loading …BrainTrust
Jeff Sward
Founding Partner, Merchandising Metrics
Rachelle King
Retail Industry Thought Leader
Ghost kitchens have their place, but as the pandemic subsidies (notwithstanding the new variants and labor shortages), I think consumers are craving dining experiences of all varieties. I think that we’ll see a strong shift back to in-restaurant dining, but ghost kitchens and the veritable cornucopia of take out/home dining options we now enjoy are also here to stay.
With the growth of restaurant online ordering and delivery during the pandemic, the long-term demand for restaurant delivery services has increased. Malls that have vacant space can create multi-use ghost kitchens to generate incremental revenues. Food delivery appears to be a long-term growth trend and finding clever ways to make the production and delivery profitable will make it more enticing for restaurant chains.
I’m confused. Before the pandemic, food halls (which are the exact opposite) were becoming crazy popular. And I like them a lot. As Mark said, ghost kitchens have their place, but they don’t provide a lot of “experience.”
That’s why food halls are cool — .multiple experiences housed under one roof. So my answer is, stick to food halls.
How about a food hall served by a ghost kitchen, where the independents share resources?
I agree DeAnn. I see this as looking exactly the same as it is today — food halls in malls — but instead of having 10 restaurants, there might be 10 ordering kiosks (mobile ordering is even better), where customers could place their orders and the food would be delivered to their table in as much the same way as if it was delivered from their attached kitchen, only that it would have been delivered from a ghost kitchen. Of course, timing is important and so also the presentation (redesigned packaging that can unwrap into a plate).
Ghost kitchens can absolutely be part of the revitalization of the mall. I have long thought that the food court would benefit from behaving as though it were a specialty store, with a variety of offerings that changed with the seasons. The highly predictable burgers and sub sandwiches and donuts have a role. But if a ghost kitchen can provide an ongoing revolving menu of some sort it would add a dimension of newness and freshness to the food court. People shop specialty stores for the ongoing fresh flow of product. A food court can behave in the exact same manner and help provide one more reason to see what’s new at the mall this week.
I read this story as being about mall space being re-purposed for non-retail usage. Yes it is supporting retail, but these kitchens are not attracting customers to the mall, and in fact are really adding to the narrative that the local mall as a customer-centric shopping center is dying. When a mall becomes a fulfillment center, in my thinking, it’s no longer a mall.
Ghost kitchens recast the food court. I think they would attract traffic, and traffic creates sales — so what does that result in? Happy customers and happy retailers. What else should we do?
Ghost kitchens recast the opportunity for malls, not just with respect to the food court. Overall, malls are going to start looking different in order to evolve with shifting consumer shopping behaviors. This is a great solution to filling and updating the space, and we’ll continue to see innovative updates like this across all categories within the mall.
I see this as an interesting but rather limited opportunity. Food halls can certainly bring new life (and traffic!) to what is an overwhelmingly unremarkable part of most regional malls. Yet there are a lot of complications. The first is that the capital cost to retrofit is significant, requiring substantial food hall and delivery volume to make it work. Second, the logistics (and potentially tenant and zoning issues) of running a high volume ghost kitchen (and the endless stream of delivery cars) is not trivial. The centers that make the best food hall locations are likely the ones where this will be the biggest obstacle. Third, home delivery growth is starting to moderate at the same time that the overall economics of it look very, very challenging. Consolidating production helps the economics for delivery companies, but they have many other issues to ever make decent money. Bottom line is that costs are almost certain to go up, which will also tamp down demand. I see mall based ghost kitchens/food halls making sense in dozens of malls, not hundreds.
Shopping centers have a unique opportunity to pair the benefits of ghost kitchens with the location and experiential benefits of the community mall. It’s also an opportunity to improve the rather lackluster dining experience of the typical mall. Typically food courts have consisted of individual and disconnected fast food chains because they tend to be the companies with the credit to secure bank loans, but this doesn’t create a very interesting food hall experience. By leveraging ghost kitchens, malls can offer a more cost effective kitchen service that can serve a wider range of food purveyors, including local independents. This in turn gives customers a much more dynamic and interesting food hall experience that becomes destination in its own right that also folds in omnichannel options like take out and home delivery. A win/win all around.
On a statistically irrelevant sampling of one street in Portland — dining out in particular with large street-side restaurant extensions is a huge hit, and our local restaurants are seating and feeding a lot more people than they could inside pre-pandemic. And all that extra seating comes rent free which hopefully is allowing them to recover lost revenue/spent capital during the pandemic. Come November weather may send diners back to normal indoor dining, but even so I don’t see how mall based ghost kitchens can play with this trend. If you are going to do a ghost kitchen there are easier venues with better access to bringing ingredients in and cooked food out than a food court, and as others have noted ghost kitchens do nothing to increase footfall in malls.
I’m not sure a ghost kitchen will drive traffic to the mall as consumers have now become used to home food delivery — trekking to a mall just to sit in a food court seems like a stretch. The more likely scenario would be more opportunity for ghost kitchens as they would no longer need to rely solely on digital promotion and be able to take advantage of mall foot traffic.
It’s doubtful that the food court alone will revamp the mall. If there is no traffic in the mall, then there is little or no traffic in the food court. Ghost kitchens can certainly raise the appeal of food options in food courts, many of which seem tired and generic. Ghost kitchens can certainly recast this light. But the malls still need to do the heavy lifting to bring in majority of the traffic. Once consumers realize the array (and quality) of options they can get from ghost kitchens, it’s likely ghost kitchens will see continued growth and innovation post-pandemic.