The office cafeteria at the Kraft Heinz Co.'s Canadian headquarters is zombie-apocalypse quiet, but back in the kitchen, the grill is sizzling. Cook Alon Chitiz is flipping burgers, while nearby an iPad keeps track of the SkipTheDishes driver coming to pick up an order.
The customer waiting for their lunch delivery from Kitchen 57 may not know it is coming from this concrete office building in Toronto. As most of the 200 employees who would typically come through the cafeteria each day are now working from home, this facility has found a side hustle as a “ghost kitchen." That’s a snazzy term (see also “dark kitchen,” “cloud kitchen,” “virtual kitchen”) for a simple concept: a restaurant kitchen focused on delivery.
But why is a consumer packaged-goods company suddenly in the restaurant business? For Kraft Heinz, it’s partly market research; it can test recipes to gauge customer tastes in real time. The company also has a large foodservice business, selling products to restaurants, and wants to understand how the industry is changing.
Even before the pandemic reoriented Canadians' eating habits, food delivery was on the rise. Sales reached $4.1-billion in Canada in 2019, up 85 per cent from just three years earlier, according to Ipsos Canada. Third-party services such as Uber Eats and others account for a third of Canada’s delivery traffic, processing 81.2 million orders in the 12 months leading up to August, 2020. Kraft Heinz wants to understand how the needs of foodservice companies focused on delivery might differ from those of other restaurant owners.
“There is no back to normal. Whatever the world is going to be, we’re going to see consumption at home higher than previously, and people will keep looking for convenience,” said Bruno Keller, the president of Kraft Heinz Canada. “Ghost kitchens, food delivery at home, is something that’s here to stay.”
The number of ghost kitchens has been growing in recent years, and they can serve different purposes. For example, an entrepreneur may not have the capital to open a full restaurant but might see the potential of a slimmer operation that only exists on delivery platforms such as Uber Eats, DoorDash, SkipTheDishes or Foodora. Or a well-known restaurant may want to deliver to a new area without investing in a second or third location; a satellite ghost kitchen does the trick. In the spring, DoorDash partnered with Joey Restaurants to rent a food truck in Brampton, Ont., which made takeout possible during the pandemic but also served as a delivery hub.
A restaurant might also test delivery under a different name – as the U.S. chain Chili’s has done, selling chicken wings online under the brand Just Wings. On Wednesday, the owner of fast-food chain Mad Radish announced the restaurants will begin selling items such as pizzas and burritos for takeout at its locations in Toronto and Ottawa but would advertise those items on delivery services under two new brands, Luisa’s Burritos & Bowls and Revival Pizza.
Recipe Unlimited Corp. opened its first delivery-tailored kitchen in Toronto in the spring. Ultimate Kitchens lets customers choose from menus at the company’s different restaurants, including Harvey’s, Swiss Chalet and East Side Mario’s, in a single order.
Earlier this year, Canadian startup Kitchen Hub opened a food hall dedicated to delivery, providing turn-key kitchen space for different restaurant brands. Toronto-based Dekotas Group started a business called Ghost Kitchens in 2014 and has grown to 20 locations across Canada, delivering on platforms such as Uber Eats, SkipTheDishes and DoorDash. Ghost Kitchens delivers well-known fast-food brands such as Quizno’s and Cinnabon, but also packaged goods such as Ben & Jerry’s ice cream and Red Bull energy drinks. California-based DoorDash opened its own shared delivery kitchen for multiple restaurants in Redwood City, Calif., about a year ago.
“We have teams actively solving problems for [restaurant] partners. … If a food truck solves the problem, we’ll build that. If a dark kitchen solves it, we’ll build that business,” said Toby Espinosa, DoorDash vice-president of global business development. “This whole phenomenon has helped us accelerate the relationships we’ve been building in the last seven years.”
Only a couple of years ago, third-party app companies were expecting delivery to be 2 per cent of the overall restaurant business; now they expect it to grow to as much as 10 per cent, said SkipTheDishes managing director for Canada Howard Migdal.
“Already prepandemic, people were trying to get into the [delivery], to capitalize on a growing industry," he said. “The pandemic has accelerated that.”
Kraft Heinz partnered with SkipThe Dishes on its delivery business, which opened in mid-July in Toronto and in Montreal in late August under the name Cuisine 5à7. The names allude to the “57 varieties” slogan on Heinz ketchup bottles. The company rented cafeteria space in a former Provigo corporate office building in Montreal from foodservice-facility management company Sodexo, which also owns the cafeteria space in the Toronto headquarters.
This kind of research is important as the industry changes dramatically, Kraft Heinz corporate chef Thomas Heitz said. “What we knew six months ago is constantly evolving."
Kraft Heinz is in the midst of a turnaround plan to revive consumer interest, which will see it update many of its products. The company plans to cut US$2-billion in costs over the next five years and boost its advertising and marketing spending. At a recent investor day, U.S. zone president Carlos Abrams-Rivera praised the Canadian ghost kitchen project for giving the company “direct and immediate consumer feedback [and] a much more agile way to source new ideas.”
The Toronto location sells burgers and fried chicken sandwiches, while the Montreal menu has pizzas and deli sandwiches. Both sell items such as fried mac and cheese “bites” made with Kraft Dinner and salads served with Kraft Heinz-owned Renée’s dressings.
It’s not a high-volume business; the Toronto location has a maximum cap of 36 orders a day.
“We’re not looking to make money; we’re looking to learn,” Mr. Heitz said.
Even as the cafeteria business picks up once people are able to return to work, there is room to do both, he said. Because meals aren’t made to order, the busiest time is a prep period in the morning, meaning staff can handle delivery orders during the lunch rush.
“We’re actively looking for more locations,” Mr. Heitz said.
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