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DoorDash expands ‘ghost kitchen’ concept using Bay Area restaurants

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DoorDash (DASH) is giving the delivery-only food service model a boost, using a version it opened nearly two years ago in California.

This week, the food delivery company opened its second DoorDash Kitchens inside a local mall in San Jose, California.

Under one roof, six “ghost kitchen” restaurants — including Aria Korean Street Food, Canter's Deli, Milk Bar and Curry Up Now, The Melt Express, and YiFang Taiwan Fruit Tea — will be available for delivery and pickup services through DoorDash’s app.

Ghost kitchens, a modern dining concept that’s been embraced as a low operating cost option for fledgling food service entrepreneurs, has opened up additional options for existing local and national restaurants hammered by COVID-19 lockdowns. 

Restaurants license their brands to DoorDash, then work with the company to optimize their menu. The company takes on the full costs of operations, but shares a portion of the revenue with the restaurants.

DoorDash’s new ghost kitchen differs from the first one, which opened two years ago, in the San Francisco Bay Area. Each kitchen was staffed by employees of the brand using it. The kitchens themselves were separate, and were designed in collaboration with the occupants.

DoorDash's ghost kitchen in a San Jose Mall.
DoorDash's ghost kitchen in a San Jose Mall.

Yet along came the COVID-19 outbreak, which decimated the food service industry with capacity restrictions, worker shortages and supply chain slowdowns. DoorDash found that businesses wanted more operational support when entering new markets.

“I literally wanted to expand but rent is very high, the labor costs keep going up, food costs are crazy right now,” Charlie Kim, owner of San Francisco-based Aria Korean Street Food, told Yahoo Finance in an interview. “I got this opportunity so I was like, 'I want to do it.'”

It’s still not clear what the revenue split is, but a spokesperson for DoorDash said that the company is working “with restaurants to figure out what works for their business.”

While the previous ghost kitchen model worked, the San Jose location is changing it up by operating from one large kitchen that is used to cook for all six brands. It’s built inside a closed California Pizza Kitchen in the Westfield Oakridge mall. The pop-up kitchen will be open until November.

DoorDash partnered with culinary operator A La Couch to hire cooking staff, and prepare the food on the company’s behalf.

The company learned a lot more about what goes into the day to day operations of a restaurant while developing their new channel. But DoorDash said it's not trying to become a restaurant operator.

“This is our first time executing full end-to-end operations on behalf of our partners, and it is a continual improvement process,” Ruth Isenstadt, director of DoorDash Kitchens, in a statement.

“For example, when we first launched one of the partners in San Jose we knew right away we needed to improve customer ratings,” she added.

First, DoorDash had to hire a culinary team, now led by Chef Carl Bertka, formerly of Ruby Tuesday and Gordon Ramsay at the London. Then they worked with its partners to make sure the recipes could be replicated.

With familiar issues arising due to too few staff, DoorDash has had to offer competitive wages to attract quality workers. Yet, the company created more than 30 jobs across both the Redwood and the San Jose location.

DoorDash plans to expand this new revenue- ghost-kitchen model elsewhere but for now, it’s focused on its first set of partners.

“Our collective priority is to ensure that we have the best people executing the menu and vision set out by our partners to help them grow their businesses,” Bertka told Yahoo Finance.

“We have partnered closely with each partner along the way in order to deliver a high brand quality out of our kitchens,” he added.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv

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