With new funding, the ghost kitchen operator is looking to accelerate growth in existing markets and build partnerships with some of the largest companies in the world.
For CEO Michael Montagano, the best part of Kitchen United's recent $100 million funding round is the power players behind the investment.
Namely, Restaurant Brands International, parent of Burger King, Popeyes, Firehouse Subs, and Tim Hortons; Kroger, the largest grocer in the U.S.; and Circle K, the second-biggest convenience store chain in the world.
“They know this industry, and they have recognized that there is value within this strategy," Montagano says. "That’s really exciting to me. I’d be excited by any financing, but this particular financing is more unique for that reason. The best part is the validation coming from people that really understand the industry.”
The CEO says newly raised funds indicate interest in how Kitchen United’s physical structures and proprietary technology work symbiotically. The ghost kitchen operator allows customers to order from multiple restaurants on the same ticket, which has piqued the interest of partner companies like Popeyes, Panera, Dog Haus, Chick-fil-A, and Portillo’s. The technology also takes into account firing times of each restaurant, to ensure hot and cold foods keep their temperature for guests.
Montagano says Kitchen United's services are particularly useful to restaurants struggling with the influx of third-party aggregators.
“You have people paying 40 percent in transaction fees, including taxes and delivery fees,” he says. “Our vision is asking how we solve that.”
Kitchen United operates about 200 ghost kitchens across 20 regions, and the $100 million will help accelerate that figure. That includes the company's own four-wall centers, more stations inside Kroger shopping centers, and other future partnerships. One of those upcoming ventures will be with Circle K, which has more than 11,300 locations across the world—giving Kitchen United enormous off-premises whitespace.
The brand already has a presence in major markets like Los Angeles, Chicago, New York, Dallas, Houston, and Phoenix, and the plan is to build more in these areas. New regions are on the horizon, as well, like Miami and smaller markets in Ohio and Indiana.
“Our ethos is still very methodical,” the CEO says. “We took a different approach than others in the market, and now we feel like we are in a position where we are able to grow.”
A cornerstone of Kitchen United’s success has been its relationship with enterprise and mid-market level restaurant brands, Montagano says. Expect that to continue as the company ramps up expansion.
“We have found great success with many of those brands in our centers over the last four years, and our expansion strategy continues to be in tandem with areas where they would like to be,” he says.
The news comes at a time when other companies in the food-tech space have been hit with a series of layoffs, including REEF Kitchens, ChowNow, and Lunchbox. Kitchen United's latest round more than doubled its previous total. To date, the off-premises operator has raised around $175 million.
Montagano says the investment speaks to the legitimacy of Kitchen United's vision, which is to build a foundation predicated on positive economics and a strong value proposition. The CEO adds that fundraising showcases the necessity of cooperation between brands. Instead of seeking to disrupt part of the industry, Kitchen United is focused on mutually beneficial relationships.
“To be successful in our industry, it takes partnerships with companies large and small to build trust and value for each other,” he says. “Our vision has been not to come in and disrupt restaurants or grocery or convenience or the other aspects of the industry that maybe others focus on, but really enable these market incumbents to evolve to the changing consumer preferences in the market. And we want to be their partner along the way.”
“ ... We took our time in the beginning to put an infrastructure in place to ensure that we had that staying power well into the future and that the value we're adding is very, very clear,” he continues.