Ghost kitchens are the next capital markets hot play with strong retail investment interest and institutional following and international expansion becomes the key factor for estimating scale of potential growth
Ghost kitchens are all the rave now in the post-pandemic recovering markets. As a neo-economy revamp of the restaurant business and eateries, ghost kitchens provide a revolutionary approach to culinary industries on a global basis. As all new hot trends usually go, this one is no exception in attracting the top of the investment players with stocks and valuations ramping up in-line with financial performance and stellar revenue growth.
Travis Kalanick, the former UBER CEO is investing into the space and promoting Cloud Kitchens globally. Google venture arm backs Kitchen United with massive rounds of finance and Amazon’s Deliveroo aims to grab serious market share in the world.
They all have different angles around the business, either focusing on the real-estate facilitation (‘culinary WeWork’-esq) or delivery as a service, or simply placing the tech and ordering mobile app as a key value proposition. But all players aim unanimously and ubiquitously to retire the legacy restaurant model as we know it.
JustKitchen (TSXV:JK.V) is a newly listed public company on the Toronto Stock Exchange, which despite of its unassuming name, is poised to reinvent the food delivery market. It operates on a unique ‘hub’ and ‘spoke’ model where the food is prepared in the hub, sent to the spokes, where the final preparation and packing is done before delivery takes place to the end-consumer.
The beauty is in their busines model. Each hub that services circa 35 spokes generates a revenue run-rate of ~$50 million at a ~20% EBITA. This is a powerful model if scaled properly. The company has grown rapidly in Taiwan and currently announced its expansion into Hong Kong with plans for upcoming further expansion into Singapore, the Philippines and the United States. If JustKitchen meet these goals for global ‘pinning’, they are heading towards an exponential revenues growth within the next 18 – 24 months.
While in-restaurant dining numbers have stayed flat in recent years, digital orders have risen by 20% a year. The food delivery industry, which JustKitchen plays in, is expected to be worth $24 billion with a growing number of customers preferring to eat in the comfort of their own homes without having to wait in line for a table or for their food to arrive.
One thing is certain: this is a global play. Companies with no international growth plans will not survive. JustKitchen have proven to be an aggressive contender in this arena with their HK expansion and expected entry into the U.S. Quality of menu, and operating costs reduction via fewer employees and less square footage, are all crucial aspects of this busines of course, but it is the scale and ability to scale that will make the difference between the ultimate kings and the losing wannabees of this arena.