Tag: ghost kitchens

• An interactive map of industrial space in southern California

  Here is an interactive map, created by the Robert Redford Conservancy for Southern California Sustainability, showing the approximately 1,573,777,062 square feet of industrial space that can be found in Los Angeles, Riverside, and San Bernardino.

  The map allows you to zoom in on specific parcels to see things like site area, warehouse size, and year built. You can also play around with different map radii to create a rollup of warehouse space within a specific area, which includes an estimate of daily truck traffic and CO2 produced.

  The Guardian also used this data to create the following chart, which is helpful in showing the dominance of certain cities, as well as how much of this industrial space has been built since 2010:

  

  The point of this interactive map, this data, and the accompanying articles is to highlight just how disruptive all of this new industrial space is to these southern California communities and to the environment in general. But I think it is also an important reminder that, whether we like it or not, our online activities have real-world physical implications.

  Online shopping requires warehouses and logistics. Online food delivery requires (ghost) kitchens. And online activity, in general, requires the storage of unprecedented amounts of data. All of these “back-end spaces” take up room, even if they’re mostly easy to ignore when we’re just looking at our phones.

  This is our new “phygital” world and, yes, it is changing the landscape of our cities. Now our task is to figure out how to do this in a way that respects communities and respects the environment.

  2023.01.06

• TikTok wants to open warehouses

  Last week, Axios revealed that TikTok is looking to hire a bunch of people that can help the company build out fulfillment warehouses and an entire e-commerce supply chain system for its users. All of this was discovered through various job listings that the company has posted to LinkedIn.

  Broadly speaking, this is I think interesting for two reasons. Firstly, it is an atypical approach compared to other social networks. Instagram allows people to sell stuff via its platform, but it’s done through an asset-light approach. What TikTok is doing is more Amazon meets social. (Though this is not my area of expertise and I’m going to need someone like Ben Thompson to do a deep dive into TikTok’s business model.)

  Secondly, I like to think about the physical spaces that service our online activities and what any changes might mean for our cities. Today if you order something from UberEats, it may come to you from a ghost kitchen that is servicing multiple restaurant brands and various food apps, and has no front-of-house operations. Tomorrow if you order something you see on TikTok, it may come to you from one of their warehouses.

  This is not any different than how Amazon works today, except for the fact that TikTok has this incredibly powerful and sticky social layer. If you take this to an extreme, it’s almost as if our physical spaces are slowly becoming back-of-house providers to front-of-house spaces that only exist somewhere online. Who needs Zuck’s metaverse, we may already be living in one.

  2022.10.16

• France clamps down on “dark stores”

  One way to shop for things is to make a list of all the things you want and/or need, and then go to a location that sells as many of those things as possible. As I understand, this is more or less what people do when they go to a place like Costco.

  Another way to shop is to just order things piecemeal, and have them delivered to you when you want them and in the least amount of time possible. And it turns out that this latter option is pretty popular.

  It is popular because it involves (1) not going anywhere and (2) not having to make a list and think proactively about the things you may want and/or need in the future. But it does mean that we need specific infrastructure to support this method of consumption. Generally speaking you need urban spaces close to where people live and work, and you need people to transport the goods.

  I mention all of this because it has translated into two areas of concern within our cities: (1) we now have “dark spaces” that are embedded into urban areas but don’t have any public-facing components and (2) we now have throngs of delivery vehicles starting to annoy local communities.

  In fact, France has already responded with a new federal policy that is expected to reclassify “dark stores and “ghost kitchens” as warehouses. This is intended to give local municipalities the power to shutter these sorts of spaces. Part of the thinking is that we all did just fine before delivery apps, so why not just go back to doing what we were doing?

  My own view is that this shift in consumption is here to stay. And so we would be better served by figuring out how to respond in a way that is both sensitive to communities and that maintains the vibrancy of our urban environments. We also managed without things like refrigerated food and mobile phones, but I’m pretty happy to have these tools available to me.

  2022.09.14

• CloudKitchens quietly expands across Latin America

  Despite having somewhere around 4,000 employees and being valued at upwards of $15 billion (2021 figure), CloudKitchens remains an incredibly secretive company. In 2020, it was reported that they had spent over $130 million in the preceding two years on properties in about two dozen cities, and this week the Financial Times reported that they have been quietly building “dark kitchens” across Latin America, alongside a new food and convenience goods business called Pik N’ Pak.

  The way this all supposedly works is that the “dark kitchens” prepare the food for delivery and pick-up takeaway, and any excess space within these buildings is used to store convenience goods like over-the-counter medicines and pet foods. I guess it is literally about picking and packing various items that you can then attach to takeout orders. In both cases, the food and goods are delivered to customers using local app companies such as Uber Eats.

  All of this appears to represent a shift in the supply chain for takeout food and various convenience goods. But what I am really curious about right now is what the real estate footprint of this network looks like within our cities. What is the optimal square footage of a ghost kitchen? What radius do they serve? And how does this ultimately change the landscape of our cities? I don’t know the answers to these questions, but change appears to be underway. Here’s an excerpt from the above FT article:

  “…the growth of dark kitchens across Latin America has caused controversy in certain cities. The proliferation in São Paulo, the largest city in the Americas, sparked objections from residents living nearby, with banners against new facilities appearing in well-heeled neighbourhoods. The town hall has proposed local regulation of dark kitchens and earlier this year placed a temporary ban on the issue of new licences. People have complained about noise, smells, smoke and motorcycle drivers — known colloquially as motoboys — waiting outside to collect orders. One unhappy local said his son had been nicknamed “bacon” and bullied in school because of the odour on his clothes, according to Cris Monteiro, a city councilwoman.”

  Travis Kalanick seems to have a knack for upsetting people and changing the way our cities operate. Although, the same could be said about a lot of other startups.

  2022.09.06

• My 2021 predictions

  Life will feel a lot more normal by spring/summer (Q2). By this time, the various vaccines should be broadly available (at least in the developed world). This is something that never happened during the Spanish Flu. From what I have read, the Spanish Flu lasted about two years and there were four major waves, the second of which was by far the most deadly. Ultimately, a vaccine was never found. It just petered out as people developed immunity. But medicine then was not what it is today, so surely we are destined to do better.

  What happens with working from home is going to be one of the most important outcomes of 2021. Right now it feels like tech vs. commercial real estate. The tech industry has been quick to renounce offices (while many large tech companies continued to lease more space through 2020). And the commercial real estate industry has naturally pointed out that we’re all still going to need physical offices.

  My view is that, yes, people appreciate the flexibility of being able to work remotely, but that we’re greatly exaggerating the extent to which work is going to disperse in the short-term. I think it comes down to three main things. 1) It’s nice being around other humans, both in the office and for those after work drinks. 2) Collaborative and knowledge-intensive endeavors work better when people are in the same room. And 3) corporate politics will encourage people to return to the office. Who do you think is going to get promoted first, the person who Zooms in from the Caribbean for meetings or the person who shows up to the office and grinds it out every day?

  As the world returns to normal, we will, however, see an explosion in global travel. Many will be questioning how Airbnb’s sky-high valuation makes any sort of sense, but it’ll have the right story for what’s going on in the world (some people call these “story stocks”). The reality is that there will be a massive amount of pent up demand that starts to come out as soon as people start to feel safe and governments start to allow people to travel en masse. I’m already looking forward to the 2021-2022 ski season, which I fully expect to be a blockbuster season.

  Because of this, we will see a decline in recreational real estate. The kind that was fulfilling people’s need for local travel during this pandemic. Instead, people will turn their attention to more international experiences and try and make up for lost time. Many will also come to realize that the whole working from home thing didn’t stick as expected and so they’ll start deriving less utility from their property outside of the city. Expect a kind of reversion to the mean when it comes to prices.

  Urban/downtown real estate will strongly rebound in the second half of 2021. As restaurants reopen, as people return to offices, and as urban life in general resumes, we will see an increase in demand for condos/apartments, and probably larger urban spaces given the run-up in prices for single-family homes that many cities saw last year. (A bit more on this point can be found over here.)

  The trends that are being accelerated as a result of this pandemic are not going to stop, though their rate of increase will temper. The apps and platforms that people started using in 2020, perhaps for the first time, have established new habits. People’s credit cards are now on file and it’ll be very easy for those online habits to remain. But the opposing force to all of this will be the strong desire for socializing, travel, and novel experiences. It’ll be the more routine stuff that will continue to live entirely on our phones.

  The restaurant/food industry will bounce back in a slightly different form. Sadly, many businesses will have failed. But we will also see an explosion in new ideas and new concepts, satisfying our demand to be out socializing and trying new things throughout the new roaring twenties. Ghost kitchens and on-demand food delivery companies will continue to disaggregate how some restaurants are setup. Companies like Uber will see their ride-sharing businesses quickly snap back, which will more than offset the decline in food delivery as people resume eating out.

  Public transit ridership probably won’t return to its pre-pandemic levels until at least the fall. Possibly late fall. This is going to be a serious problem for the various levels of government that subsidize virtually all public transit authorities. Many transit networks have seen ridership declines of 70% or so and, if my timing projections are correct, that will have been the case for about a year and a half.

  The migration from high tax states (like California and New York) to low tax states (like Texas and Florida) will continue. This trend was well underway before COVID-19 and so I don’t see it reversing. What is perhaps more interesting to consider is how this dispersion of economic activity will ultimately play out against some of the centralizing/polarizing forces of the global economy. Urban agglomeration economies aren’t going to go away.

  To end, I will say that I think it’s safe to assume that we’re all looking forward to the world getting back to normal, whatever that happens to mean. But ironically, once that happens, I reckon that some of us might look back on this period of time and feel hints of nostalgia. Perhaps you learned a new skill or perhaps you were able to spend more time with love ones. Time and distance may better reveal these silver linings.

  Onward, my friends. What a time to be alive.

  2021.01.01

• Deal is back on: Amazon to buy stake in Deliveroo

  This is an interesting business story. Deliveroo is a London-based online food delivery company that was founded back in 2013 and today accounts for a big chunk of the online restaurant platform market in the UK. (They are also developing a network of “ghost kitchens” through a subsidiary called Deliveroo Editions.)

  Amazon has been and still is interested in buying a minority stake in the company (Roofoods Ltd). But the Competition and Markets Authority (CMA) has been blocking it out of fear that it would stifle competition. The thinking was that if they blocked this deal, maybe, just maybe, Amazon would enter the market on its own. And more participants means more competition.

  The merger case was opened on July 5, 2019.

  Well, Deliveroo’s business is now struggling amid this pandemic. To deliver food from restaurants and then charge those restaurants a commission, it turns out that you typically need those restaurants to be open for business. So the CMA is now revisiting the case. Is it better to have Amazon invest in Deliveroo or have Deliveroo possibly fail?

  The CMA has decided that the former now makes more sense — at least provisionally.

  2020.04.20