Want a roadmap to how the virtual kitchen industry will shape up in the U.S. over the next few years? Look no further.
— Erika Adams
In China’s biggest cities, restaurants are struggling to satisfy the appetites of customers ordering food delivery through apps on their phones. That’s leading to a booming market for renting kitchen space, without tables, chairs or waiters.
One shared kitchen startup, Panda Selected, plans to announce on Friday a $50 million investment from a group of international backers. The Beijing-based company is snapping up real estate to get ahead of local rivals and a deep-pocketed competitor from Los Angeles run by Travis Kalanick, the billionaire co-founder of Uber Technologies Inc.
The new investment in Panda is led by Tiger Global Management, a backer of Uber before Kalanick was forced out in 2017. Other investors include DCM and Glenridge Capital, with the latest round bringing its total capital to $80 million, the company said. The deal values Panda Selected at as much as $300 million, said people familiar with the matter, who asked not to be identified because the information has not been made public.
Kitchens are shared between restaurants to reduce their overheads with Panda Selected providing the venue, supplies and marketing. The company makes money through monthly fees as well as additional charges for services such as data analytics to help merchants adjust menus to boost sales on delivery platforms Meituan and Ele.me.
Founder Haipeng Li started the business in 2016 and now has more than 100 kitchens in China, with plans to double that over the next eight months. Panda Selected’s kitchens are each around 400 to 500 square meters and can fit 15 to 20 restaurants in a space, Li said. The company isn’t profitable but expects to reach break-even later this year, he said.
Companies outside of China are experimenting with the shared concept, which is sometimes referred to as cloud kitchens or virtual restaurants. London-based Deliveroo offers field kitchens throughout the U.K. for upscale restaurant brands to offer their cuisine to customers outside of central London. A former Deliveroo executive started a company in Paris that has no waiters or space for dining but branded kitchens that supply takeout.
One of the most capitalized startups in this space is Kalanick’s CloudKitchens. The company is looking to expand into China, according to a report in the South China Morning Post.
Li said he believes Panda Selected has a local advantage that money can’t buy. “Opening shared kitchens requires local expertise,” he said. “Regulations are different in each country.”
©2019 Bloomberg L.P.