How DoorDash’s ghost kitchen works

The delivery service’s venture into brick and mortar was shaped significantly by data collected from its app users.
Photograph courtesy of Doordash

DoorDash is giving the ghost kitchen model a tweak with the version it just opened in the San Francisco Bay Area.

DoorDash Kitchens provides customized kitchen space for five restaurant operations that offer delivery and pickup services through DoorDash’s app. The kitchens are separate and were designed in collaboration with the occupants. The participating restaurants share storage and refrigeration space.

Four of the five slots are currently filled, by The Halal Guys, Nation’s Giant Hamburgers, Rooster & Rice and a local ice cream concept, Humphry Slocombe. Each kitchen is staffed by employees of the brand using it, with DoorDash personnel handling janitorial services, delivery, and the handoff of meals in a common first floor area to customers who opted to pick up their meals.

Most ghost kitchens provide meals exclusively for delivery or catering. The Redwood City, Calif., location was selected in part to serve as a storefront, a marked departure from the usual setup.

“This is in an area where consumers are driving by,” says Fuad Hannon, DoorDash’s head of new business verticals. “It’s highly visible. It’s not a shared kitchen that’s in the back of some warehouse.”

The kitchens were built to suit, with both parties making a multiyear commitment. DoorDash provided all of the capital to build out the space and also handled all of the permitting and development logistics, Hannon says. “We wanted to make it as turnkey as possible for our partners,” he says.

The orders are funneled down to the bottom-floor common area, where they’re either stationed for DoorDashers—the service’s delivery personnel—or pickup customers.

In exchange for use of the facilities, the partners pay the usual commission on the orders they sell, along with what Hannon characterizes as a modest rent. Avoiding the area’s notoriously high occupancy costs and arduous permitting requirements were significant attractions for the concepts using the facility, he says. None of the four currently have restaurants in the area.

The biggest advantage for the four, says Hannon, was the advanced gauge they were provided by DoorDash of how their concepts would fare in unfamiliar territory. “This isn’t high-level data: ‘Here’s what restaurant demand looks like in this area,’” says Hannon. “It’s very detailed. ‘Here’s what a burger concept has done in this area’—it’s that specific.

“You de-risk the main worry of any restaurateur: ‘I’m new to this area. How will my concept do?” he continues.

The four operations were chosen because data indicated that users of DoorDash’s app were looking for products like the group’s respective specialties. The deeper dive was looking at what brands offering the right cuisines were known to local consumers but did not yet have a brick-and-mortar presence in the region.

“It allowed restaurants that did not have a presence in that area to move in with very little risk,” Hannon says. “We have eliminated the [capital expenditure] commitment. We have helped you understand how your concept will do. And we become your marketing expert. We’re able to promote your story and your brand” via the service’s app.

He declines to reveal what volume of sales the participating restaurant brands are generating from their ghost kitchen, but says, “None of these merchants had a previous presence in this area. Every dollar is a fully incremental dollar of sales.”

DoorDash has no plans to open a second DoorDash Kitchens, Hannon says, but he acknowledges that the Northern California venture will be studied. Its short-term goals are “hearing from our partners and seeing what we can improve on,” he says.

A number of other initiatives are in the works, Hannon says, declining to reveal specifics. With competition escalating among third-party delivers, DoorDash intends to make service to its merchants a signature point of differentiation, he says.

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