Reef Kitchens is closing unprofitable ghost kitchens as it turns to a new model: licensing its technology to places like airports and stadiums.
The company still operates an unknown number of delivery-only food trailers, or “vessels,” in parking lots across the U.S., where it acts as a licensee for existing brands. But it has recently wound down that business in some markets, including Portland, Ore., and Philadelphia, a spokesperson confirmed.
“Reef is continuing to review and optimize all locations that it wholly operates while growing the ecosystem of third parties that license its platform and technology,” the spokesperson said in a statement.
It’s part of a more intense focus on profitability at the Miami-based company after years of fast growth and associated growing pains. Its vessels have struggled to make money in some locations and have faced health code and permitting violations. One of its biggest partners, Wendy’s, scaled back plans to open as many as 700 vessels with Reef. The economic slowdown, which has been hard on venture-backed companies like Reef, has not helped.
So the company is changing course. Reef’s website, in fact, no longer features the 250-square-foot trailers and instead highlights the technology behind them, which it is now working to license to other businesses.
Reef is closing unprofitable food trailers. / Photo courtesy of Reef
The technology, called Reef OS, allows restaurants to offer food from multiple brands for digital delivery and takeout. It includes a library of menus from more than 200 concepts for operators to choose from, including TGI Fridays, Capriotti’s and Wow Bao.
Reef is targeting Reef OS at places like airports and stadiums. In July, it opened a digital food hall at Raleigh-Durham International Airport, where travelers can order ahead using kiosks or their phones. It offers 12 brands, including 800 Degrees Pizza, Pei Wei, and The Cheesecake Factory. Reef is providing the technology and Raleigh ghost kitchen company HUBB Kitchens is running the kitchen.
Reef has a similar agreement at Hard Rock Stadium in Miami, where it’s partnering with foodservice operator Sodexo Live on a pair of mobile-order concession stations. Another Reef food hall will open soon at Dulles International Airport near Washington, D.C.
The locations in high-traffic venues rely on walk-up orders rather than delivery and should get more eyeballs than trailers tucked away in parking lots.
As for those trailers, the spokesperson would not say how many remain in the U.S. As of early last year, it had more than 300.
Reef began as a parking lot operator and added the ghost kitchen business in 2019 with the goal of turning the lots into "proximity hubs." It has raised more than $1.5 billion in growth capital since 2018.
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