Teardown | All Day Kitchens

Founded in 2018, All Day Kitchens partners with restaurants to expand their access to more customers via satellite ghost kitchens

May 10

These briefs are produced by leveraging publicly available data sources and information. If you notice a mistake or see an area for improvement, please let us know through this typeform. Brief by Sarah Pariwush.

Snapshot

Founded in 2018, All Day Kitchens is a food technology and logistics platform that aims to assist independent restaurants in expanding their business through the use of a network of satellite kitchens.

Based in San Francisco, the company has raised $120.3M in funding and is backed by renowned investors such as Lightspeed Venture Partners, Khosla Ventures, and Andreessen Horowitz.

About All Day Kitchens: Website, LinkedIn

Business Overview and Products

All Day Kitchens partners with independent restaurants and offers their menus through its network of satellite kitchens. This enables partner restaurants to reach their takeout and delivery customers with ease. This lowers expansion costs for the partner restaurants and allows them to offer their menu to a wider audience with minimal upfront investment. The company also offers expert culinary consulting services by leading chefs from well-known restaurants.

In a traditional ghost kitchen model, a company typically only prepares food for delivery. However, in the model incorporated by All Day Kitchens, partner restaurants can offer both delivery and pickup channels to their customers.

How It Works

The company focuses on small and independent restaurants when it is seeking partners. This is because such restaurants face the greatest need to shift to online systems, yet lack the technology and infrastructure to do so.

The All Day Kitchens platform allows these partners to reach their customers via its satellite kitchens across different markets. The company also has a culinary team that helps partner restaurants customize their menus for delivery, kitchen staff that prepares the food, as well as a network of logistics.

The company’s kitchens are situated in residential and business areas, ensuring their proximity to customers. When a new restaurant partners with the company, its food goes to all satellite kitchen locations, allowing these restaurants to access large geographies and delivery zones.

Customers are able to place orders from multiple restaurants operating out of each satellite kitchen location, on a single ticket for delivery and pickup. Restaurants send prepared food to All Day Kitchens locations, which then prepare the food for distribution.

Business Model and Pricing

The company offers a variation on the traditional warehouse model. Instead of utilizing large warehouses in far-away industrial regions that may increase delivery times, All Day Kitchens uses a micro-fulfillment model to enable small local chains and restaurants to increase their market penetration, without having to invest in infrastructures themselves. The company has not revealed its pricing strategy.

Traction

In 2021 alone, the company doubled the number of satellite kitchens in its network. In May it was reported to have 10 kitchens throughout the Bay Area. By October, it had 15+ satellite kitchen locations operating across the Bay Area and Chicago, and the number of partner restaurants had grown 4x in the past 12 months. Its revenue was reported to have grown 18x during the past 18 months although exact amounts were not given.

Founder(s)

Ken Chong: Co-founder & CEO. Previously, Ken has worked as a program manager at Microsoft, and a product manager at Uber. He was also a product manager at Upthere.

Andro Radonich: Co-founder & Head of Culinary. Prior to All Day Kitchens, Andro was a former chef who founded Andro's Rostilj in 2011. He currently serves as CEO of the company, along with being the Head of Culinary at All Day Kitchens.

Matt Sawchuk: Co-founder. Previously he was Head of Operations at Instawork, and a group manager at Uber. Before his 5 year career in Uber, he was an Associate at Emerald Technology Ventures.

History and Evolution

Prior to this startup, founders Ken Chong and Matt Sawchuk worked at Uber Eats where they noticed that the supply side for online food ordering did not meet the demand side, which rose rapidly especially due to the pandemic. They noticed that restaurants could not keep up with the influx of demand, and identified that the source of the failure for most was at their kitchen level.

In 2018, Ken and Matt came up with the idea of All Day Kitchens and left Uber to help small independent restaurants that were struggling with expanding their business. The company was originally founded as Virtual Kitchen Co, and the idea was to collaborate with these restaurants and expand access to their food across a city via satellite kitchens.

The company formally launched in November 2019. It revealed its intentions to open a dozen kitchens in the Bay Area within the next 6 months. The company’s early partner restaurants included DOSA, Big Chef Tom’s Belly Burgers, and Poki Time.

By February 2020, the company was operating 6 satellite kitchen locations in the Bay Area and announced it had plans to expand both nationally and in a potential scenario, internationally.

In May 2021, the company rebranded itself to All Day Kitchens and after raising its latest funding round in October, it began focusing on R&D, expanding its team, and new market expansion. From its base in San Francisco, All Day Kitchens expanded to Chicago, where it quickly set up 4 kitchen locations and partnered with 6 restaurants. The company also announced its target to expand to Texas and Southern California after this funding round.

Currently, the company operates across the Bay Area and Chicago.

Additional Learnings

The company rebranded after receiving feedback from partner restaurants who expressed confusion at the company’s original name “Virtual Kitchen Co”. Another reason for the change was that the company wanted to adopt a name that would be more reflective of its future ambitions. In the words of founder Ken, “It’s also a reflection of kitchen lingo capturing the energy of a bustling kitchen and a colloquial term suggesting high availability.”

What differentiates All Day Kitchens from other ghost kitchen companies, is that it does not follow a simple warehousing model. It aims to go for an ultra-fast delivery capability, of under an hour or 30 minutes. This is possible by the micro-fulfillment infrastructure that the company is focusing on, which enables it to be fast, fresh, and convenient for customers. According to Ken Chong, its vertical approach has helped the company create a scalable user-friendly platform. Instead of operating large centralized warehouse kitchens, it operates a large network of smaller kitchens in neighborhoods close to customers.

Moreover, the company combines its team's knowledge about food markets with its data-driven model to figure out which markets to target next. The model determines what parts of a region are the most ideal for delivery and takeout volumes, and rather than simply going for warehouses in the middle of industrial areas, the company instead chooses to go for model-identified parts of town.

Market Snapshot

Food delivery and pick-up greatly increased in the wake of the pandemic. According to the NPD Group, carryout orders increased by 130% between March 2020 to March 2021. Delivery grew by 142% during the same period.
Moreover, prior to 2020 full service restaurants represented a 10% share of digital orders, but grew to 16% market share from March 2020 to March 2021. This was a 237%+ increase in digital orders during the period. During the same period, quick service digital orders grew 111%+ from their original market share of 84%.
The most common means of digital ordering are restaurant apps and websites. They form 62% of all digital orders and experienced a 98% increase. Other digital order channels include 3rd-party apps like DoorDash and UberEats, which grew by 207%+ in the same period.
There is excessive competition in the ghost kitchen category. Investors' confidence in the delivery and pickup business can be visibly observed through market movements. For example in 2020, C3 raised $80M to grow its online presence while Reef raised $700M and Kitopi raised $60M. Moreover, JustKitchen secured $20M and Local Kitchens raised $25M in June.