All Day Kitchens receives $65M in funding for expansion

Dive Brief:

All Day Kitchens has secured $65 million in funding on the heels of a $20 million fundraising round in May. This brings its total fundraising to date to $102.5 million since its founding in 2018. The company will use the proceeds for research, development, staffing and to expand into new markets.
The ghost kitchen platform provides its restaurant partners with access to a network of satellite kitchen locations in a market, allowing them to scale their operations and bring their products closer to customers through delivery and pickup channels. This differs from the traditional ghost kitchen model, which typically offers delivery only.
All Day Kitchens has over 15 locations in the San Francisco Bay area and Chicago markets and has quadrupled its roster of local restaurant partners in the past year, according to TechCrunch. Its revenue has grown 18 times during the past 18 months.

Dive Insight:

All Day Kitchens' growth is driven by the increase in delivery and pickup transactions during the COVID-19 pandemic. The NPD Group shows that carryout orders increased by 130% from March 2020 to March 2021, for example, while delivery grew by 142% in the same period.

"COVID has been challenging for businesses, especially in the restaurant industry. We've seen increasing urgency from restaurants to expand digitally, for pickup and delivery, using All Day Kitchens. We're scaling rapidly in new markets to help more great brands thrive," All Day Kitchens CEO Ken Chong said in a statement.

All Day Kitchens' focus is on small and independent restaurants. These businesses have been hit particularly hard in the past 18 months because many don't have the technological infrastructure or capital to shift to off-premise operations. The ghost kitchen platform allows these restaurants to expand their reach by leveraging satellite kitchens across a market without providing any upfront costs. All Day Kitchens also lets customers order from multiple restaurants operating from a satellite kitchen.

In a statement, Darnell Johnson, owner of Chicago's Home of Chicken & Waffles, called All Day Kitchens' model the "future of the industry."

"The partnership has been an unbelievable way to expand our brand reach and take us to another financial level. The volume of guests coming in who discovered us through an All Day Kitchens location keeps growing," Johnson said.

All Day Kitchens will use its latest funding to target growth in Texas and Southern California.

The platform is the latest in a string of companies in the ghost and virtual kitchen space to receive funding, indicating investors' confidence in the future of delivery and pickup business. C3 recently raised $80 million to grow its virtual brand presence, for example, while Reef raised $700 million and Kitopi raised $60 million last year. Also in the last year, Virtual Kitchen raised $20 million, JustKitchen secured $20 million and Local Kitchens raised $25 million in June. All of these companies are targeting market expansion, so the category is ripe for competition.