Dive Brief:

• Reef Technology, the largest ghost kitchen operator in the United States, announced a partnership Wednesday with 800 Degrees Pizza to open 500 delivery-only locations in the U.S., Canada and international markets over the next five years.
• The first of these locations began operating on Sept. 17 in Miami, according to a release emailed to Restaurant Dive.
• Reef, which started as a parking lot management and technology company, has grown into a major player in the delivery-only market. Last year, the company raised $700 million to grow from 4,800 locations to 10,000 in the U.S. 

Dive Insight:

Both Reef Technology and 800° Degrees have been expanding rapidly. Reef partnered with Wendy's in another major deal earlier this year, and the companies plan to build 700 delivery-only units over the next five years in the U.S., Canada and the United Kingdom. 

Similarly, 800 Degrees Pizza, which has only 16 locations in the U.S. and international markets listed on its website, signed a deal with robotic pizza concept Piestro in August to build 3,600 automated pizza machines in the next five years.  

The pizza chain]s partnership with Reef will give it the chance to break into major delivery markets.

"Partnering with REEF will give us the capability to grow faster while remaining true to our promise of providing premium dishes with the highest quality ingredients available," 800 Degrees CEO Tommy Lee said in a press release.

Reef's dramatic expansion is tied to a surge in delivery growth since the start of the pandemic, which accelerated a shift towards ghost kitchen and delivery-only concepts. Using parking lots and structures in urban areas gives the company unique access to as much as 70% of U.S. consumers, according to Reef's website. 

Expansion in the ghost kitchen segment predates COVID-19, however. In 2019, ghost kitchen companies raised large amounts of money and signed major partnerships. Last year marked a turning point for the segment, as many restaurants expanded off-premise offerings and major brands rethought their development strategies. 

Pizzerias, long a backbone of the delivery market, fared particularly well during the pandemic compared to other restaurants. Independent pizzerias still suffered, with thousands closing, according to the Wall Street Journal. This could leave delivery-oriented brands well positioned to expand. Papa John's, for example, signed its largest franchisee deal ever this week with plans to add 100 locations in Texas.