How ClusterTruck and CloudKitchens are disrupting the dining game
When I arrive in September at the red warehouse at 1282 Essex Ave., a pair of workers are installing giant letters on the side of a wall. The 20,000-square-foot building is home to what will eventually be 40 kitchens, all tenants of a quickly expanding food delivery startup called CloudKitchens. But you’d never know it. The company’s name is nowhere to be seen, and that’s by design. Instead, there are signs explaining that the best parking is reserved for delivery drivers.
I am there to visit the delivery-only kitchen, or ghost kitchen, run by Frank Fazio, operations manager of the Cleveland-based restaurant and caterer Mario Fazio’s. He is one of the newest and most enthusiastic tenants at Columbus’ nascent location of CloudKitchens. By the end of my visit, the vinyl lettering on the exterior has been completed. It reads FOOD DELIVERY. Obscure, but to the point.
While third-party food delivery has been increasing for five or six years (growing from 2 percent of restaurant sales nationally prior to March to 10 percent when COVID-19 hit, says John Barker of the Ohio Restaurant Association), this increased desire for food delivery was kismet to the growing trend of ghost kitchens.Like what you’re reading? Subscribe to our weekly newsletters.
Ghost kitchens (aka virtual kitchens or cloud kitchens) skip the hassle and expense of dine-in operations and create a direct-to-consumer experience through delivery—the food equivalent of a direct-to-Netflix release. And they’re alive and well in Columbus, with two major players dominating the niche. One is ClusterTruck, which has resided in Downtown Columbus since June 2017, and the other is CloudKitchens, a secretive company founded in 2016 by ex-Uber CEO Travis Kalanick. It quietly entered the Columbus market this year.
The two companies couldn’t be more different.
Los Angeles-based CloudKitchens stays under the radar for consumers but advertises to potential tenants promising “commercial kitchens optimized for delivery” and “prime real estate at a fraction of the cost of a traditional restaurant.” CloudKitchens acts as a commissary for businesses to cook and expedite food to a front of house that relies on gig economy drivers from Grubhub, DoorDash, Uber Eats and Postmates to deliver throughout the city.
Meanwhile, ClusterTruck is a single, standalone kitchen with its own staff, expediters and drivers. The Indianapolis-based company operates in three cities and recently signed a deal with Kroger to replace its delis across the country. (The first in Columbus is expected to open in December in the Kroger at Sawmill and Hard roads in Dublin.) While ClusterTruck’s menu is expansive, its delivery radius is limited to locations that can be reached in six to seven minutes, to ensure that the food is hot.
Cultivating Brands, Known and Unknown
When hungry customers begin searching for options on food delivery apps, there are both familiar and unfamiliar names operating from CloudKitchens’ space on Essex Avenue. There are known chains, such as Wingstop and Akron-based Swensons Drive-In. A few area independents—Ava’s Taste of the Caribbean, Buns & Brews and Mr. Hibachi—with standalone locations or food trucks have expanded into CloudKitchens. Other brands, like Ridiculous Eatz, appear to only exist online.
The company also hosts some “house brands” that operate from several of CloudKitchens’ locations around the nation. And in some cases, two different brands operate out of the same kitchen. Customers may be surprised to learn that Moonbowls (a Korean-inspired bowl eatery) also moonlights as F#ck Gluten, which offers salads, pizzas and, yes, bowls.
On the flip side is ClusterTruck, which has modeled its menu on one of the most ubiquitous brands in the food industry: The Cheesecake Factory. In fact, its entire lead culinary team is made up of people who worked at the chain and know how to provide a wide array of high-quality foods at volume.
ClusterTruck is tucked inside an unremarkable building on East Long Street, down the street from The Hills Market Downtown. Upon my arrival for a tour, co-founder Chris Baggott is standing outside while a line of drivers sit in their cars—like an airport pickup queue—waiting for the day’s orders to come in. Inside, staffers are chopping onions, taste-testing tomato bisque and smoking chicken wings. Tempting conveniences offered by food distributors, such as bagged soups, precut vegetables and frozen ready-to-heat meals, are noticeably absent.
ClusterTruck has six standalone locations—four in the Indianapolis area plus one each in Columbus and Kansas City. Columbus was an easy choice for Baggott, because of its similar demographics to Indianapolis, where the flagship location resides. (It doesn’t hurt that Columbus is home to Drive Capital, an investor.)
As the co-founder of the email marketing company ExactTarget, which Salesforce bought for $2.5 billion in 2013, Baggott is a tech guy, not a food guy. To someone wanting to order chicken Caesar salads for a company lunch, ClusterTruck is a food delivery company, but to Baggott, it’s all about technology. Therefore, his tour is less about the ins and outs of the kitchens and more about screens and stats. On one monitor, Baggott notes that a single, same-day order for 41 people has just been placed. “We’re disrupting the catering industry,” he says. Another screen reveals the day’s sales of $2,242 at 10:50 a.m. And a third shows the ratio of active drivers to orders. (The goal is to be as close to a 1-1 ratio as possible.)
“We never dilute the driver pool,” he explains. “If we make sure that this is the best gig economy job, they’ll be the best gig economy drivers.”
ClusterTruck’s technology provides precise and predictive machine learning. The software knows exactly where the customer is located, how long it takes to cook each item in an order and when the driver will be at the space for pickup. ClusterTruck’s drivers can deliver four to six jobs per hour (compared to one or two elsewhere), receive paid sick leave and get to keep 100 percent of customer tips.
“I enjoy driving for [ClusterTruck],” says Elizabeth Rodriguez-Allen, who has worked for the company for three years. “You don’t have to worry about having to park the car. You don’t put a lot of miles on your car, and the customers are happy and make you feel appreciated.” Rodriguez-Allen says that she makes in an hour what friends who drive for Uber Eats make over several hours.
The idea for ClusterTruck sprang from the dysfunction of modern-day food delivery services, which have been known to exploit gig workers (and restaurants) while also doing a poor job at delivering hot food. Baggott figured that if the delivery drivers weren’t happy and the customers weren’t happy, there had to be a better solution. “The only way to have free delivery,” he says, “is to do it all yourself. We’re nothing like what Travis [Kalanick] is doing. They’re adding a middleman, and we’re trying to eliminate the middleman.”
A Family Business Looks to the Future
Inside the CloudKitchens facility, the building has a bus station sort of feel. Drivers silently sit in a row of chairs and stare at their phones while waiting for orders. I felt slightly claustrophobic as I entered the crux of the building, which is three long hallways with rows of narrow kitchens, each numbered. Many are marked with laminated signs featuring quirky logos denoting the businesses inside. Occasionally, people race down the hallways to pick up an order left on the Metro racks located outside the occupied kitchens. They remind me of valet drivers, running french fries instead of keys.
Only five weeks into operating a delivery-only restaurant, Frank Fazio invites me into Mario Fazio’s kitchen, where an employee is assembling an order. With two locations in Cleveland and hospitality management and culinary school degrees under his belt, Fazio decided to bring the family business to Columbus in a delivery-only format after someone from CloudKitchens approached his family with the opportunity last December.
Fazio’s grandfather started the restaurant in 1971 in Willoughby, Ohio, specializing in lemon chicken, pasta dishes and specialty pizza. He says the structure CloudKitchens offers allows him to see a future for the family business.
“We did our homework, and we realized it was a business model that is trending upwards, even before COVID,” says Fazio, who employs only two others at the ghost kitchen: a line cook and a prep worker. Notably, the need for front-of-house staff is eliminated.
CloudKitchens provides the basics all restaurants need (think: a hood, a three-compartment sink, a handwashing sink) and builds out the rest based on individual needs. The lessees share two walk-in coolers and a communal freezer, and CloudKitchens helps to streamline permits and provides assistance with the weekly visits from the Ohio Department of Health.
In addition to kitchen infrastructure, the company provides restaurateurs with software. Its integration system, Otter, combines orders from different delivery apps into a single platform that provides business owners like Fazio with weekly stats and sales data. It also serves to inform runners when an order is ready to be handed off to drivers.
Additionally, CloudKitchens offers its tenants seminars on ways to drive revenue and on virtual branding. Fazio supplements these marketing opportunities with social media, subscriber newsletters and coupons. One of Fazio’s most prominent techniques for building name recognition in Columbus is one of the most old-school: branding on packaging. Each order comes in a large, logoed plastic bag, making it impossible for first-time customers to forget that Italian place with the amazing chicken.
When I ask Fazio, who’s worked for Cameron Mitchell’s corporate offices, about being a hospitality management graduate who doesn’t actually see his customers, he says that hospitality is still part of his world. In one instance when a customer didn’t like her pizza, Fazio says he reached out to her, made a pizza himself and delivered it personally.
While ClusterTruck ensures a six-minute delivery window to keep things hot for customers, businesses like Fazio’s at CloudKitchens have to find other ways to satisfy customers, whose delivery range is at the mercy of the delivery companies. “Our food being cold was a worry of ours,” Fazio admits, “but we learned how we package the food helps. Plastic bags help keep the heat in.”
So far, Fazio seems happy and hopeful with his situation at CloudKitchens, and he has eyes on fellow restaurateurs who are embedded into CloudKitchens’ other locations nationwide—in cities like Chicago, Philadelphia, Nashville and Atlanta.
“[They’re what] we aspire to be,” says Fazio. “[Going nationwide] is a long-term goal.”
Meanwhile, ClusterTruck has slightly larger aspirations. “We expect to be the global leader in food delivery service,” Baggot says. Competitors like CloudKitchens, Kitchen United and a host of other growing virtual kitchen companies may have something to say about that, but when we reached out to CloudKitchens for an interview, a spokesperson said “no thank you.” You could say they ghosted us.