Why We’re Investing in Virtual Kitchen Co

We all have our favorite places to dine out where we live — for me, that could be anything from enjoying a hot pot meal with friends in the Richmond district of San Francisco, grabbing a quick burrito off a local food truck, or having a special occasion dinner in Napa Valley. Restaurant and foodie culture seems to be growing globally. Everything from travel guides to Netflix specials, local food blogs and Instagram (of course!) shows a rising consumer interest in discovering great places to eat. 

Talk to the people who own and operate these beloved places, however, and they will present a less romantic reality. Running a restaurant is often a tough, difficult business! There are the classic challenges of picking the right restaurant concept, marketing, hiring, training and retaining talented employees (not to mention scheduling and paying them), plus food sourcing and logistics. Most chefs would rather concentrate on the food and present a memorable experience to diners. 

On top of that, we are in the midst of technological change: marketing restaurants alone went from an era of newspaper ads and street signs – to countless online review platforms, Twitter and Instagram accounts and digital loyalty programs. And delivery which once was limited to certain cuisine types has now become a baseline expectation for all restaurants. New delivery platforms deliver meals with the tap of a button – sometimes even by a sidewalk robot (and soon, maybe even via drone)! 

Food delivery has been transformative, not just for customers – but for restaurateurs as well. For the restaurant industry, the opportunity is huge (at last count nearly $100B of orders worldwide). On an individual level – it allows our most beloved local brands to scale beyond their retail footprint, and reach new customers in entirely new ways at a much lower cost.

And with this rise of new delivery platforms, restaurants can now reach new customers and grow their sales, without having to worry about how many seats they have in their dining room. But still, there are limitations, kitchen space in prime locations is often expensive, and restaurants can only handle preparing so many meals at a time. So, more recently, we’ve seen the emergence of a concept called “virtual kitchens”– a kitchen-only space that allows restaurants to offer delivery without having to build out a new restaurant in a high-foot traffic area. This makes it more affordable for a restaurant to get up and running and to quickly scale their customer base – without worrying about many of the complexities of a front-of-house operation. 

With all of these shifts in mind, I’m excited to share that we’re investing in Virtual Kitchen Co and that I’ll be joining the board. 

Virtual Kitchen Co empowers restaurants, chefs, and food entrepreneurs to take advantage of the delivery boom without enduring the challenges of building out additional locations themselves. Virtual Kitchen Co offers a turnkey solution, not just renting out kitchen space or solving some smaller part of the stack – but providing a fully integrated technological solution to help businesses grow their sales. 

We think with a combination of technology, data science, and rigorous operational abilities, it’s possible to make running a high-volume delivery restaurant an easy, complete solution that lets even the smallest food entrepreneurs take advantage of the massive food delivery market. Virtual Kitchen Co utilizes data to figure out where to best locate their network of kitchens, what cuisines are lacking in underserved neighborhoods, and even what ingredients should go into which dishes. By sharing and collaborating with restaurant partners, it will make the ecosystem even better.

For consumers, the value is obvious. Our favorite local restaurants, not just national chains, will become available on the food delivery apps we already use. By locating the network of kitchens close to customers, the time it takes to get our food will be shortened, so that it arrives crisp and delicious, and never soggy. With operational excellence that’s being tested and optimized over time, service will be consistently great, with fewer mistakes on orders and less unhappy diners.

Virtual Kitchen Co is another opportunity for me to continue to work with colleagues from Uber. This is a new startup founded by my former colleagues from Uber — Ken Chong, Matt Sawchuk, both experts in complex logistics, product, and pricing — and Andro Radonich, an expert in food operations at scale. They have the perfect blend of expertise to build this startup, and in just the first year they have already made a lot of progress. Today, they are announcing partnerships with beloved San Francisco restaurants such as DOSA, Belly Burgers, and Poki Time — and are targeting several dozen kitchens and many more brands by early next year.

So far, a16z has done 4 investments (both announced and unannounced) in the ex-Uber network. I have a ton of respect for the entrepreneurial spirit, operational abilities, and hustle of those from one of the fastest growing companies in the last tech cycle. I’m excited to support both the Virtual Kitchen Co team and the broader alumni network in their next adventure.

I believe Ken, Matt, and Andro are building the best team to pull off this ambitious vision, and we are excited to start our journey with Virtual Kitchen Co!

 

The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation.

 This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets) is available at https://a16z.com/investments/.

Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.