Food delivery "ghost kitchens" face major obstacles

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  • Travis Kalanick
    Travis Kalanick
    American entrepreneur

The growing popularity of food delivery has given rise to startups that open "ghost kitchens" — kitchens in warehouses or trailers that prepare food solely for delivery and have no option to dine in.

  • But they can come with a whole host of problems.

The big picture: The concept of "ghost kitchens" has been dubbed the next big thing in the future of services, with high profile backers like Uber founder Travis Kalanick. But these kitchens can be hard to run or unsafe.

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The Wall Street Journal's Eliot Brown looked into Reef Global, a ghost kitchen company that has been dealing with a variety of issues.

  • They include three big fires, one of which seriously injured a cook to the point where she can no longer work.

  • Reef has also been dealing with problems connecting to local utilities, shutdowns due to regulatory violations, and higher-that-expected operational costs for such necessities as generators and water delivery, Brown heard from former executives and managers.

What to watch: Ghost kitchen companies still have obstacles to overcome before they become the cash cows Silicon Valley venture capitalists are betting they will be.

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