Wendy’s opens ghost kitchens to meet growing demand as Deliveroo doubles orders value

UK – American international fast-food chain Wendy’s has announced plans to open 700 delivery-only kitchens by 2025 to meet the growing demand from people who want their fast food brought to them

Wendy’s said the kitchens will primarily operate in big cities in the U.S., Canada and the United Kingdom, where the chain has fewer brick-and-mortar stores.  

The company said it is partnering with Reef Technology Inc., a Miami company that runs 5,000 delivery kitchens in 30 cities worldwide in making the delivery-only kitchens a success. 

The Dublin, Ohio-based company, further noted that plans are already underway to open its first 50 delivery kitchens this year. 

In a conference call with investors, Wendy’s President and CEO Todd Penegor said Reef will build the locations and hire workers for the kitchens, each of which is expected to see sales of US$500,000 to US$1 million per year.  

The company said third parties like DoorDash, Uber Eats, and Grubhub will deliver the food and expects to get royalties of around 6% of sales.  

Wendy’s isn’t the first fast-food chain to explore so-called ghost kitchens, which have no storefront and only prepare food for delivery.  

In 2019, Chick-fil-A began offering delivery from a DoorDash Kitchen in Northern California, and recently, Rebel Foods, an India-based virtual restaurant chain, said it doubling down on its Middle East expansion which it says has the potential to grow into a US$1 billion food delivery business. 

Deliveroo orders surge in H1 
 Meanwhile, UK-based food delivery platform Deliveroo has said the value of orders on its platform more than doubled in the first half, with no material impact from the wider reopening of restaurants in its biggest market, Britain. 

First-half revenue increased 82% to £922.5 million (US$1.4bn), Deliveroo said, while its core operating loss narrowed to £27.0 million (US$37.8m) from £30.3 million (US$42m) a year earlier. 

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The company, which connects customers with over 136,000 restaurants and 9,000 grocery stores in Britain and 11 other countries, said its gross transaction value (GTV) rose 102% to £3.386 billion (US$4.68 billion). 

Chief Executive Will Shu said growth had remained strong for both restaurant and grocery orders even as pandemic-related curbs eased. 

The company, which competes with Uber Eats and Just Eat Takeaway.com, said it expected orders to continue to grow but average order values to revert towards pre-pandemic levels. 

It  reiterated the full-year forecast it upgraded last month of 50-60% growth in GTV, with a full-year gross profit margin in the lower half of the 7.5-8.0% range. 

Earlier, German rival Delivery Hero took a 5.09% stake in Deliveroo last week, driving the British company’s share price to its highest since its March initial public offer (IPO). 

Shu in an interview with Reuters said he had not had any talks with Niklas Oestberg, his counterpart at Delivery Hero, since the move adding that he believed Delivery Hero’s move was just a “financial investment.” 

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