Restaurant Franchising Reimagined | justkitchen

JustKitchen manages cloud kitchen facilities, but the company’s vision extends beyond simply providing space for preparing delivery-based meals. It views food itself as a form of media, with recipes and brand identity taking the place of traditional entertainment like music or television, and aims to establish a new model for food franchising. Currently, JustKitchen utilizes a “hub and spoke” system in Taiwan and intends to broaden its reach to four additional Asian countries, including Hong Kong and Singapore, as well as the United States within the current year.

Established last year, JustKitchen presently features 14 different brands in Taiwan, such as Smith & Wollensky and TGI Fridays. Food preparation begins with initial ingredient processing at a central “hub” kitchen, followed by transfer to smaller “spoke” locations for final assembly and order fulfillment by delivery services like Uber Eats and Foodpanda. To minimize operating expenses, these spoke kitchens are strategically located throughout cities to facilitate faster deliveries, and the brands offered at each location are determined by local ordering trends.

Beyond licensing agreements, JustKitchen also creates its own brands and provides research and development services for its partners. To support this, chief operating officer Kenneth Wu explained to TechCrunch that JustKitchen is transitioning to a more distributed structure, where hub kitchens will primarily focus on R&D, and production at select spoke kitchens will be contracted to external food suppliers and manufacturers. The company’s ultimate objective is to license spoke operations to franchisees, while supplying them with order management software and branded content – encompassing recipes, packaging, and overall branding – to ensure consistent product standards.

The demand for both meal and grocery deliveries experienced a substantial surge during the COVID-19 pandemic. In the United States, food deliveries accounted for approximately 13% of the restaurant market in 2020, a rise from the 9% previously projected before the pandemic, as reported by Statista, and is anticipated to increase to 21% by 2025.

However, on-demand food delivery businesses are often characterized by high operating costs and narrow profit margins, despite added fees and markups. Cloud kitchens – also known as ghost kitchens or dark kitchens – aim to improve profitability and maintain consistent quality by centralizing food preparation and order pickup. Consequently, companies in this sector have attracted considerable interest, including CloudKitchens, founded by former Uber CEO Travis Kalanick, Kitchen United, and REEF, which recently secured $1 billion in funding led by SoftBank.

Kenneth Wu, whose food delivery company Milk and Eggs was acquired by GrubHub in 2019, stated that a key differentiator for JustKitchen is its emphasis on both operational efficiency and content creation, in addition to providing kitchen infrastructure. Before establishing partnerships with restaurants and brands, JustKitchen collaborates with them to develop menus tailored specifically for takeout and delivery. These menus are then produced by JustKitchen, with the brands receiving royalty payments. This approach allows restaurants with a single physical location to expand their presence into multiple neighborhoods and cities (or even countries as JustKitchen expands internationally), representing a novel franchising approach for the on-demand delivery market.

One of JustKitchen’s delivery meals. Image Credits: JustKitchen

Each spoke kitchen completes the final preparation of meals before handing them off to delivery personnel. These spoke kitchens are smaller than the hubs, situated closer to customers, and are designed to maximize revenue per square footage.

“The core idea is to achieve economies of scale or high volume at the central kitchen where the food is initially prepared, and then distribute it throughout the community from the spokes, enabling quick last-mile delivery,” Wu explained.

JustKitchen claims to reduce typical delivery times by 50%, and reports that its restaurant partners have experienced 40% month-over-month growth. It also streamlines the order stacking process for delivery providers like Uber Eats, allowing drivers to collect multiple orders simultaneously for different destinations. This lowers costs but is generally feasible only with high-volume restaurants, such as fast-food chains. Because JustKitchen offers multiple brands from a single spoke location, it provides delivery platforms with increased opportunities to consolidate orders from various brands.

In addition to its partnerships, JustKitchen also develops its own food brands, leveraging data analytics from various sources to forecast demand. One source is its own ordering platform, which provides direct customer data. It also receives aggregated data from delivery partners, revealing food preferences and average order sizes in different areas, and utilizes general demographic information from government and third-party sources, including population density, age groups, average income, and spending habits. This data-driven approach enables JustKitchen to strategically launch brands in specific locations and at different times of the day, catering to breakfast, lunch, and dinner needs.

JustKitchen is registered in Canada but initially launched in Taiwan due to its high population density and the established popularity of food delivery services. Prior to the COVID-19 pandemic, food delivery penetration in the U.S. and Europe was below 20%, whereas in Taiwan, it already stood at 30% to 40%, according to Wu. The increased demand for food delivery in the U.S. “represents a lasting shift in consumer behavior, and we believe this trend will continue,” he added. JustKitchen is preparing to launch operations in Seattle and several cities in California, where it has already established partnerships and secured kitchen infrastructure.

“Our objective is to concentrate on software and content, and to provide franchisees with a complete, ready-to-launch franchise opportunity,” Wu stated. “We supply the content, allowing them to choose what they prefer. They receive software integration, recipes, and we manage food manufacturing and sourcing to ensure quality control, while they operate the individual location.”