Sell for More News is a weekly blog series with interesting information from the world of commercial real estate.
The former chief executive of Uber, Travis Kalanick, has been quietly assembling a mini real-estate empire over the past two years, acquiring closed restaurants, auto-body shops and warehouses for use in his new ghost kitchen venture.
Entities tied to Kalanick’s CloudKitchens, a startup that rents out space to businesses that prepare food for delivery, have bought more than 40 properties in nearly two dozen cities for more than $130 million. These acquisitions include buildings in Portland, Las Vegas, Columbus and Nashville.
The acquisitions are a big bet on the fast-growing food-delivery business. Delivery-only kitchens have been around for years and have raised hundreds of millions of dollars from venture investors hoping to replicate the success of the co-working industry, which built a multibillion-dollar industry by essentially subleasing real estate.
Kalanick isn’t the only Uber veteran to get into the business. Virtual Kitchen Co. was co-founded by former Uber executives Ken Chong and Matt Sawchuk and has raised around $20 million in funding.
SoftBank-backed Reef Technology and Kitchen United are also part of this budding industry.
Except, Kalanick’s competitors rarely acquire real estate. They typically lease or sign revenue-sharing deals with landlords.
Note: Companies can expand more quickly without spending cash or borrowing heavily to acquire buildings.
But some landlords have been reluctant to rent to ghost-kitchen operators because they often require a complicated rebuild and the business model is still relatively unproven. For example, Reef has been placing mobile kitchen pods in parking lots.
Mr. Kalanick has money to spend. Last year CloudKitchens raised $400 million from Saudi Arabia’s sovereign-wealth fund. Goldman Sachs has been financing his acquisitions and developments with millions in loans, property records show.
His spokeswoman told The Wall Street Journal last year that he had sold all his stock in Uber for more than $2.7 billion.
Not long ago Kalanick was raising money for a far fetched idea called ridesharing. Smart people turned him down…and it cost them millions.
Perhaps ghost kitchens will be a summarily huge deal in a few years. Some proven, very successful people sure seem to think so.
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About Beau Beach, MBA CCIM
Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.
Beau leads Beachwood which is a commercial real estate broker for sellers in the Nashville, Milwaukee and South Florida markets.
He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.
Beau can be reached at 800-721-3287, click to schedule a call or Beau@BeachwoodSells.com