General Catalyst Leads $40M Round for Local Kitchens, a Different Kind of Restaurant Kitchen Startup

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Local Kitchens

At a time when cloud and ghost kitchens are struggling, Local Kitchens is proving its tech-enabled multi-brand restaurant concept is a business model that can thrive. The company has just secured $40 million in new Series B funding for its efforts.

Founded in 2020 by Jon Goldsmith, Jordan Bramble, and Andrew Munday, all former DoorDashers, Local Kitchens offers dishes from local restaurants and nationally recognized chefs to consumers in Northern California. The company operates in a similar manner to cloud and ghost kitchens, which are shared workspaces for restaurants to cook meals, often exclusively for delivery. However, Local Kitchens has developed a digital format to manage mobile app orders for multiple brands from a single kitchen.

CEO Goldsmith insists that Local Kitchens is not a ghost kitchen, citing the company's focus on operating its own restaurant locations, employing staff, and working with partner restaurants and chefs to train them on their recipes. This approach enables the company to achieve 50% more sales per person per hour than traditional restaurants, according to Goldsmith.

"One of the advantages of this model is that we're more efficient from a sales per labor hour perspective," he said. "That means we can really reinvest in hiring great people, paying them and training them well. That's critical to get food quality in a model like this where you have eight brands coming from one kitchen."

In San Francisco, the company is working with local brands, including Sushirrito and Boba Guys, and with nationally recognized chefs like Mason Hereford, founder of New Orleans sandwich shop Turkey and the Wolf. Since its Series A in 2021, Local Kitchens has grown 5x and achieved unit-level profitability. Plus, 1 in 10 households in the San Francisco Bay Area have tried the service, Goldsmith said.

"We've become a weekly habit, especially for guests who don't feel like cooking," he said. "A family or couple can order from Local Kitchens and find something for everyone."

Not every company in this industry is doing as well. In fact, the cloud and ghost kitchen concept was once expected to make up more than 20% of the restaurant industry by 2025. However, after restaurants reopened, the concept became difficult to maintain, even for big fast-food chains like Wendy's.

Meanwhile, Kitchen United, which raised some $150 million in venture-backed funding, decided to sell assets to Sam Nazarian-led lifestyle hospitality company SBE in March.

Local Kitchens' success made it a good bet for General Catalyst, which led the $40 million Series B and a previously unannounced follow-on to its Series A round. Kyle Doherty, managing director at General Catalyst, said ghost kitchens initially "promised to drive pivotal change in customer value and efficiency." However, issues like inauthentic menus, poor quality control, questionable preparation methods, and unsustainable unit economics prevented certain business models from gaining a strong foothold in the restaurant industry post-COVID.

By creating what Doherty called "a new category that's in our view reflective of the ideal dining experience," Local Kitchens has "the perfect blend of prioritizing what consumers need and using innovation to fix restaurant challenges and inefficiencies."

"Even years after food delivery growth proved to be a long-lasting trend, customers are still being forced to sacrifice the factors that make eating out enjoyable, and choose between high-quality food and good service," Doherty said. "Local Kitchens is accomplishing what other food delivery models have not been capable of — meeting customer experience preferences, driving unparalleled efficiency, and creating a solution that delights consumers, chefs, and local communities alike."

General Catalyst was joined by other existing investors Human Capital, Pear VC, and Stanley Tang, co-founder of DoorDash, who joins the company's board of directors. This brings Local Kitchens' total funding to $75 million.

"Stanley has been a friend and a mentor to us," Goldsmith said. "He's also been involved with Local Kitchens since the beginning of the company, and we're excited to have him officially join the board."