Ghost kitchens are putting a scare in brick-and-mortar SF restaurants, who served the Small Business Commission notice that delivery apps are listing their establishments without permission.
As San Francisco tries to make sense of the outbreak of ghost kitchens and sham restaurant listings on food delivery apps like Grubhub and Seamless, we have to make a distinction between “ghost kitchens” and “virtual kitchens.” They’re not the same thing! “Virtual kitchens” are attached to real brick-and-mortar restaurants but have separate menus or locations for delivery app partnerships, “ghost kitchens” are delivery-only outfits that pass themselves off on apps as traditional restaurants. These distinctions, and the move-fast, break-everything disruptions being caused by the digital food delivery sector, were the sole topic of Wednesday’s Small Business Committee meeting at City Hall. The Chronicle reports that restaurants had a mouthful of complaints about the scam listings, but also had feedback on how this new and largely unregulated model could be better managed.
The whole meeting ran for well over three hours, and the emerging alliance of delivery apps, ghost kitchens, and virtual kitchens was the only topic discussed. You can watch the whole meeting above, though we cut out the juiciest bits for this post. Unsurprisingly, restaurants are most upset about how, as Eater reported last year, DoorDash, Postmates, and GrubHub list restaurants without those restaurants’ permission.
“Listing restaurants without their consent has to stop,” said Rosa’s Cafe owner and executive director of the Golden Gate Restaurant Association Laurie Thomas. “We were getting a lot of orders at Rosa’s Cafe. These poor couriers were showing up with orders we couldn't even make. [The items] weren’t even on the menu, because they’d pulled the menu from a year ago, and we change the menu daily.”
“It was difficult for me to figure out how to make Postmates stop that,” she continued, noting that the arrangement violated her restaurant’s exclusive delivery agreement with Caviar. “There has to be a ‘Remove me’ button.”
Kin Khao owner Pim Techamuanvivit, victim of the notorious Seamless and Grubhub impostor scam, also spoke and didn’t mince words. “I do not appreciate being dragged into doing business with companies that we have no business with,” she fumed. “It shouldn’t be on us to figure out these people, who drag our names into their business model, to say ‘Hey, I don’t want to be on.’
“It’s thuggish behavior,” she added, noting they were violating her Michelin-starred trademark by fraudulently listing her name and logo.
On the restaurant end, traditional eateries worry that the ghost kitchens and virtual kitchens have unfair advantages. They don’t face the same rigorous permit process, and of course, have no obligation to give their gig workers minimum wage and employment benefits. The drivers are causing congestion with their double-parking for pickups, interfering with the restaurants’ regular deliveries of things like food and linen service.
But the most troublesome aspect to all of this are the potential consumer safety and public health hazards, particularly considering there is a crazy and unexplained virus currently running amok. App-based delivery drivers are not required to get the California Food Handler certification required of traditional servers, and likely have no clue what a food-borne illness even is.
“These changes happen faster than we’re able to change the health code to keep up with it," assistant director at the Department Public Patrick Fosdahl told the commission.
Dosa owner Anjan Mitra, who closed his Valencia Street location and does now dabble in virtual kitchens, still complained that the tech startups do have massive and unfair advantages. “Restaurants do not have the powerful lobbies or the luxury of operating at a loss for several years, as do many tech companies that are financed for growth,” he said.
Those companies’ financial reckoning may yet come, as we informed you last week that DoorDash, Postmates, and Uber Eats have all discussed mergers as profitability remains unattainable to these cash-burning machines. Yet once the irrational exuberance dies down, these apps and cloud-based services could present traditional restaurants with a nice niche.
“Our restaurant industry in San Francisco is in a serious state of decline,” Thomas said, noting there were 40 percent more restaurant closures than openings in 2019. ”Without a new revenue stream, we’re going to see more closures.”
Some movement toward app-based food delivery seems inevitable, since the lazy shut-in economy is here to stay, and apparently it’s just too hard to simply place a phone call to a restaurant for delivery as we had been doing for decades prior. But the revenue restaurants get from these partnerships is incremental at best, and at worst, there could be genuine public health consequences to the sloppy logistics of app hucksters. Those are the issues the Small Business Commission has on its plate, and their findings will be presented to mayor and Board of Supervisors for presumable future attempts at legislative fixes.
Image: Broke-Ass Stuart