Dive Brief:
- Kroger will offer scratch-made meals for on-demand delivery through a new service called Kroger Delivery Kitchen, the company announced in a press release. The grocer said there will be no service or delivery fees for the meals.
- The grocer will open a dark kitchen in Carmel, Indiana, in partnership with ClusterTruck, a company that owns and operates vertically integrated, delivery-only kitchens. The kitchens can, on average, prepare and deliver a meal within 30 minutes of a customer placing their order.
- Initially, Kroger Delivery Kitchen will serve customers in Columbus, Ohio, Indianapolis and suburban Carmel. Another ClusterTruck dark kitchen in Denver will support Kroger’s King Soopers banner.
Dive Insight:
Kroger is positioning the new service as a way for customers to get fresh, flavorful meals quickly and easily. It’s a potentially game-changing move that could signal a new revenue stream for grocers as the line between their stores and restaurants continues to blur, and as demand for meal delivery grows.
Indianapolis-based ClusterTruck, which was founded in 2015, uses a proprietary software platform with algorithms that optimize kitchen and delivery operations. The company has achieved profitability, according to the press release, using cutting-edge technology and high-quality ingredients to create and deliver from-scratch meals in a timely manner.
The dark — more commonly known as "ghost" — kitchen ClusterTruck is opening with Kroger in Carmel will be its fifth location, and will require about 20 employees to staff it, according to the Indianapolis Business Journal. The partnership is initially running as a 12-week pilot, though there’s no firm end date, a Kroger spokesperson told the Business Journal.
In a statement, Kroger’s vice president of fresh Suzy Monford said customers can order items like pizza and pad thai and receive their food within minutes of being prepared. Other menu items listed on the Kroger Delivery Kitchen site include a "lazy breakfast burrito," Vietnamese noodle bowl and roasted chicken green goddess salad. A spot check of the service in Carmel revealed deep discounts on dishes like its crispy chicken Caesar wrap, marked down from $9.99 to $4.99, and the green goddess salad, listed at $5.49 compared to a regular $10.99.
Customer expectations for food delivery are shifting. Stores like Wegmans, Whole Foods and many others have upped their prepared foods game, making them destinations for quick, convenient meals. They've also moved meals online, ushering food delivery companies like DoorDash into the grocery space and pushing delivery services like Instacart and Shipt to allow shoppers to add prepared foods to their carts.
As demand for meal delivery continues to grow, ghost kitchens are becoming a popular way for restaurants and other companies to prepare food closer to the customer and without disrupting their full-service locations. CloudKitchens, founded by ex-Uber CEO Travis Kalanick, recently netted $400 million in funding from Saudi Arabia's Public Investment Fund, while Kitchen United, another major player in the space, announced $40 million in funding this fall, with plans to move into large cities like New York. DoorDash has begun building ghost kitchens, recently adding Chick-fil-A as an operator.
A direct partnership with ClusterTruck and full access to a co-owned ghost kitchen means Kroger, which recently rebranded and launched a marketing campaign centered on the tagline "Fresh for Everyone," can better understand what its customers want and how they respond to the service. It will also entice customers with its fee-free structure, a major advantage Kroger has over other food delivery providers.
Customers in Indiana and Ohio will be able to place their orders online at KrogerDeliveryKitchen.com or through the ClusterTruck app, while Denver area customers can visit KingSoopersDeliveryKitchen.com.
