After operating his own shadow kitchen, Keto Kitchen, in Austin for the past year, serial entrepreneur John Meyer found fintech resources for the industry were lacking.
When Keto Kitchen had good sales in the first quarter, Meyer went to the bank to ask for expansion funding and called the banker back asking what a ghost kitchen was. This told him there was an opportunity for a data-driven fundraising tool for these types of restaurants.
“Even if the bankers knew about it, they didn’t have the technology to back it up properly,” he added. Instead, Founder and CEO Meyer created Ghost Financial to initially do two things: provide what it bills as “the first cash-back credit card for food and beverage inventory” and use data and technology to underwrite restaurant expansion loans and credit limits. for the map.
The credit card offers 1% cash back on purchases, which can be quite lucrative, especially if ghost kitchens spend an average of around $40,000 a month on supplier inventory, he added. .
Ghost Financial also develops API integrations with point-of-sale systems, like Toast, and delivery apps, like DoorDash, so it can pull metrics that represent areas like operational health and efficiency. , hourly and daily sales, average food preparation links, ratings and reviews to determine credit limit and provide instant loan decision.
If you wonder where you heard Meyer’s name, you might remember him in 2015 when he was building Fresco News, a crowdsourced network for breaking news, or as co-founder of Homebound, where he is always advise.
Meyer was candid about his journey from Homebound with Jack Abraham. It happened around the time he lost his father to depression, and Meyer decided to take some time off to focus on healing, and about a year and a half ago he started a number of side passion projects including angel investing, advising and starting Keto Kitchen.
“I went from being a seasoned tech entrepreneur to working 12-hour days in the kitchen with chefs and dishwashers,” he said. “This immersion in the service sector taught me a lot. Restaurants have small profit margins, maybe 5% or less. There are some extremely hard workers out there, and it turns out that a vast majority of the industry, especially ghost kitchens, pay for inventory with a check, cash, or ACH and don’t benefit financially from an expense five or six figures per month.
Meyer cited research showing that by 2030, ghost kitchens will be a $1 trillion industry. So, to meet demand and further develop Ghost Financial’s first two core products, the company completed a $2.5 million pre-seed funding round to build engineering and marketing teams. .
He secured a diverse mix of investors including HOF Capital, 305 Ventures, Hustle Fund, Active Capital, Anthony Ghosn, The Council, Amber Illig, Sarah Kaney, Meg Fitzpatrick, Samantha Stein, Sabrina Halper, Kosinski Ventures, House Capital, Starship Ventures. , Ben Yu, Adam Guild, Cory Levy, Ditec Ventures, Draft Ventures, Pareto20 and Kepler Operator Fund.
“I’m a big proponent of funding to bring in additional strategic expertise and capabilities so we can move faster,” Meyer said. “It’s an obvious concept that I’m surprised hasn’t been built on before.”
He says there are a few competitors who are still in stealth mode, but Ghost Financial’s secret sauce is their empathy-driven approach that cares about operators rather than asking them to spend 30% of their income on tools. . Instead, his company makes money from credit card interchange fees, generating around 2% in fees, half of which goes back to the operator in the form of cash back.
Others are also seeing pent-up demand in this area and offering great deals. For example:
- Melon Kitchens is an Indianapolis-based delivery-only restaurant accelerator for black chefs that includes a three-month program to guide emerging food entrepreneurs from idea to test kitchen to revenue generation. The project is backed by Kelli Jones of Sixty8 Capital.
- MayaEats’ One Stop Kitchen works as a partner with underperforming restaurants to renovate their brick-and-mortar stores, digitize them, and convert them into fast-food restaurants and distribution centers.
- Last year, Inspire Brands launched Alliance Kitchen in Atlanta, billed as “the first multi-brand restaurant-operated ghost kitchen” that includes Arby’s, Buffalo Wild Wings, Jimmy John’s, SONIC Drive-In and Rusty Taco.
We’ve also seen other tools for shadow kitchens receive funding. For example: CloudKitchens, Travis Kalanick’s ghost kitchen startup, raised $850 million at a $15 billion valuation in January. And All Day Kitchens, which raised $65 million in Series C funding for its approach to allowing restaurants to share their food in a city using satellite kitchens. We’ve also seen Popchew, Lunchbox, Forward Kitchens, Muy, JustKitchen, and robotic kitchens like YPC fundraise over the past year.
Meyer, meanwhile, plans to launch the tools later this year with some $27 million in committed minimum spend, which he says will triple and quadruple as the credit card rolls out.
Then the company’s third product will focus on restaurant insurance – one of the biggest issues – and the fourth will be on an optimized payroll system. All of this will position Ghost Financial as a one-stop-shop for the financial and business needs of ghost kitchens and restaurants.