Front Range Food Halls Are Going Virtual

“I wish people didn’t want fries delivered,” Michael Joseph says, explaining that the spuds just don’t hold heat long enough to arrive at his customers’ doors warm. If Joseph had his way, he’d drop them entirely from the menu at Scratch Kitchen, the two-year-old takeout-and-delivery restaurant chain he co-founded in Boulder. “At the same time, we want to sell the customers what they want,” he says. So the fries remain, but they’ll soon see competition from tots, which testing indicates stay warmer longer. Then, if the data shows a positive change in customer behavior, Joseph will move the spuds to a more prominent location in his online ordering platform to further increase sales.

If using data analysis to quibble over the menu placement of fries versus tots seems like a scene from the HBO comedy Silicon Valley, it’s not too far from the truth. Two stories above Scratch Kitchen’s first location, Joseph and I are sitting in what is unmistakably a tech startup office. A handful of slightly unkempt 20- and 30-somethings hunch over messy desks, stacks of La Croix lean against the walls, and wires seem to go everywhere at once. All of this is fitting because Scratch Kitchen isn’t your typical eatery. It’s a new breed of ghost kitchen, the tech-centric restaurant model that is to the food service industry what Uber is to taxis: a disruptive force.

Ghost kitchens—also called dark, cloud, or shadow kitchens and, less spookily, virtual restaurants—are as amorphous as the name suggests. Generally, the phrase has come to mean takeout- and/or delivery-only restaurants that accept orders almost exclusively online; rely solely on their digital presence to reach customers; use third-party apps like Grubhub and UberEats to transport their meals; and prepare their food in the galleys of unrelated brick-and-mortar eateries or inside commissary-style kitchens on nameless industrial blocks where the rent is cheap.

Scratch Kitchen breaks what mold there is in a few ways. Its first location lives just east of the Pearl Street Mall, and its kitchen is far from hidden: Customers picking up their meals can see straight into the open food prep area. But the most obvious difference is that Scratch Kitchen is not a single restaurant; it’s a virtual food hall with six restaurant concepts. In one order, you can get a Buffalo chicken sandwich from Highline Burgers & Wings, tacos from Casera Mexican Kitchen, a miso salmon plate from Kin & Co. Comfort Kitchen, and vegan chocolate pudding from À La Mode.

Joseph and his team created each concept and plan to develop others so the mix of menus at each location can be tailored to its neighborhood’s culinary tastes and new restaurants can be swapped in at existing stores to keep pace with what’s trendy. “The idea of Scratch Kitchen is that it’s just a platform,” Joseph says. “Restaurants can go out of style, so for us, as long as delivery and takeout don’t go out of style, we’re good.”

During the pandemic, the ghost kitchen business model has taken off as a lifeline for struggling restaurants. “We were dependent on the hotels, the city and county government buildings, and conventions. Then all that went away,” says Tay Wilbanks, the owner and operator of the Greedy Hamster, which recently moved from a physical location in downtown Denver to a ghost kitchen model. “It just made a lot of sense for us. It’s lower overhead. It’s lower insurance and lower staffing requirements.”

The first wave of delivery-only restaurant concepts debuted long before 2020, popping up around the early 2010s. Nearly all of them failed. At the time, some critics blamed the approach, but Joseph believes the delivery app ecosystem we take for granted today just wasn’t mature enough then. Either way, the early problems didn’t stop investors from pouring hundreds of millions of dollars over the following decade into startups like Highland-based Nextbite; founded in 2018, it has developed dozens of ghost-kitchen-specific brands (including HotBox, which features stoner snacks curated by rapper Wiz Khalifa).

Joseph started thinking about what would become Scratch Kitchen around the same time. He made his name—and a boatload of money—when Hello Fresh purchased his meal kit startup, Green Chef, in 2018. After a hiatus to spend time with his family, the then 37-year-old combined his tech savvy and his clean-food background to dream up a way for households, especially ones with members who may have dietary restrictions, to have all their meal delivery needs—and wants—met without multiple orders from multiple establishments. The result was Scratch Kitchen, where approximately two-thirds of the produce is organic and everything is made with additive-free ingredients. The first location debuted, fortuitously, in March 2020; a second opened in Elyria-Swansea last July; and a Glendale outpost should launch next month.

Scratch Kitchen isn’t alone in the local virtual food hall game. This past November, ghost kitchen Playground relaunched as a virtual Asian-street-fare-centered food hall with six concepts, and two-year-old Overland-based ChefReady—which currently leases space to eight virtual restaurants, including the Greedy Hamster, in its South Cherokee Street building—is developing software so customers can order from all of its tenants at once. It’s a move that could give ChefReady an edge in the increasingly crowded arena: Datassential, a food and beverage market research service, estimates there are 13,000 virtual restaurants in the United States, and data firm Statista predicts the size of the American ghost kitchen market could reach $71 billion by 2027. It was $43 billion in 2019. On the ground, Wilbanks is similarly confident the ghost kitchen trend will outlast the pandemic. “There’s always been space for delivery and to-go,” she says. “I just think it’s going to be a much bigger space than it was ever before.”

After more than an hour spent discussing everything from the difficulty of sourcing organic and clean-label ingredients to using algorithms to automatically build a personalized ordering experience, Joseph takes me to see Scratch Kitchen in action. Ingredient-packed coolers and stoves line the walls; a long prep station stretches down the middle; and a monitor above the pickup counter uses proprietary software to display live updates for each order. There’s a public restroom off to the side, which, with no on-premises dining, doesn’t legally have to exist. It’s for the delivery drivers, as is the water-bottle-filling station.

That attention to detail makes its way into the meals, too. Fries aside, Scratch Kitchen screens out foods that don’t travel well (like steamed broccoli), and it packages hot and cold as well as wet and dry items separately. Because this is a data-driven startup, it doesn’t make those decisions without testing them first. There was some question, for example, about whether the burgers should be sandwiched inside the buns or delivered separately for at-home assembly. Joseph and his team decided that serving them together didn’t affect quality—and it meant less packaging waste, something their eco-conscious customers say they care deeply about.

Back in Denver that evening, my partner and I scroll through Scratch Kitchen’s menu on Grubhub. I order a Nashville hot chicken sandwich and, yes, some fries. She gets a plate with grilled chicken, Brussels sprouts, and mac ‘n’ cheese, and we add some tacos to share. The fries arrive cold, just as Joseph warned me they would, but they are still crisp and lightly seasoned, better than plenty of versions I’ve gotten via drive-thru windows. A few minutes in a toaster oven or air fryer would easily bring them back to their prime, but they’re good enough that getting off the couch isn’t worth the effort.

(Read More: 12 of Metro Denver’s Best Food Halls)