Commercial kitchen operator Karma Kitchen has not seen a slump in delivery, with its major F&B partners continuing to grow delivery sales, founders Eccie and Gini Newton tell MCA.
The business, founded by the two sisters in 2018, sees delivery as a small but growing part of its model, with partners including Tortilla and Popeyes as well as growing brands such as Roti King. It operates five units in London, with eight more in the pipeline.
“Corporate catering is really booming right now,” they say. “There’s huge demand for central production unit [CPU] space for big and small operators.
“We’re the perfect real estate partner for these businesses to help them scale.”
Karma Kitchen is backed by private equity firm CrossTree, which made a £100m investment in 2022.
The majority of its business is CPUs, which help restaurants centralise operations, staffing, waste, and cost.
“While delivery is not growing as fast as during the pandemic, the market is actually really robust. Big delivery brands are doing very well.
“It’s a newer category, while corporate catering has been around for a long time and is very established. Delivery will eventually hit that point of becoming established.”
The standard for delivery has risen dramatically in the past few years, according to the founders, with Karma Kitchen recently partnering with two Michelin-starred Wales restaurant Ynyshir to deliver a £200 10-course tasting menu from its Bermondsey unit.
“The customer has higher expectations now. We’re seeing a lot of specialisation, with founders and owners really connected with their brands and communities through their personal histories.
“The shifting price point of delivery is another big trend we’ve seen. Shrimp in a bag has an average spend of £60 per head.
“There’s also a lot of meal prep being delivered…lots of small independents are doing well from our kitchens, and Popeyes is smashing it.”
Large multinationals are signing multiple site deals with the business, which aims to expand into European territories in the future.
The aim is to more than double the UK estate to 20-25 sites in the next few years, with an eye on increasing presence in Bristol and expanding to Brighton.
“Our expansion will be driven by our partners and where they’d like us to be.
“For us, any new territory needs to tick three boxes – core partners need to expand to those territories, there needs to be growth in corporate catering in that area, and the area needs to have a lot of restaurants we can support.”
In addition to providing a low capex alternative in residential areas, Karma Kitchen looks to support its partners to better connect with their customers.
“Roti King for example doesn’t have so many physical sites. Aside from an additional revenue stream, we offer another brand touchpoint to connect with customers in their homes.
“We hope to drive long-term value for these businesses.”
