Ghost kitchen company once valued at $1B pivots to grocery delivery as food-prep business withers

A pandemic-era unicorn that opened hundreds of “ghost kitchens” around the country will lay off more than 50 New York City-area workers and shift gears to grocery delivery as the food-prep model quickly fades away.

Reef Technology, once valued at $1 billion after backing from SoftBank, filed WARN notices with the state Department of Labor earlier this month, announcing its plans to fire 53 workers at three locations at the end of September, according to the government filing.

The move is part of the Miami-based company’s larger pivot away from ghost kitchens and toward micro-fulfillment and technology services that it has quietly been pursuing for the past 18 months, a senior executive told The Post.

The three New York locations targeted for layoffs are on West 24th Street in Manhattan, in Riverhead, Long Island, and at FreshDirect’s sprawling parking lot in the Bronx.

Reef will become the landlord of the facilities, which will continue to provide grocery delivery services, according to the executive, who did not want to be identified because the initiative has not been announced yet.

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“We take the goods from FreshDirect’s warehouse and put them in our facility and deliver to FreshDirect customers,” the source said.

“We do a lot of their deliveries in the Hamptons and in Manhattan,” via vans and electric cargo bikes, he added.

Reef, founded by Ari Ojalvo and Umet Teki, will rent out the facilities to new owner-operators, while the company provides support services, the exec said.

In a statement to The Post, FreshDirect said that it “works with a few local vendors including Reef and Metrospeedy to help fulfill a small portion of orders,” adding that despite the impending layoffs there has been no discussion about “discontinuing their services.”

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Reef — which started out in 2013 as ParkJockey, a company that provided software and management services to parking lots, changed its name in 2019.

At the height of the pandemic in November 2020, Reef secured $700 million in funding from SoftBank and others to set up so-called kitchen “vessels” that make restaurant food for delivery only and operate out of trailers.

The ghost kitchen industry was super-charged by COVID as demand for takeout and delivery services soared because of lockdowns. KFC and Chick-fil-A began experimenting with the concept and some fast food chains partnered with ghost kitchen operators.

By late 2022, Reef had more than 300 such vessels in the US and abroad.

However, the need for ghost kitchens began to evaporate as the pandemic eased. Many either closed, were acquired or changed strategies.

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Just a handful still operate, including CloudKitchens , run by former Uber CEO a nd co-founder Travis Kalanick, who received billions from SoftBank as well.

Cloud Kitchens is facing its share of challenges, including lawsuits alleging misleading business practices, health department violations and layoffs.

Reef has also struggled to right its operations over the past two years.

It temporarily closed about one third of its food trailers and laid off 5% of its workforce in 2022, following explosions in some of its kitchens caused by propane burners.

Officials in a number of cities, including New York, Houston, Chicago, Philadelphia and others forced Reef to temporarily close their trailers for regulatory violations, including operating without a permit, according to a Wall Street Journal report .

Last year, it inked deals with food service providers at airports and stadiums, including the Hard Rock Stadium in Miami and the Raleigh-Durham International Airport, where travelers can order meals using kiosks or their phones from about a dozen restaurant brands that Reef supports, according to a Restaurant Business report .

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