June 5, 2019— Americans are increasingly idling their kitchens and spending more time and money on dining out, according to CBRE’s U.S. Food-in-Demand report. Prepared food delivery, primarily from restaurants, has grown by 40% in the past five years, reaching $18 billion in 2018. Sales are expected to hit $25 billion by 2023, with two-thirds ordered online.1 Restaurants are looking for more efficient ways to satisfy online-sourced hunger and are turning to “Virtual Kitchens” or shared meal preparation space to meet delivery demand.
Three prominent virtual kitchens2 in Greater Los Angeles (GLA) are capitalizing on prepared meal delivery expansion and much like last-mile warehouses, are locating their facilities to maximize customer order fulfillment reach. Spaces within virtual kitchen facilities rented to restaurants are typically hundreds vs. thousands of square feet for traditional restaurants and offer a low-cost and efficient alternative. For landlords, virtual kitchens could act as another source of demand for smaller industrial properties and vacant restaurant space. As consumer eating habits shift toward prepared meals accessed via technology platforms, virtual kitchens will likely become more prevalent for both existing and new kitchen-only (or ‘headless’) delivery restaurants.