Asian ghost kitchen operator with B.C. connection cooks up a new business model

Vancouver-raised entrepreneur Jason Chen co-founded ghost kitchen operator JustKitchen, which plans to expand globally from its home base of Taiwan.

Credit: Courtesy of JustKitchen

A JustKitchen facility in Taiwan

Vancouver-raised entrepreneur Jason Chen co-founded JustKitchen, which plans to expand globally from its home base of Taiwan

Jason Chen is calling from Taipei, but he’s kind enough not to rub it in.

Unlike B.C. and most other places around the world, Chen’s native Taiwan has been virtually COVID-free since the pandemic took hold early last year. “We’ve been very fortunate here,” admits the co-founder, president and CEO of JustKitchen.

Taiwan never experienced a lockdown—just social distancing from March through June of 2020. “Then everything else more or less reverted back to normal,” says Chen, who grew up in Vancouver after moving there at age eight. “Being an island nation, I think the government reacted fairly quickly.”

As it turns out, COVID has also helped Chen’s latest business venture. JustKitchen is one of the recent crop of cloud or ghost kitchens, which prepare meals for delivery only. These so-called app-to-door food businesses cost less to run than traditional restaurants because they don’t need dining rooms or wait staff.

In the first such public offering anywhere, JustKitchen listed on the TSX Venture Exchange in mid-April. Its stock is now trading in the $1.40 range. “We realized it was a market that was emerging but coming up quickly,” Chen says of the IPO. “So we wanted to establish our brand, we wanted to get into building very quickly.”

Chen, an entrepreneur with an extensive background in capital markets and private equity, moved back to Taiwan from Vancouver with his family about eight years ago. He soon joined Taipei-based Bayshore Pacific Hospitality, becoming vice-chair of the restaurant group.

Late last decade, he and his colleagues started noticing that online food delivery was gaining traction. Then in 2019, a 16,000-square-foot commissary kitchen went up for sale. “I had a lot of friends from the Bay Area and Silicon Valley that were visiting, and they said to me, Have you heard about ghost kitchens?” Chen recalls.

Around the same time, former Uber Technologies chief executive Travis Kalanick had launched CloudKitchens. “We started looking into the model and what works,” Chen says. “We decided to acquire the facility and take it over as a ghost kitchen operator.”

Hub-and-spoke grub

Chen’s three partners in JustKitchen include his friend Kai Huang, co-creator of the hit video game franchise Guitar Hero; and COO Kent Wu, who sold his Milk and Eggs grocery delivery service to Grubhub in 2019. “We call them COVID refugees,” Chen jokes of their Taiwanese roots. “They were born and raised in the U.S., but they came back during COVID.”

Chen and the other co-founders put their own spin on ghost kitchens, which are typically limited to a delivery radius of 3.5 kilometres, or 25 to 35 minutes. JustKitchen uses what it calls a hub-and-spoke model, preparing food to near completion at the main facility, blast-chilling it and sending it to 15 much smaller kitchens throughout Taiwan.

The spoke kitchens, which average 1,200 square feet, are in areas that the company has identified as showing high demand for online food delivery. “A consumer on the app is routed to them,” Chen says. “It’s warming up, packaging, ready for delivery, and it takes us five minutes to get into to the hands of the delivery driver.”

JustKitchen is also different because it runs all of its own infrastructure, from software integration to culinary operations, Chen explains. “To occupy all those spaces, we’re not aware of anyone that’s doing that at the moment. So competition is not direct for us at this point.”

Since JustKitchen launched last March, business has grown rapidly. At that time, 38 percent of Taiwanese households ordered from an online food delivery service at least once a week. “By June, it had gone up to 70 percent,” Chen says.

Although Taiwan’s restaurants are full again, he expects that this year’s number will be upward of 73 percent. After the pandemic gave online ordering a big push, it’s become a habit for people, Chen notes. “Now they realize the convenience, so they’re staying on it.”

From bar snacks to Michelin stars

JustKitchen’s business has three components. The first is its 14 proprietary brands, from Western to Asian cuisine, with different price points. The location of their respective spoke kitchens hinges on what nearby residents like to eat. For example, areas with younger populations might prefer healthier food, while those that are busy after dark might skew toward midnight snacks.

JustKitchen also has partnerships with two Michelin-starred restaurants. “That’s a process of us inventing a menu that’s suitable for delivery,” Chen says. “It’s not necessarily the same as what they offer in their dining experience, but it captures their chef’s creativity and flavour profile.”

The third component: JustKitchen’s five franchise brands, including TGI Fridays and similar Asian chains. “Those are the brands that we feel can really scale.”

On that note, JustKitchen is focused on international expansion. Besides Hong Kong—where it recently announced a deal for its first location—the Philippines and Singapore, the company is looking at the U.S. and Canada.

Do those plans include Chen’s longtime hometown of Vancouver? Yes, but not right away, he says. The company’s North American beachhead could be Toronto, where Chen and his partners have found a large kitchen that can be subdivided. “Operationally, it’s easier for us to go into a shared kitchen and start small and then build from there,” he says.

Sure, but come home soon, Jason.