Delivery Apps Are Forcing L.A. Restaurants to Adjust to a Take-Out World—or Risk Starvation

As technology turns ordering in into the new dining out, many local restaurateurs are slinging food from ”ghost kitchens” throughout the city

Canter’s is the Dodger Stadium of delis. The enormous menu; the nearly 24-hour service; the Kibitz Room, home to generations of rock and rollers and late-night rabble-rousers—none of it has changed in years. And it’s not going to. At least not so you can tell.

Marc Canter, the third generation to run his family’s landmark on Fairfax Avenue, has no intention of altering so much as a napkin dispenser. At the same time, the soft-spoken 54-year-old is in the middle of upending the family business without the regulars noticing a thing: He’s creating a delivery and take-out service that will extend far beyond the deli’s current three-mile delivery radius, using strategically located satellite kitchens.

“Everyone wants convenience,” Canter says. “If we want to keep up, we need to deliver more than we do now.”

Out of necessity as much as choice, L.A. restaurateurs suddenly find themselves catering to the whims of customers who increasingly prefer to eat in rather than dine out, leaving them reliant upon national delivery operators who’ve analyzed and algorithm-ed an old idea into a gold mine. Postmates, Caviar, DoorDash, Uber Eats, Grubhub, and the rest all compete for your take-out order through their apps. Morgan Stanley restaurant analyst John Glass predicts the restaurant delivery business will grow to $220 billion by the end of 2020. Lisa Jennings, executive editor of the industry trade publication Restaurant Hospitality, points to recent surveys showing 60 percent of all restaurants’ business is now off-premises delivery, catering, or pickup. “That’s astounding,” Jennings says. “But that can make it difficult for some smaller restaurant owners because it’s not uncommon for their profit margins to be as little as ten percent.”

Additional revenue from deliveries might not bolster those margins enough to offset the expense of running a delivery service on top of the day-to-day costs of a dining room and kitchen. In addition to the hefty 20 percent to 30 percent commission on each bill paid by the restaurants, the apps charge customers a delivery fee and an unexplained “service fee” that is the source of much derision. “They double-dip,” says an outraged L.A. chef in disbelief. “They won’t budge on those charges.”

Delivery was supposed to have been a godsend, but for many restaurants the golden age of food to go has brought only headaches and even disaster. Some are getting out altogether or are retrenching, offering delivery only from much smaller storefronts. The 64-year-old La Scala is keeping its Beverly Hills flagship but has closed in Brentwood and opened a take-out and delivery shop instead. The current owner is looking for more locations for its no-seating service, maybe in the Valley. Gigi Leon, daughter of the original owner, Jean Leon, says, “We were doing so much takeout in Brentwood, we didn’t really need the restaurant. Why go to that expense if it’s not earning enough back?”

Meanwhile growing numbers of marquee establishments are quietly employing so-called ghost or virtual kitchens, where food is prepared in anonymous industrial locations designed expressly for delivery or pickup. It’s the same food, just not prepared in the restaurant’s kitchen.

canters deli delivery
Marc Canter is expanding Canter’s delivery footprint across L.A. by opening remote ghost kitchens that prepare its fare

Christina Gandolfo

Canter’s is one of those pivoting. From now on, much of its takeout will come not from the mothership on Fairfax but from ghost kitchens, which Canter says lessens the problems of supply and demand. As small as 250 square feet, a ghost kitchen doesn’t have a dining room, bar, customer bathroom, or parking. It’s just two or three chefs, trained, in this case by Canter’s, cooking and packaging food for pickup and delivery. Ghost kitchens aren’t exactly a secret, but most customers have no idea their food isn’t coming from a restaurant.

A few stalwarts refuse to yield. The Apple Pan on Pico Boulevard might use a delivery app someday, but not now, according to manager Lupe Gomez. “We’ve gotten along fine all these years.” Killer Noodle on Sawtelle Boulevard won’t deliver even if you wheedle—it’s just too busy. There’s no delivery at Pink’s Hot Dogs either, as evidenced by the limos idling along La Brea Avenue at 2 in the morning. The second generation to run his family-owned enterprise, Richard Pink isn’t following the herd. “We don’t think a chili dog is going to be very good after a ride of more than 15 minutes,” he says. Besides, he’s plenty busy already and doesn’t want to allocate more space or labor for delivery. “And I hear other owners complaining about the costs,” he adds.

Another longtime local restaurateur complains that his establishment’s expanded delivery service actually cannibalizes the in-house business. “If they can get it at home, they don’t come here and spend on those extras like wine,” he laments. “I’m in this business to see and take care of the clientele. Now I don’t see them.” Bobby Burns, co-owner of Bedford & Burns in Beverly Hills isn’t as pessimistic. “People want to come in here and see me and my sisters, their favorite busboy, and their colleagues and friends,” he says. “There isn’t any couch that’s going to give you that.”

For years Canter’s had fielded requests to start delis in other neighborhoods but hesitated because of the expense. “When we heard about ghost kitchens, that made sense to us,” says Canter. “Instead of investing in an entire restaurant, we could just have kitchen space with delivery services so we don’t have to manage drivers.” Canter plans to use the kitchens to expand to neighborhoods farther west that promise to prove profitable. So geography will no longer stand in the way of West L.A. customers’ favorite matzo ball soup.

Jim Collins, CEO of Kitchen United, one of the largest nationwide operators of satellite kitchens, hates the term “ghost kitchens.” He prefers “virtual kitchens.” Kitchen United’s Pasadena building houses seven food operations, Canter’s among them. “This is a pivot of the old commissary idea and an opportunity for restaurants to serve new consumers,” Collins says. Kitchen United founder Massimo Noja De Marco, a chef himself, sees the business as a service to cooks: “I’ve never known a chef who loves to clean. What a cook wants to do is cook. We’re taking care of the cleaning, storing, and provisions.” Even Travis Kalanick, the bad-boy cofounder of Uber, is getting into the virtual-kitchen business with CloudKitchens, now that Uber Eats has emerged as a dominant player in the delivery game. Besides space and equipment rental, CloudKitchens charges restaurants for data analytics. Kalanick has been secretive about the venture; Saudi Arabia’s reported $400 million investment in CloudKitchens kicked up a dust storm of bad PR, given the kingdom’s dreadful human rights record.

ghost kitchens
Ghost kitchens like this one have popped up throughout L.A.

Robert L. Burns

Having drilled down on data, these new enterprises see a strong business model with room to grow. Virtual-kitchen owners and delivery service operators talk about taking the hinterlands by storm. “Des Moines needs this,” says one. But, Jennings warns, “there are problems, and there’s more shaking out to come.” While Canter was pleased with the delivery business generated at his restaurant’s Kitchen United satellite in Pasadena, the location operated by CloudKitchens downtown hasn’t been able to cover all of the potentially lucrative office building or USC business. And unlike the Pasadena kitchen, there isn’t any way to pick up an order inside the gritty, heavily graffitied building across from the Angelus Rosedale Cemetery.

Nailed to the door of chef Eric Greenspan’s ghost kitchen is a black-and-white photo of swing-era bandleader and drummer Chick Webb. “Benny Goodman was consistent, but Chick heard the notes between the notes—he improvised,” Greenspan says. Webb is an appropriate role model for the chef, who’s cooked at Patina, opened the well-regarded Foundry, and was one of the first serious chefs to go all in on delivery, creating four menus under the Alt/Grub/Faction name and cooking in space rented from CloudKitchens. Unlike restaurants with familiar names, Greenspan’s virtual food court didn’t ring a bell with consumers. Greenspan recently licensed the business to a large restaurant group, which he says will bring marketing muscle to the venture. “I learned a lesson,” he says, “but I still believe anyone who’s not doing delivery is gonna fall out of the sky like a pterodactyl.”

“I’m not sure you can make it anymore if you don’t figure out your delivery option.” —ZacH Pollack, Alimento Chef and Owner

Zach Pollack’s success is all about timing. The respected chef and owner of Alimento, Pollack opened Cosa Buona in 2017. Built in the shell of a former pizza joint in Echo Park, the restaurant was his bid to re-create a traditional neighborhood red-sauce place but with more-refined cooking. Pollack designed the kitchen from the start to accommodate takeout. He enlarged counters for packages to be picked up and made sure there was enough room for both delivery and food prep. “I’m not sure you can make it anymore if you don’t figure out your delivery option,” says Pollack, whose fried mozzarella sticks are legendary. “Those are favorites in the restaurant and to go,” he says. “Who doesn’t love fried cheese?”

Godmother of the L.A. food scene and partner in the Mozza restaurants, Nancy Silverton has never ordered food delivered for her own consumption. “My staff orders in things that aren’t on our menu,” she says a little ruefully. “Tacos, I think.” Despite her lack of personal experience, Silverton and her partners were ahead of the delivery curve. Not because they were prescient, but for the most L.A. of reasons: real estate. The building that now houses Mozza2Go, the restaurant’s delivery brand, came up for lease in 2007, so she snagged it, mostly to prevent someone else’s business from landing in the middle of what is known as the Mozzaplex.

“We thought delivery made sense,” says Silverton, who oversees Pizzeria Mozza, Osteria Mozza, Chi Spacca, and Mozza2Go. Opened before restaurant delivery services became ubiquitous, Mozza2Go employed its own drivers. Silverton has since bowed to the apps but points out: “If you call us directly, you pay less, the driver gets all the delivery fee, and the restaurant keeps more,” she says. “It’s a good option for the customer and for us, but people have gotten so used to the apps, they don’t think to call directly.”

“You’ll never get as good a meal delivered as you can have in the restaurant.” —Jerry Greenberg, cofounder of Sugarfish

Besides the economic challenges of dealing with a separate service to get meals to their destination, making sure that food maintains in-house dining standards is a big issue. Don’t even mention the subject to Sally Elliott, a retired nurse who orders delivery a lot. “I have gotten such slop from places that otherwise do a beautiful job at the table,” she says. “Some of them seem to be waking up to how terrible their delivery food looks and tastes, but they’ve got a long way to go in general. This is expensive, it should be done right.”

Restaurant owners are aware of the problem. “You’ll never get as good a meal delivered as you can have in the restaurant,” says Jerry Greenberg, cofounder of the Sugarfish sushi restaurants. “We didn’t want to deliver for that reason, but guests kept asking.” So Sugarfish designed its own delivery box, which looks more like a gift from a posh baby boutique. It’s divided into sturdy compartments so that the sushi isn’t squished; an elegant insert offers recommendations for the appropriate condiments, included in small containers. “People assumed we hired a marketing firm to get the container right,” says Greenberg. “We did it ourselves. We tested every detail you can imagine to get the form right.”

Sugarfish limits the food available for delivery based on how well each item “travels,” Greenberg says. Silverton also restricts the menus for delivery. “I’m not going to send our delicately arranged plate from the mozzarella bar,” she insists. She has tweaked some Mozza favorites—the chopped salad is layered just so—to arrive in pristine condition. The staff thought an oven they had on hand would be great to warm the pizza before sending it out. That didn’t work, Silverton says. “It dried out the pizza.”

mozza delivery
Nancy Silverton baked delivery into the business plan at Mozza well before the onslaught of the apps. “It’s a good option for the customer”

Some restaurant owners take things even further. Last year Bryant Ng, chef-partner at Cassia, part of the Rustic Canyon Family restaurant group, started a virtual kitchen, Cassia Rice & Noodle Kitchen, within the original Santa Monica restaurant, specifically for takeout and delivery. He offers a short menu of rice- and noodle-based dishes, all tested for durability. “People may not treat the food the way you’d like,” Ng says good-naturedly. “So we made sure it all had staying power.” And just as important is pricing. “Cassia can be a special-occasion restaurant for some people,” he says. “The delivery menu is a bit less expensive, making our food more inclusive, which is important to my wife and me.” That’s unlike many restaurants, which typically charge a dollar or two more than the regular menu items. “It’s to cover the extra cost,” Silverton explains, reasonably enough, although convenience-addled customers tend to grouse about yet another couple of bucks tacked onto the multiple charges levied by the delivery apps.

Across the hall from Cassia is Esters, another Rustic Canyon Family business. Esters makes deliveries and has increased its charcuterie offerings, which are packaged like gift boxes. “People are charmed by the presentation,” says wine director Kathryn Coker. Another plus: wine delivery, also offered by Mozza2Go and Cosa Buona. “People really like to have a wine brought with their meal,” Coker says.

Milo & Olive, yet another Rustic Canyon Family property, has added Milo SRO, a separate location with a new menu for delivery. Regulars were asking for items that couldn’t be prepared out of the Milo & Olive kitchen, including larger New York-style pizzas for parties and gluten-free topping combinations. “You have to be nimble as well as understand your niche when it comes to delivery,” says Elise Freimuth, Rustic Canyon Family’s director of communications. “And we listen carefully to our guests.”

So what’s the takeaway, as the British would say, on home delivery? Restaurants aren’t going anywhere, but they are morphing. “To succeed now,” says Greenspan, who, besides his chef chops, has a business degree, “you’re going to need scalability. Figuring that out is up to the individual owner, but I’m still betting on ghost kitchens. They give you a lot of flexibility. If something doesn’t work, stop offering it. Experiment in a place that’s not an arm and leg to rent.”

Canter agrees. “Ghost kitchens are a good way for us to go. We can’t afford to become irrelevant. L.A. traffic is always a problem, so the way we were getting our food to the customer wasn’t going to work much longer.” Well aware of his customers’ cravings, Canter adds, “If someone in West L.A. wants a Canter’s Reuben and matzo ball soup, and they can’t get it delivered, they’ll go someplace else and become their regulars.”

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