Kroger enters meal delivery game with launch of on-premise ghost kitchens

08-Oct-2020 - Last updated on 08-Oct-2020 at 16:02 GMT

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In partnership with Indiana-based technology startup ClusterTruck, Kroger is repurposing around 1,000 square feet of retail space at select stores to meet consumer demand for quick, freshly-prepared, restaurant-quality meals delivered to customers' doorsteps or available for pickup at Kroger stores.

Founded in 2015, ClusterTruck's ghost kitchens use proprietary software employing custom algorithms to optimize kitchen and delivery operations. In the case of the Kroger partnership with ClusterTruck, meals are prepared at on-premise ghost kitchens located in Kroger stores but which are operated by Clustertruck employees who prepare and deliver the meals removing the pain point of a third party delivery model.

The partnership with ClusterTruck will provide customers with an on-demand meal ordering service in which users can order a meal online or through a mobile app for quick delivery (average order time is less than 30 minutes) or for store pickup at a Kroger location with an on-premise ghost kitchen operated by ClusterTruck staff.

Customers can order from a menu of more than 80 meal options – from pizza to Pad Thai – which the Kroger and ClusterTruck describe as food quality on par with a sit-down restaurant but “with the personality of street food.”

"The way our customers order and receive meals is evolving, and ClusterTruck's innovative culinary and digital design is cracking the code for the future of profitable meal delivery," commented Yael Cosset, Kroger's CIO.

“As the prepared food delivery category continues to explode, we’re thrilled to play such a pivotal role in Kroger’s fresh and forward-thinking meal delivery strategy,” said Chris Baggott, ClusterTruck co-founder and CEO.

Kroger’s first on-premise kitchen is open in Fishers, Indiana, with a second location in Dublin, Ohio, launching later this year.

Kroger’s digital evolution

The partnership with ClusterTruck is part of Kroger’s ongoing efforts to provide a seamless shopping experience supported by digital innovation. Kroger experienced a 127% digital sales lift in the second quarter 2020, as customers continued to use digital ordering options, including pickup, delivery, and ship to home.

“The new on-premise kitchen, in partnership with ClusterTruck, is an innovation that streamlines ordering, preparation and delivery, supporting Kroger as we meet the sustained customer demand for quick, fresh restaurant-quality meals, especially as we navigate an unprecedented health crisis that has affected every aspect of our lives, including mealtime,” said Dan De La Rosa, Kroger’s group vice president of fresh merchandising.

In its Q2 2020, Kroger president and CEO Rodney McMullen commented on the strong adoption curve of its digital services that the company predicts will last well into next year.

“Kroger's digital ecosystem continues to expand and customers are increasingly engaging with us,” said chairman and CEO Rodney McMullen during Kroger’s Q2 2020 earnings call.

“Many of our customers are ordering groceries online for the first time as a result of COVID-19 and the majority of them tell us they plan to continue to do so in the future.”