Starbucks inks deal with Travis Kalanick's CloudKitchens as the coffee giant expands delivery through DoorDash

• Starbucks is trying to expand its delivery business.
• CloudKitchens offers one solution to delivery growth.
• Starbucks already works with Uber Eats and recently expanded its DoorDash partnership.

Starbucks is working with CloudKitchens, the ghost kitchen company run by Uber founder Travis Kalanick, as the coffee giant broadens delivery outside of its traditional stores.

Mobile ordering and delivery have boosted Starbucks' bottom line and have become an incremental and growing part of the business. Starbucks would not share specifics on the size of its delivery business but has previously said the segment has seen a 20% year-over-year growth.

"Delivery demand remained robust even after consumer mobility has recovered, demonstrating that it is highly incremental and interwoven into our customers' lifestyles," Laxman Narasimhan, the company's CEO said during an earnings call in May.

The company works with Uber Eats and recently expanded its DoorDash partnership.

CloudKitchens, which rents small, private kitchen bays that share a reception, offers one solution to delivery growth. The pickup-only facilities allow companies to take advantage of the DoorDash- and UberEats-enabled delivery boom. Brands ranging from Buffalo Wild Wings to Chick-fil-A have signed up with CloudKitchens, which has dozens of live locations in the US and operates internationally under various names.

Starbucks is building out a kitchen in at least one San Francisco CloudKitchens location, per local permits reviewed by Insider. The site, called Charter Oak Food Pick-Up, sits at the intersection of two major highways, making it convenient for delivery drivers. Other offerings at the converted warehouse include burgers, pancakes, and local ice cream brand Humphry Slocombe.

Starbucks plans to open the San Francisco ghost kitchen on August 22 and operate it from 7am to 6pm, per a March filing with the city. The ghost kitchen will not sell alcohol.

Starbucks declined to provide additional details about the CloudKitchen partnership. CloudKitchens did not respond to an email seeking comment.

The coffee chain has long mulled ghost kitchens and has opened several in China.

"We're learning from their experience to understand how we might bring a similar model to life in the US, particularly in large metro markets like New York," Starbucks' then-chief financial officer Pat Grismer said at a 2019 investor conference.

In the company's 2022 investor conference, Brady Brewer, the company's chief marketing officer noted the 'tremendous growth' in new store formats like delivery-only.

"Connection is no longer constrained by the four walls of a store or any physical location at all. We're serving customers across all of our channels," he said. "We're connecting with customers in their cars, connecting with customers on their doorsteps."

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