- Travis Kalanick’s ghost kitchen company laid staff off on Wednesday.
- In 2021, Kalanick raised $850 million at a $15 billion valuation for the company.
- The cuts come as tech and real estate companies rethink staffing needs in a more difficult market.
Two employees at Travis Kalanick’s ghost kitchen company told Insider that they were laid off on Wednesday.
City Storage Systems employed over 4,300 people prior to the layoffs. It was unclear how many CSS employees were affected at the time.
According to two employees who spoke with Insider, employees were told on Wednesday that if their jobs were being eliminated, they would be invited to meetings with human resources, and the company scheduled an afternoon all-hands meeting. They asked not to be identified because they were discussing a sensitive subject.
Kalanick hopes to reinvent the food business through CSS, just as he did the taxi industry globally by founding Uber. CloudKitchens, a CSS unit, converts warehouses in the United States and Canada into ghost kitchen facilities for mom-and-pop restaurateurs as well as large corporations such as Chik-fil-A. Otter, another division, develops software for ghost kitchens and traditional restaurants. Kalanick raised $850 million for CSS from investors including Microsoft in the fall of 2021, at a $15 billion valuation.
The layoffs come amid a challenging market for technology and real estate firms, with inflation, higher interest rates, and other headwinds.
A spokesperson for CloudKitchens did not respond to a request for comment.
Customer issues in kitchens and with software
CloudKitchens purchased warehouses in 2019 and 2021, before interest rates skyrocketed. However, as its facilities have come online, the company has experienced high customer churn. Last year, operators told Insider that CloudKitchens sold them a dream but occasionally delivered filthy kitchens in locations lacking adequate safety and technical support.
According to public records and interviews with former real estate employees, the company owns more than 70 active locations across the United States, though some are nearly empty, and at least ten have been up for sale or changed hands in the last year.
Over the last year, the US real estate team has been reduced, leaving a few employees focused on renovations and asset management rather than the acquisitions-focused groups that worked regionally. In September, the Financial Times reported that CloudKitchens was selling warehouses and laying off some real estate employees.
CSS’s software has also experienced operational difficulties. In August, Insider reported that some customers complained to salespeople that Otter’s software package arrived late, was glitchy, frequently disconnected, and locked people out of their accounts. A CloudKitchens operator who was invited to speak at an all-hands meeting in July expressed dissatisfaction with the software. In response, Otter’s global general manager, Guido Gabrielli, a former Uber general manager, promised better customer service in a Slack message to the entire company.
Otter originally created a management system to aggregate orders from DoorDash, UberEats, and other delivery platforms so that restaurants could manage all of their orders on a single tablet. Since then, the company has developed a point-of-sale system called Mercury that competes with Toast, as well as other services such as revenue recapture, which allows restaurants to recover money from customer disputes to delivery platforms. Otter’s products are now more focused on enterprise sales rather than small restaurant sales.