Former Uber CEO Travis Kalanick opens ghost kitchen in San Jose

Former Uber executive Travis Kalanick has opened a ghost kitchen for more than two dozen tenants at a long-vacant Victorian building in Downtown San Jose.

Kalanick’s startup, Los Angeles-based CloudKitchens, opened San Jose’s Downtown Food Hall at 82 East Santa Clara Street, the Silicon Valley Business Journal reported.

In 2018, a real estate venture led by Kalanick bought the three-story Odd Fellows building, built in 1885, for $7.3 million. Its ground floor had a furniture store that closed a year earlier.

Ghost kitchens cater to food businesses that take orders online, then prepare and have meals delivered to customers.

CloudKitchens, formally known as City Storage Systems, developed 26 kitchens on the ground floor of 82 East Santa Clara, which will dole out grub mostly through online orders shuttled around town via DoorDash, UberEats or Grubhub.

The firm has leased out 23 kitchens for undisclosed terms. As of this week, five kitchens were open to serve up Mediterranean food, sushi, halal tacos and boba tea.

It’s the eighth CloudKitchens location in the Bay Area and the first in the South Bay. Others are in Redwood City, San Mateo, Hayward, Oakland, Adeline, San Francisco’s Mission District and in San Francisco’s SoMa neighborhood.

Unlike most CloudKitchen operations, the Downtown Food Hall has 1,000 square feet and a coffee bar for sit-down patrons. The eat-in option was included at the urging of Downtown community leaders.

“Our typical model is dark kitchen only,” Grace Lin, the general manager of CloudKitchens’ West Coast operations, told the Business Journal. “We really emphasize delivery, pickup, grab and go. So the experience of opening something so public-facing has been very unique.”

Last year, an estimated 161 million people used food delivery services in the U.S., according to an analysis by Statista, which predicts the number of people expected to place orders will rise this year to 172.8 million.

CloudKitchens’ newest location can capitalize on more than 1 million residents and 592,000 workers within its delivery circle, which extends out to parts of Campbell, Santa Clara, South San Jose and East San Jose, according to a company analysis, 

Some 60 percent of consumers order takeout or delivery at least once a week.

CloudKitchens has raised more than $900 million in venture capital funding at a $15 billion valuation, according to PitchBook Data. Nationally, the company has opened more than 90 locations.

They’ve incurred some controversy. Traffic jams caused by deliveries have been a concern at different Bay Area CloudKitchens venues, according to SFGate.

Two ghost kitchens run by CloudKitchens in Oakland have drawn complaints from residents for either traffic, illegal parking, or trash bins overflowing with garbage.  

In 2022, Business Insider reported that operators complained about unhygienic spaces without restrooms, in addition to doing little to prevent safety concerns at or around CloudKitchens sites. Four business operators filed lawsuits against Kalanick’s company for “deceptive business practices.” 

In September, the Financial TImes reported that CloudKitchens has over the past year laid off staff, closed locations, and decreased its real estate purchasing. Its ghost kitchens were “only about 50 percent full at the end of the first quarter,” and the business has closed locations in New York and Tennessee.

Kalanick stepped down as the CEO of Uber in 2017 after the company came under fire following allegations of a toxic work environment, gender discrimination and sexual harassment.

— Dana Bartholomew

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