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Ex-Uber CEO Travis Kalanick Is Betting on the Rise of ‘Ghost Kitchens’

Ex-Uber CEO Travis Kalanick Is Betting on the Rise of ‘Ghost Kitchens’

This article originally ran in Term Sheet, Fortune’s newsletter about deals and dealmakers. Sign up here.

Ex-Uber CEO Travis Kalanick is back with a secretive startup already valued at $5 billion.

His new company, called CloudKitchens, builds commissary
kitchens that restaurants can use for their delivery operations. CloudKitchens
also operates its own delivery-only restaurants within those commissaries,
including brands like Excuse My French Toast, Egg the F* Out, and B*tch Don’t
Grill My Cheese.

Kalanick has kept CloudKitchens largely under wraps, but
he’s been buying up cheap properties across the U.S, India, China, the U.K. and
elsewhere. He also capitalized the company with $200 million of his own money, according
to The Wall Street Journal
, and added another $100 million in
January. Saudi Arabia’s Public Investment Fund (PIF) poured another $400
million into his venture, bringing the total to $700 million in funding. (My
colleague Maria Aspan points
out
that the deal reportedly makes Kalanick the first Silicon Valley
founder to accept an investment directly from the Saudi government since the
murder of journalist Jamal Khashoggi a year ago.)

But the question more people should ask is: What the hell
is Kalanick’s goal in building CloudKitchens?
And here’s where I think he’s
playing some sort of 3D chess. 

Let’s look at the facts: At Uber, Kalanick oversaw the rise
of Uber Eats, the company’s food delivery unit. Eats launched about six years
after Uber’s inception in 2015. The service debuted in Los Angeles, New York,
and Chicago. Fast forward a few years and today, Eats boasts $1.5
billion in revenue
and serves food from more than 220,000 restaurants in
more than 500 cities around the globe. It’s the bright spot in Uber’s business.

Kalanick is betting that these non-traditional kitchens will
revolutionize the food delivery business. There are a couple of types. “Virtual
restaurants
” refers to real-life restaurants that make different cuisines
specifically for food delivery apps. Since 2017, Uber has helped start 4,000
virtual restaurants exclusive to its Uber Eats app. The other — the one
Kalanick is focusing on — is “ghost kitchens,” a name for those
that have no retail presence and serve as a meal preparation hub for delivery
orders. (This
feature explains it well.

I had heard a rumor about Kalanick’s end game: build up
CloudKitchens and make it such a compelling business that Uber would have no
choice but to buy it.
And then, boom, the ousted founder would be
back inside the company he started. I reached out yesterday to a source familiar
with CloudKitchens to ask about the validity of this rumor. 

They told me Kalanick does want to compete with Uber
— but he does not want to sell. He wants to compete with Uber and win.
And that, my friends, would be checkmate. 

WE NEED YOUR HELP: We’re taking nominations of
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Polina Marinova
Twitter: @polina_marinova
Email: polina.marinova@fortune.com 

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