Travis Kalanick’s ghost kitchen company cut jobs on Wednesday, two employees told Insider.
Before the layoffs, City Storage Systems had more than 4,300 employees. It wasn’t immediately clear how many CSS employees were affected.
Staff were told on Wednesday that they would receive invitations for meetings with human resources if their jobs were being eliminated, and the company scheduled an afternoon all-hands meeting, according to the two employees who spoke with Insider. They asked not to be identified discussing a sensitive topic.
Through CSS, Kalanick wants to reinvent the business of food, just as he upended the taxi industry globally by founding Uber. CSS units include CloudKitchens, which renovates US and Canada warehouses into ghost kitchen facilities for mom-and-pop restaurateurs and big companies like Chik-fil-A. Another arm, called Otter, creates software for ghost kitchens and brick-and-mortar restaurants. In fall 2021, Kalanick raised $850 million for CSS from investors including Microsoft, at a $15 billion valuation.
The layoffs come in the midst of a difficult market for tech and real estate companies, with inflation, higher interest rates, and other headwinds.
A CloudKitchens spokesperson did not respond to a request for comment.
Customer issues in kitchens and with software
CloudKitchens went on a warehouse-buying spree in 2019 through 2021, before interest rates skyrocketed. But as its facilities have come online, the company has struggled with high customer churn. Operators told Insider last year that CloudKitchens sold them a dream but sometimes delivered dirty kitchens in locations lacking adequate safety and technical support.
The company owns more than 70 active locations across the US, though some sites sit nearly empty and at least 10 have been up for sale or changed hands in the last year, per public records and interviews with former real estate employees.
The US real estate team has been cut over the last year, leaving a few employees focused on renovations and asset management instead of the acquisitions-focused groups that worked regionally. The FT reported in September that CloudKitchens was selling warehouses and laid off some real estate employees.
CSS’s software side has also faced operational bumps. Insider reported in August that some customers complained to salespeople that Otter’s software package arrived late and was glitchy, disconnected often, and locked people out of their accounts. In July, a CloudKitchens operator who was invited to speak at an all-hands meeting complained about the software. In response, Otter’s global general manager, Guido Gabrielli, a former Uber general manager, sent a Slack message to the full company promising better customer service.
Otter originally built a management system to aggregate orders from DoorDash, UberEats, and other delivery platforms, so restaurants could use one tablet to manage all of their orders. The company has since built a point-of-sale system called Mercury that competes with Toast, and it has added other services like revenue recapture, to claw back money for restaurants from customer disputes to delivery platforms. Across its products, Otter is now focusing more on enterprise sales, instead of selling to small restaurants.
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