Vancouver Commercial Real Estate Podcast

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May 25, 2022
VCREP #52: The Food App Industry Exposed with Amrit Maharaj

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Ever find a great restaurant on your favourite food app, but then realize they don’t have a physical brick and mortar location you can enjoy?

On the show this week, Cory and Matt welcome Amrit Maharaj, Chief Operating Officer of Coho Collective, who is here to break down what exactly a ghost kitchen is, why some of your favourite restaurants are getting in on the action, and how they have capitalized on the food app boom.

As the demand for the food delivery market continues to grow, Coho Collective is looking to expand rapidly not only in BC but also across Canada and beyond. He unpacks the opportunity and the little start-up cost needed to open your first online ghost kitchen and take your culinary passion to the next level. After this episode you will never look at Doordash or Skip the Dishes the same way again.

Who is Amrit Maharaj? What is Coho Collective Kitchens?

I am the Chief Operating Officer of Coho Collective Kitchens Inc. Coho Collective started three and a half years ago. I come from a background in real estate development and my co-founder, Andrew Barnes, comes from tech. Neither of us were fulfilled in our jobs and wanted to do something to give back. So we started this fund to help give back to the local food community. That’s how our commissary kitchen was born.

When the pandemic hit, our commissary was already full but we got inundated with chefs needing space to do takeout while their brick and mortar restaurants were closed.

How did you get into food?

Myself and my co-founder, Andrew, have been friends for over 20 years and have always connected over the food scene. My family are immigrants to Canada from Fiji and food was always a great connector. Andrew experienced the same thing in his family.

Food is a great way for immigrants to get a foot in the door when they arrive in a new country. Even if they don’t speak the same language, people can connect over food.

What is a ghost kitchen?

A ghost kitchen is where a restaurant does all their takeout and delivery off-site. They don’t use their restaurant; they use a shared kitchen space off-site. Currently, restaurants are full with in-house diners. Their kitchens aren’t made to do an additional 400-500 orders of takeout and delivery each night. They’re overwhelmed. So they turn to a ghost kitchen like ours to do their takeout and delivery from a centralized facility.

The food delivery apps come into play because restaurants need to be within 5km of where their food is being delivered. So if an Earl’s restaurant location is downtown but they have a ghost kitchen in East Van, they can use food delivery apps to serve the East Van community.

What does Coho Collective Kitchens do? How does Coho Commissary work?

Coho leases large industrial warehouses and divides them into micro-kitchens. Each micro-kitchen is assigned to a different restaurant or mom and pop shop that doesn’t have their own brick and mortar location. A shared kitchen space reduces the barrier to entry for people who don’t have money to build their own restaurant, wait for permits, etc.

We want to help everyone and even the playing field. We are a community initiative. Whether you have one restaurant, three restaurants or no restaurants – or if you’re a bigger brand – we welcome everyone. Bigger brands can help teach the smaller brands and they bring in larger buying power. They may be able to pass on their discounts with suppliers to the smaller brands.

From a commercial and health standpoint, you can’t operate a restaurant kitchen out of your house. You need a facility like ours.

What percentage of Coho’s micro-kitchens are tenanted by big brands with brick and mortar restaurants and what percentage are tenanted by mom and pop shops that don’t have restaurants?

It’s about 50/50 right now – 50% big brands with restaurant locations and 50% mom and pop shops who don’t have restaurants.

Some of our brick and mortar clients also use our commissary facility to do their prep. They can lower their labour costs and do consistent prep at our facility, and then send that out to all of their locations. And then we have the other half, mom and pop kitchens, who want to try it out and create an online presence. Some have been very successful, which is great to see.

Do the big brands help you choose where to create your next commissary kitchen?

Exactly. We try to work with the big brands to create locations where they’re looking to go.

The bigger restaurant brands are trusted names. But apps only work within a 5km radius. So if you don’t have a location within 5km of your customers, they won’t see your brand. But instead of opening a brand new location, these restaurants can work with us to reach a new audience. They have way less overhead and no risk. They can use a ghost kitchen to expand or even test out new markets. They can get started in just a few weeks.

How many Coho Commissary locations are there? Is Coho Collective opening more locations and growing across Canada?

Coho Collective has three locations and will be growing from there. We have one coming online in Gibsons soon and then there will be locations in Victoria, Richmond, White Rock, two more in East Vancouver, and then across Canada. We have a waitlist of over 400 companies in Vancouver alone waiting to get in. We’re signing leases in Toronto and continuing to grow across Canada.

We’re expanding rapidly but people also recognize our brand and trust our service. We’ve taken on investors and have made strategic partnerships. It’s been fun working with these different companies and seeing where our growth will go.

What differentiates Coho Collective from the competition?

It is a very competitive space that we’re in. We’re lucky to start without blinders on. Coming from real estate and tech, we’re able to see outside of just the cooking industry. We want to look at how we can make Coho Collective work on a bigger scale.

At Coho, we care about our clients. Whether you’re an established company or just starting out, we want to help. Chefs are amazing creators but may not always have the knowledge to be successful. If they’re successful, we’re successful. So why not help?

We also take on strategic partnerships to make sure Coho Collective is successful at every level. We are invested in tech and customer service.

Where are Coho Collective’s current operations?

We have three current locations, two in East Vancouver and one in North Vancouver. Our first location is behind Andina Brewing. It started out as a baking facility only, which was easier to permit. We were able to get going quickly and within a few months, we were overflowing with tenants. We then took over a location in North Vancouver, off of the Second Narrows Bridge.

Our last location is off of East Georgia in East Vancouver. It’s our largest location and after opening in March 2020, it went through the roof. It also has our first retail experience, a coffee shop, that helps create that bond between the community and our producers. When you come in and get a coffee, you can see into the kitchen and learn more about what we’re doing.

We got very lucky with our timing. As the pandemic went on, we received more and more interest. People understand what a commissary kitchen is and want to be a part of it.

What growing pains has Coho Collective dealt with?

Supply chain issues have been a big problem for everyone, including us. Kitchen equipment is hard to get on time. Luckily, financing has been good because we’ve been fortunate to find some great investors. But it is a startup, so there’s been a lot of learning. We want to make sure we find the right people and take our time, so we don’t scale too fast.

I wish the City of Vancouver could speed up their act so we could get through the permitting process faster and get more restaurants off our waitlist.

What’s next for Coho Collective? Where will you open future commissaries?

We want to be in all of the major cities. Toronto is the food hub of Canada so we want to be out there. We’ll have five Coho Collective locations in Vancouver by the beginning of next year and could easily have 20 in Toronto. We put up a landing page to see if there was interest in Toronto and 2000 companies signed up. There’s so much we want to help with and the demand is huge.

By the end of this year, Coho Collective will be the biggest provider of ghost kitchens and shared kitchen space in Canada. And we really want to excel at that. From there, we’d like to move into the States. We’re exploring options down there. But we want to dominate in Canada first and ensure we’re helping people succeed.

Does Coho Collective require exclusivity with major restaurant brands using your kitchen?

Ideally we’d love to plot and grow alongside the big restaurant brands we work with. We’re happy for them to try someone else but they generally come back to us quite quickly. But it works to everyone’s advantage if we grow together. If they want to grow into a new market, we go and do the research to see if we can set up a location there.

Once we have a bigger brand signed on, it gives us more brand power and recognition to attract other clients and negotiate leases with landlords.

What are the risks to Coho Collective moving forward?

The biggest risk to Coho Collective is the well-funded competition by global companies. None of the big players have really hit Canada yet so we’re trying to dominate here first. But big players with money from places like SoftBank and the Saudi government are playing in the shared kitchen space and rapidly expanding. That’s why we’re taking on the right partnerships and investors so we can get across Canada in the next two years and really dominate this marketplace.

Will your new Coho Commissary locations be in bigger spaces?

We have a very detail-oriented finance team that has looked into our ideal format and ROI. Our average facility is currently 10,000 square feet but that will be bumping up to 15,000-20,000 square feet because our ROI is better at that size. We’re changing our model so we can quickly adapt and move into new markets.

Are there any types of restaurants that can’t work at a Coho Commissary?

We have every style and cuisine type working next to one another in our Coho micro-kitchens. The only thing we can’t do is any marijuana-based offering, as we’re not licensed for that. We put a lot of money into our heating, cooling and exhaust so the smells of the different cuisines don’t cross paths. There are no restrictions; we want to create a level playing field for everyone.

What advice do you have for someone thinking about getting started with a ghost kitchen?

Find the mentorship you need and do it. There’s no better time. You don’t know what tomorrow brings so just do it today. There’s so much opportunity available. For just a couple thousand bucks, you could start something that is your dream. Take that first step and find out if this is for you.

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Vancouver Commercial Real Estate Podcast

For all the curious minds interested in commercial real estate investing, grab a coffee and pull up a chair because we have exclusive stories and tips from commercial real estate brokers, investors, developers, economists, urban planners, and everyone in-between. From the successes and failures to the motivations and lessons learned, the Vancouver Commercial Real Estate Podcast is your insight into commercial real estate in Vancouver, Victoria, Kelowna, and beyond.

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