'Ghost kitchen' feeds essential workers staying in NYC hotels

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A room-service breakfast from Butler Hospitality.
A room-service breakfast from Butler Hospitality.

Despite Manhattan hotel occupancy hitting record lows amid the Covid-19 crisis, New York-based hotel room service provider Butler Hospitality is running in high gear, with plans to serve roughly 400,000 meals this month.

Rather than catering to ordinary hotel guests, however, Butler Hospitality will deliver the bulk of these meals to medical workers and other essential personnel throughout the Big Apple, which has emerged as the U.S. epicenter of the pandemic. 

“We have about 3,000 rooms that we’ve been hired to serve, and these are rooms that are occupied by military, first responders, nurses and doctors as well as some quarantined patients,” said Butler Hospitality founder and CEO Tim Gjonbalic. “And we’re serving them three to four meals daily.”

Gjonbalic estimated that those 3,000 rooms, which are primarily accommodations that have been contracted out by government agencies as well as some donated rooms, account for over 10,000 meals per day. 

On top of those efforts, Butler Hospitality has committed to donating an additional 100,000 meals to frontline workers this month, coordinating with the New York Nursing Association to cater free meals for hospitals such as New York-Presbyterian and Mount Sinai. 

“We reached out to [the hospitals] and said, ‘Send us a schedule of meals that still need to be filled, and we’ll commit to that,’” Gjonbalic said. “We want to be a reliable source for them, so we’re not just sending a couple hundred meals completely out of the blue. It’s about making sure every meal period is met for them, every day.”

While managing such a multitude of deliveries might seem like a logistical challenge, it’s one that Butler Hospitality is uniquely suited to meet. 

Established in 2016, the startup oversees on-demand room service for nearly 120 two- to four-star properties across New York, including the W New York, the Moxy Chelsea and the Bernic. 

Butler Hospitality’s business model hinges largely on economies of scale, with the company using a centralized “ghost kitchen” located in one hotel to serve numerous properties within a densely populated area. It services its entire 22,000-room New York network out of just four kitchens: one near JFK Airport in Queens and three others spread out across Manhattan. Room service menus across the four kitchens are identical.

“Hotels always lose money on food and beverage,” Gjonbalic said. “A hotel kitchen serving 100 rooms that maybe has 20 orders a day can’t provide any positive cash flow or even come out flat, for that matter. But if you have that same kitchen serving 10,000 rooms, even at 20% utilization, or 2,000 orders a day, it becomes a very, very interesting model.”

While ghost kitchen concepts have proven popular of late -- with CloudKitchens, a shared kitchen helmed by former Uber CEO Travis Kalanick, among the segment’s more notable startups -- Gjonbalic said that Butler Hospitality is the only ghost kitchen company zeroing in on the hotel sector. 

“We are the only player right now that delivers to hotels exclusively,” he said. “We’re integrated into the hotel’s system, so we know when guests are arriving and can send a pre-arrival email greeting. And unlike third-party delivery marketplace [apps], we own the entire mile. We cook the food, prepare the food, deliver the food within 30 minutes directly to a room, charge it to the guest’s folio and then also keep a record of it so we have the ability to kind of follow guests and keep track of their preferences.”

In addition to a highly streamlined and cost-effective supply chain, Butler Hospitality also aims to make improvements on the guest experience front. Guests can schedule room service deliveries via phone, text or the Butler website, and dishes are sold at what Gjonbalic calls “market New York prices” without any fees, mandatory gratuities or minimum purchases.

A burger on the Butler Hospitality menu is $15, while a wedge salad is $12. A side of fries and a Heineken can be added for $5 and $10, respectively. The room service menu also offers “convenience” items, such as an iPhone charging cable for $15 or Degree deodorant for $6.

“We want to change the perception of what room service is,” Gjonbalic explained. “And we want to deliver the best quality burger we can at a fair price.”

Although the U.S. hotel sector currently faces unprecedented pressure, Gjonbalic is bullish on Butler Hospitality’s growth prospects. The company is moving forward with plans to expand into Chicago, Miami and Washington this year as well as to deepen its New York-area reach with forays into Long Island City in Queens as well as Brooklyn and Newark.

“Post-Covid-19, hotels are only going to be thinking about room revenue,” Gjonbalic said. “They are going to be in recovery mode, more than ever. So they’re looking to us, saying, ‘Hey, we don’t want to reopen our [food and beverage] outlets. They’re always loss leaders, so why don’t you just take it over from day one and reopen it?’ We can come in and figure out the logistics, figure out the food and beverage amenities. And it’ll allow them to focus on selling rooms.”

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