Travis Kalanick Quietly Expands His Kitchen Business Across Latin America – Financial Times | CialisWay

Travis Kalanick has been quietly building a major grocery and convenience goods company across Latin America while the Uber founder seeks to capitalize on the region’s fast-growing e-commerce market.

The billionaire has rapidly grown his US-based start-up, CloudKitchens, by buying and building local “dark kitchens” in Latin America over the past three years to build a global network of food delivery centers, leveraging his construction experience on Uber Eats.” during his tenure as Chairman of the Board.

In addition to the dark kitchen business, which buys properties to use as a space for preparing deliveries or picking up takeout, he started Pik N’ Pak. This company stores convenience goods like pet food and medicines from nearly 50 CloudKitchens locations in 11 cities in Brazil, Mexico and Colombia. As with the kitchen operations, Pik N’ Pak items are shipped to customers by local delivery app companies.

The connection between Pik N’ Pak and CloudKitchens, which was not previously disclosed, is part of a deliberate attempt to covertly expand while keeping local units separate from the parent company to avoid an association with Kalanick, according to three former CloudKitchens employees who spoke further on condition of anonymity due to strict non-disclosure agreements.

“When you have a CEO as influential and controversial as Travis, he doesn’t want to associate the brand with him,” said a former executive who worked in CloudKitchens’ Latin America business.

Kalanick has grown CloudKitchens rapidly around the world since acquiring the company in 2018, after being ousted by Uber in 2017 following a string of scandals. CloudKitchens was valued at $15 billion in November following an $850 million funding round.

According to two people familiar with the company, CloudKitchens has more than 4,000 employees worldwide.

CloudKitchens declined to comment.

The secretive culture reflects Kalanick’s approach to business following his bitter departure from Uber. Employees are prohibited from mentioning on LinkedIn that they work for the company and instead listing their place of work as “silent startup” — a term usually reserved for companies that have yet to be incorporated.

“It has to do with how he’s been attacked in the past,” said a former CloudKitchens executive. “The Uber situation was not nice for him. He wanted to grow [CloudKitchens in Latin America]he didn’t want to attract too much attention, he wanted to dominate the industry.”

But people close to the entrepreneur said his approach could hinder the company’s growth and carries the hallmarks of his time at Uber. Notorious Uber corporate principles like “Always Be Hustlin'” have been codified at CloudKitchens.

Former employees said departments at the company were kept in the dark about related parts of the business, contributing to extremely high tenant turnover at its facilities.

“In order for me to grow, I need to understand how operations are growing or how finance is growing,” said one person. “But it was very isolated.”

CloudKitchens employs about 500 people in Latin America and operates about 70 locations with 1,800 custom kitchens in eight countries, according to two former executives with direct knowledge of the company’s operations.

Pik N’ Pak uses excess space in the company’s kitchen facilities — such as in the basement or along corridors — to store essentials such as over-the-counter medicines, pet food and sex toys. In promotional material, Pik N’ Pak says it gives retailers access to “millions of customers.”

Retail brands can rent shelf space and list their goods on Latin American grocery delivery apps like Rappi or Cornershop, which handle customer payment and delivery.

CloudKitchens’ growth in the region has been fueled by at least two acquisitions. In 2020, the group bought Mexico-based kitchen conglomerate Nano for an alleged $20 million, according to data from PitchBook.

In 2019, CloudKitchens acquired Colombian kitchen company Cocinas Ocultas, founded a year earlier by Italian entrepreneurs Raffaele Sertorio and Edoardo Dellepiane, in a previously unreported deal.

The Cocinas Ocultas team has been tasked with developing CloudKitchens’ business across the continent. Under the Cocinas Ocultas brand, CloudKitchens now operates in Colombia, Peru, Costa Rica, Panama, Chile and Ecuador. In Mexico, the company operates as VirtualKitchens.

In Brazil, CloudKitchens acts as Kitchen Central and is the market leader, according to Renato Avó, food director at consultancy 360 Varejo. According to a study by GS&NPD and the Brazilian Foodservice Institute, spending on food delivery in the country grew by almost a quarter last year to BRL 40.5 billion (US$7.8 billion).

“Dark kitchen operations are expected to account for about 15 percent of that total,” Avó said.

But the growth of dark kitchens across Latin America has sparked controversy in certain cities. Proliferation in São Paulo, America’s largest city, prompted objections from residents living nearby, and banners against new facilities popped up in well-heeled neighborhoods.

City Hall has proposed local regulation of dark kitchens and earlier this year imposed a temporary ban on issuing new licenses.

People have complained about noise, smells, smoke and motorcyclists – colloquially known as moto boys — Waiting outside to pick up orders. According to Cris Monteiro, a councilwoman, an unhappy local resident said his son was called “Bacon” and was bullied at school because of the smell on his clothes.

She said the company had been in touch before the controversy erupted, but questioned its willingness to reach a compromise.

“I understand the position of the entrepreneur. They say they are legally incorporated. To me, this response shows no desire to collaborate,” she added. “I don’t see that they want to solve the problem together with the community.”

A former CloudKitchens executive in Latin America said the company has become more sensitive to local business practices. But others close to Kalanick warned that old habits could endure.

“The only thing Travis learned from his time at Uber is not to trust the press and not to trust venture capitalists,” said a former executive at the company.

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