What: Tech investors are backing up ghost kitchens that they see as an uber-like natural expansion.

Why it is important: Given the low margins of the sector, disruption might not be around the corner.

Reef, a US-based ghost kitchen operator, is facing issues at a moment when it is expanding nationwide, with many incidents taking place in its points of production, while its business model is to build kitchen in warehouses or trailers, which are cheaper than storefronts. Other food operators, such as KFC, Wendy’s and others, are also looking at the concept.

However, while these models appeal to digital investors, they have to face real-world issues: logistics, people, supply chain. The most important issue is that the ROI can not, by definition, top up what tech investors are used to. Analyst Benedict Evans reminds that in such an industry with low margins, massive scaling is needed, which in turn requires investors’ patience.

Ghost Kitchens Are Proving to Be a Messy Business, as Reef Global Shows