ClusterTruck, a pioneer in ghost kitchens, pays its drivers an average of $88,000 per year.
The Indiana-based company doesn't use third-party delivery models to support these wages.
It doesn't oversaturate the driver pool. This is to make sure they are making enough.
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Ghost kitchens are used to deliver only and became very popular during the pandemic. They are still around 18 months later and have not been affected by the reopenings of many dining rooms.
Euromonitor, a market research firm, estimates that the ghost-kitchen industry will be worth $1 trillion by 2030.
The changing cost structure of the foodservice industry is one of the key drivers for industry growth.
Ghost kitchens' delivery-focused approach allows businesses to reduce their rent and staffing costs significantly by hiring fewer employees. ClusterTruck is based out of Indianapolis, Indiana. Its success is dependent on the happiness of its delivery drivers.
Insider was told by Brian Howenstein, ClusterTruck's chief operating officer, that drivers are the core constituency.
ClusterTruck, he said, is vertically integrated. This means it can manage the entire process from ordering food from in-house chefs to hiring its own drivers and delivery drivers.
It is notable that the company uses its own delivery fleet. Howenstein says that all delivery drivers are gig drivers who have been contracted to ClusterTruck and not through third-party delivery services like Uber Eats or Deliveroo.
They are assigned jobs based on their availability. If a courier wants to begin delivering ClusterTruck's parcels, they can log in to the app and click 'I'm available. Howenstein stated that as soon as we receive a request, we will send them a notification. Then they'll head to our kitchen to begin delivering.
To ensure that it doesn't hire too many drivers, the company attempts to manage demand. Howenstein stated, "To make our system function, we need to ensure that our drivers are happy and make enough money."
The company aims to not oversaturate its driver pool. Howenstein stated that if there are 100 orders, it may be possible to only hire 20 drivers to transport them. "We want each driver to have enough money to be happy, and it to be a profitable job for them.
This arrangement has allowed the company's drivers to be paid no less than $15 an hour. The on-demand business model means that drivers can often make more than $80,000 annually. ClusterTruck documentation proving such salary payments has been seen by Insider.
The number of jobs that couriers are assigned to per hour will determine the salary. Howenstein stated that they keep their utilization high which is where they make the most money.
Insider was told by Chris Baggott, CEO of Uber and DoorDash that the company can offer its drivers between four to six jobs an hour. He said that an Uber driver or DoorDash driver can get between 1.2 and 1.3 jobs per hour.
Baggott stated that "our goal was to take the worst gig economy job, which is delivering ready-to-eat food, and make it the best." They are our front of house. They are our face.
ClusterTruck's no-fees structure is another way that it differentiates itself from its competitors. All while still making a profit. Howenstein stated that the company supports this model as it reduces costs on non-essential service.
Howenstein stated that "We don't have wait staff, and we can exist in rents which are not high-dollar realties because customers aren’t coming to us. We’re coming to them."
According to Howenstein 95% of ghost-kitchen industry is still based upon third-party delivery models, which he believes are fundamentally flawed and unprofitable.
He said that the most important thing he will be watching for in the future is whether ClusterTruck's competition are profitable and not too expensive for customers.
