Ghost kitchen startup Butler quietly folded after 6 years, laying off roughly 1,000 employees after raising more than $50 million in total funding

• Ghost kitchen startup Butler quietly shut down and laid off roughly 1,000 workers in May, reports TechCrunch.
• The company had raised $50 million in funding and had recently announced plans to expand into new cities.

In March, ghost kitchen startup Butler Hospitality announced plans to expand its business and open new locations on the West Coast, including in Denver and Los Angeles. By May, the company had folded, leaving roughly 1,000 workers without jobs, TechCrunch reports.

Butler, which TechCrunch reports officially dissolved on May 13, was part of a growing number of ghost kitchen operators founded in the past few years.

The company was created in 2016 to provide room service to multiple hotels from centralized kitchens. The company had raised $50 million in funding, according to Crunchbase, and had locations in New York, Miami, Chicago, and Washington DC.

Butler's founder and CEO, Tim Gjonbalic, told TechCrunch that the company suffered from the lasting effects of the Covid-19 pandemic. Still, TechCrunch reports that Butler's hotel partners and roughly 1,000 employees were given little notice that the company was in dire straights and would soon dissolve.

Butler had announced plans to expand its business just two months before the firings.

Attempts to reach Butler Hospitality by Insider were not successful.

Ghost kitchens, which are kitchens that cook and prepare food for delivery-only, have exploded in popularity in the past few years, with backers like Uber founder Travis Kalanick and celebrity-restaurateur Guy Fieri.

However, the ghost kitchens trend has come with some controversy. Insider reported that Reef, one of the leading ghost kitchen companies, has had locations shut down by health authorities for deliveries of raw and undercooked meals as it raced to expand. Travis Kalanick's CloudKitchens has faced lawsuits from employees who allege labor violations.

Despite these issues and Butler's failure, ghost kitchens appear to be here to stay. Kroger, the largest grocery chain in the US, confirmed to Insider last month that it is further investing in ghost kitchens.