Also known as ‘Cloud’ or ‘Ghost’ kitchens, ‘Dark’ kitchens are ‘off site’ or third-party establishments where food is prepared for a delivery service. Because they are not visible to customers in the way that traditional restaurant kitchens are, these kitchens are called ‘dark’ kitchens.
They operate like shared workspaces, with restaurants paying a monthly subscription to have access to a fully equipped kitchen at a fraction of the costs of a physical location in a prime footfall area. Premium sites, which have been dubbed the WeWork of the restaurant trade, also offer back-of-house services like dishwashing, technical assistance in managing app orders, and other services such as procurement.
Why have they become so popular?
Did you know that over 90% of operators in the GCC are listed on delivery platforms? With the growth of food delivery apps like Deliveroo, Zomato, Talabat and Hunger Station there has been a boom in online food ordering, which has boosted the development of dark kitchens. Delivering this food-to-go from a dark kitchen offers cheaper overheads, increased diversity in menus, and faster service on demand. The recent effect of Covid-19 has also accelerated the need for food businesses to be inventive when it comes to keeping their businesses running, and dark kitchens allow them to continue offering their services. UFS has tips on helping businesses understand when to go direct.
With this growth, Wamda predict that revenue from online food delivery within the MENA landscape is likely to increase by 3.8 billion by 2024. RedSeer Consulting also reported that cloud kitchen revenues rose significantly by 160% from 2018 to 2019. Although the market for online food delivery did initially drop by 40% when the nation first went into lockdown, it seems that this sector has come back with a bang and the effect of Covid-19 could help to push businesses within this space even further. Saman Darkan- the co-founder of the Middle East’s biggest cloud kitchen company, says his company is attracting new customers who are choosing home deliveries to avoid the possible risks of dining out.
What are the different kinds of dark kitchens?
Dark kitchens range from small to large scale and take on different forms within the food delivery space
1. Fully integrated and owned
The operator controls the ordering, food prep and the delivery without third party support. Think big chains like Domino’s Pizza.
2. 3rd party multi-brand restaurants
Kitchen facilities are rented to other brands and the perks include delivery, procurement, and storage. Take Dubai-based Kitopi. Founded in January 2019, it has raised $89million in funding and now employs 1,200 staff with 100+ restaurant partners. This smart kitchen network that cooks and delivers to customers on behalf of restaurants. “It helps restaurants scale quickly in the digital age, rather than in ‘the traditional brick-and-mortar way’”, said founder Mohammed Ballout.
3. Fully owned with multiple virtual restaurants
Brands that are delivery-only built from a dark kitchen hub, that start life as a ‘virtual brand’.
4. Delivery aggregator owned
The aggregators provide kitchen facilities and partner with existing brands to launch new virtual brands, like Deliveroo Editions who have extended their reach, to ensure the smaller and further out towns can order food from a wider range of restaurants. Deliveroo now operates in over two hundred locations and was one of the first companies to focus on growing a network of ‘ghost kitchens’.
Another model of this is Gourmetville, whose enhanced take on the ‘ghost kitchen’ allows them to ‘manage your operations & kitchens, so you can focus on what you do best- Developing your brand.’ (http://www.gourmetville.ae/). They focus on putting an end to high rent costs and reducing food waste and partner with a range of food brands, such as ‘Wing It’ and ‘Bare Bowls’.
What are the Benefits of Dark Kitchens?
1. Cost!
The industrial production line set-up means dark kitchens use less staff. “Most quick-service restaurant chains employ 30 to 50 people,” said Jim Collins, chief executive of Kitchen United, a Google-backed US Dark kitchen scheme. “In our facility, we have designed the service stack, so they only need two people per shift. It cuts their labour cost by 75-80 per cent,” he told the Financial Times.
2. Flexibility
Bricks and mortar or ‘physical’ kitchens can use dark kitchens to serve a new digital clientele, and online-only brands can work with partners. Dark kitchens also provide up-and-coming chefs an opportunity to test innovative or creative ideas without committing to a location.
3. Time
OneKitchen, founded by ex-Uber boss, Travis Kalanick, says on its website that they provide “chefs, restaurants and entrepreneurs [with] the perfect space, equipment and technology to create new delivery-only restaurants at minimum time (only 48 hours) and minor capital investment (only 5% of traditional restaurant).”
Should you consider Dark Kitchens for your business?
As well as the financial benefits, dark kitchens may provide a vital lifeline to food business or restaurant chains in the post Covid 19 era. It is predicted that the Coronavirus pandemic will fundamentally change how people consume food.
Restaurants or food businesses who want to leverage this shift will have to rethink their business from the bottom up, thinking ‘delivery first’, perhaps with flagship physical locations, rather than multiple franchises. Menus will be more flexible and partnerships between different companies and restaurants are expected to grow. There are already 10 darks in the GCC, with an average of 75 total menu items per dark kitchen – and that is expected to grow.
What are the Challenges of Dark Kitchens?
As with a dramatic shift in any industry, the rapid swing towards dark kitchens has come with challenges.
1. Impact on workers
There have been concerns about the rights of staff in dark kitchens. Mental health is already an issue in kitchen environments – something that UFS’s Fair Kitchens initiative is tackling – and Isolation and worker welfare could be an issue with restaurant workers who are used to the interaction of a busy kitchen. There have also been fears that food hygiene and allergen control might not be up to the same standard (although premises are equally subjected to Food Standards Agency inspections as traditional restaurant kitchens).
2. Fighting to be seen in the digital space
Rents will be lower, but managers will have to work harder to attract customers, as all brands and companies fight for space in the digital space. It’s harder to create unique experiences online, and restaurants don't have full control over how they are presented on the app platforms (which would be the main marketing channel).
Despite challenges, the increase in use of dark kitchens is unstoppable, and this move will fundamentally shift the restaurant industry now and in the future. New opportunities will be available for digital platforms and providers and opportunities will arise for physical restaurants and smaller, independent owners in ways that are harder to predict but provide limitless, exciting opportunities.
