As restaurants continue to wrestle with the questions that come with third-party food delivery, a new factor is gaining significance. Restaurants, or more accurately, kitchens, that pump out hundreds of meals but without tables, chairs or waiters are a new development in the future of food service. These establishments, also known as “ghost” or “dark” kitchens, have no physical restaurant premises in the conventional sense, where diners can walk in, sit at a table and enjoy a meal. Instead, they are designed with the sole purpose to only handle and serve delivery customers and food is only accessible online or through a mobile app and via home delivery.
Dark kitchens represent an emerging market
The food delivery trend behind the rise of “ghost” or “dark” kitchens is massive – and it’s not hard to see why. Generational shifts in consumers’ desire to order take-out coupled with the growing influence and use of delivery apps has given rise to a booming food delivery market. Not only is food delivery is projected to grow 12 percent per year for the next five years, but according to UBS, the online food market will hit $365 billion globally in 2030, up from about $35 billion last year. With more consumers preferring to eat at home, dark kitchens used in conjunction with third party delivery apps present an very real prospect to satisfy the ever-growing hunger and continuing demand for online delivery services.
Who exactly is fronting these kitchens?
Well, it’s a combination. Some are focused simply on real estate, setting up and hiring out kitchens in the right urban locations to serve the new demand or commandeering defunct high-street restaurants. These include Uber co-founder Travis Kalanick’s new start-up, City Storage Systems, which trades as CloudKitchens in the US, and London-based Karma Kitchen. Then you have kitchen services companies that focus on making the food, such as Dubai-based KitOpi, which operates in London and the Middle East. Other players offer different combinations of facilities and services. Kitchen United, a Google-backed start-up, plans to open more than a dozen delivery kitchens across the US this year. It charges a monthly membership fee that includes the premises, back-of-house services such as dishwashing and access to its technology system for processing online orders from a range of delivery apps.
Not surprisingly, delivery services such as Doordash, Deliveroo, and UberEats are also using industrial kitchens to service orders. In recent weeks Uber has opened a test kitchen in the Parisian suburb of Saint-Ouen where it rents out commercial-grade shared kitchen space fully equipped to restaurants selling food through the company’s Uber Eats app. Some say their pick of location for their pilot program is no coincidence, as London-based food delivery competitor Deliveroo first introduced its shared kitchen in Paris back in 2017.
Are they friend or foe?
Business-wise, it does seem like a natural next step for third party delivery companies to offer restaurants a way to unload even more of the traditional restaurant functions that may seem costly to maintain. With food delivery projected to grow 12% per year for the next five years, these kitchens provide both a financial and operational solution for restaurants owners that want to benefit from this growth – but are not enamored with actually running a restaurant.
But of course, with everything, there are also downsides. While average commission costs for third party delivery are normally between 20 and 30%, Deliveroo for example, then takes a higher percentage of the meal costs — potentially up to 35%. Similarly, companies offering shared kitchen spaces to restaurants allegedly propose to alleviate take-out peak times such as Friday or Saturday night and help increase business output during quiet periods. However the sentiment echoed by restaurateurs using these kitchens is that neither has happened and that they have simply added to pressure at times of peak demand.
There is no doubt home delivery services are changing the way we eat and as the food delivery market continues on an upward path, dark kitchens will undoubtedly keep on expanding to meet consumer demand.
So, are we at the dawn of a new restaurant era where ‘dark kitchen’ will become a common term? More importantly, will 3rd party delivery companies that open their own dark kitchens undermine the very restaurants they claim to serve? Watch this space!