The Rise of the 'Dark Kitchen'
During Covid, the takeaway market has boomed, feeding a new food industry. Dark Kitchens have filled a gap in the market allowing the food, beverage and restaurant industry to reinvent itself and better cater to consumers at home. With the food delivery industry booming, this is a trend which is expected to continue to grow in the future.
Dark Kitchens are on the rise and we’re at the dawn of a new restaurant era. In the UK delivery giant Deliveroo, owns 14 such sites, subletting space to brands that use its platform. Rivals, Foodstars, owns nine more sites and big chains such as McDonalds and Wagamama have set up kitchens in areas where they do not have restaurants. As a result, sales for takeaways jumped 44% in the first half of 2020, and are predicted to continue to rise.
The big question is, as other brands fight for survival is the Dark Kitchen phenomenon sucking away more sales from the already stricken high street? Are Dark Kitchens destroying the eating experience? Are dark kitchens the way forward? Should the industry consider this option as a survival tactic?
The market will divide, and restaurants will have to change. There will be a divide between dining experiences and 'food only’ delivery services, achieved via Dark Kitchens or virtual kitchen services. Since Covid, has the experience of dining out been forgotten? What percentage of the population may never return to the restaurant experience?
How will operators respond? There are several scenarios. First scenario - those that believe in the dining experience and will hold out for the market to change and to do so will have to make changes to their business model. More about this later. Second scenario – new brands will enter the market without the need for a physical restaurant space and go directly to the Dark Kitchen model. Lastly - traditional brands who embrace the dining or fine dining experience, will develop new brands that can operate virtually through a Dark Kitchen. One such brand is Michelin-starred Gymkhana, who rather that dilute their fine dining brand by offering the standard menus for delivery, launched Motu Indian Kitchen, which sells mid-priced Indian food from a Dark Kitchen, and is now one of Deliveroo's most successful concepts.
Can the industry change? Yes, it can if the business models change. Outsourcing is key to reducing head count and costs. After all what is a Dark Kitchen, if not a massive outsourcing and cost saving project. And that is what we advocate at Paperchase. Outsourcing of accountancy, reporting, creating management accounts, weekly analytical reports, payable management & remittances, procurement and inventory management solutions, plus a host of other management tools to help you run your business more efficiently, and more cost effectively.