The rise of the 'dark kitchen' and what it means for your business

KEY INSIGHTS

• Popularity of online ordering has led to ’dark kitchen’ food preparation sites solely for home delivery
• Dark kitchens are likely to make the already crowded foodservice market even more competitive
• Deliveroo has more than a dozen dark kitchens across the UK and at least four in Australia
• The future of dark kitchens depends on the ability of foodservice brands without bricks and mortar premises to engage with consumers and drive sales

THE POPULARITY of online order platforms has led to the creation of  a new type of foodservice outlet – the ‘dark kitchen’ or ‘ghost restaurant’. These are not dine-in venues nor are they takeaways. They are simply food preparation sites where staff work to create meals solely for home delivery, with consumers ordering the food via an online platform

The exponential growth of online ordering suggests that dark kitchens are here to stay and that disruption to the traditional foodservice market is set to increase. But what does the rise of the dark kitchen mean for your foodservice business?

Some pundits are predicting the worst – like a recent article in London’s Financial Times, which suggested that dark kitchens will play a role in deskilling the UK market.

The argument goes that because the staff who prepare food in dark kitchens are essentially anonymous, don’t own the brand that the food is supplied under and have no face to face contact with the consumer, they may not have the same personal investment or pride in their work as a hard-working restaurateur, chef or wait staff.

This seems a harsh judgement given the fact that plenty of restaurants and other foodservice venues have long relied on home delivery and takeaway for the bulk of their sales. Plenty of neighbourhood pizzerias have regular customers who have never set foot in the premises, never met the pizzamakers or back of house staff, and only interact with the delivery drivers – whom these days are often likely to be contractors working for a third party order platform. 

This doesn’t mean that the staff suddenly stop caring about the food they produce. On the contrary – when the customer has no face to face interaction with staff, their loyalty to the business rests entirely on the quality of the food they order. This is surely a strong incentive to keep the quality to the level that customers expect!

One thing is clear: dark kitchens are likely to make the already crowded foodservice market even more competitive. Their lack of need for storefront premises means they can operate with cheaper rent and fewer overheads. Additionally, dark kitchens aren’t branded outlets, which gives them more flexibility in being able to offer a broad range of cuisine styles and therefore cater to a wider cross-section of customers. They’re also able to adapt to changing menus quickly and easily, without having to refit or remodel décor.

In 2017 Deliveroo UK launched its Deliveroo Editions, whereby the online order platform partners with branded foodservice restaurants to create menus exclusively for home delivery. These meals are created by a ‘Deliveroo Edition’ – ie a dark kitchen which makes the food to order according to the recipes, styles and presentations laid down by the restaurant partner. Deliveroo now has more than dozen dark kitchens across the UK and is reportedly planning to expand the operation further. Here in Australia Deliveroo has at least four dark kitchens with more to come.

Uber Eats says it does not have dark kitchens but is going down the similar path of ‘virtual restaurants’ – online delivery only kitchens. In an interview with the Sydney Morning Herald, Uber Eats Australia head Jodie Auster said the company did not formally keep out of the dark kitchen segment.

The future of dark kitchens is dependent upon the ability of foodservice brands which have no bricks and mortar premises to engage with consumers and drive sales. Some restaurateurs who have tried creating menus with dark kitchens have found that the traditional model of a business with a physical presence is more attractive for customers.

Another important issue is the real cost of online delivery services, with foodservice market pundits suggesting that the delivery fees will become much more expensive in future. Up till now the delivery market has been largely subsidised by foodservice businesses, but as margins continue to become tighter, the increased cost is likely to be passed on to consumers – and that may price some delivery services out of the market.

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