The rise of food delivery created a lot of new economic trends – one of these new trends which rode on the food delivery wave was dark kitchens. People stopped visiting restaurants and brick and mortar shops and only ordered food online. The ambiance of the place did not matter as people never visited them what mattered was the quality of food. A good chunk of these people would not even be aware that their food was prepared in a dark kitchen. I asked few of my friends who ordered food online that were they aware of anything called dark kitchens and that their food could be coming from these dark kitchens. And not a single person out of my 2 dozens friends were aware.
Even though the name dark kitchen does sound sinister it is infact a very positive thing both in terms of customer experience and business logistics. Dark kitchens are known by many names like virtual kitchens, ghost kitchens, only delivery restos, cloud kitchens etc. Though dark kitchens have different names the core concept is similar I.e these businesses cater to customers only by delivery – they do not provide brick and mortar seating place for customers to visit and have food there.
Food delivery has seen a huge boon in the past years and food delivery giants like ubereats, swiggy, zomato, foodpanda have become ubiquitous everywhere. These giants bought in a fresh wave of investment with them spending billions of dollars in each country and bringing online food ordering customers from a measly 15% to a staggering 70% with their discounts, exclusive offers, blitzkrieg marketing and all. They gave a platform and huge ready market to the boot strapped entrepreneurs to reach out to substantial market without investing. Infact the entire marketing part is been handled by these food delivery giants you only have to list your business on their platform and yoi would have a line of customers wanting to try out your food. And your food would be delivered piping hot to these customers in a snap by the food delivery team. All the extra efforts of getting the food out to the customer has been cut off.
Deliveroo started deliveroo editions which are actually dark kitchens in London, Hong Kong, Singapore, dubai and recently in Melbourne. Deliveroo editions provides customers access to restaurants which are not yet located in their areas and a new way for restaurants to grow their brands in new areas where they are not physically present. Deliveroo provides all the infrastructure and the staff is provided by restaurants to make their menu items. So even if there are multiple kitchens operating from the same place the food that customer gets tastes same as the customer would get from their actual restaurant. So basically deliveroo editions provides ready infrastructure for food entrepreneurs to hit the ground running and make money from day one instead of spending huge amounts upfront and wait for months or years to get even and start making profit.
Another set of entrepreneurs who are adopting dark kitchens are chain of restaurants. The strategy they are using is that they open a dark kitchen in a particular area and gauge the response for 6-12 months and if they find the response good then they open a brick and mortar shop in that area and they don’t get the anticipated response they can continue with either the dark kitchen or close it and open a dark kitchen in another area.
Today the online platform is the intervening platform even providing a trusted branded face to the newest of the player on their platform.
There is hardly any real live interaction between the customer and the actual food provider. It has become important for dark kitchens to ensure that they remains relevant by providing what the customer needs.
So how does dark kitchen benefits the food entrepreneur?
One of the biggest investments in the food business is the cost of the place – from the setup cost to the monthly rent(yes let’s not even talk about buying) and note that in majority of the cases the reataurant place has to be premium place. If your location is not good yiu may provide the best food but customers will not come. Also maintenance cost of the property like electricity etc. Are gone. Yiu also don’t need to hire staff to serve customers. This drastically reduces your liquid money investments. Approximately your overheads are reduced by 70% – just look at that figure 70% that means where I had to invest $1000 – I woild be investing only $300. But more important than money as a food entrepreneur this model gives me the ability and the power to NOT worry about running the business and just focus on what I love the best i.e focus on making good food.
Another huge advantage of the dark kitchen model is that you can play around and iterate with different brandings, menus and food concepts. You are not tied down by an elephant which is difficult to turn quickly due to its bulk. With dark kitchens you are agile like a panther. If one brand does not work or your menu does not tick with your audience you can completely revamp your brand or menu without breaking the bank.
Even in dark kitchen there are varying business models – some invest in multi-restaurant dark kitchen model others invest in private ghost kitchens with different brands. Some are in house while others are 3rd party managed.
Making the delivery process seamless is one of the most important thing for the success of delivery kitchens as they work with multiple delivery partners and each have their own process and flow and different teams.
Why are dark kitchens thriving?
The exponential increase in online ordering in the past decade, consumers focusing on time and convenience, ease of placing orders from mobile apps from anywhere are some of the main influences in the current food delivery business. The way food business used to operate has been completely revamped by the onset of new technologies and increased consumer demands.
When we talk about technology – today with Internet and a working computer fitted on a mobile phone in consumers hand they can place order from anywhere in the world, easily pay via multiple ways of payments including mobile payments and wallets and then even track their orders in real time. This workflow fits perfect for food delivery business and food delivery has been early adopter of this.
Millennial are another set of strong influencers who have driven this growth. Millennial are people born between 1981 – 2001 who have grown with the new and growing technologies around them and value convenience. They value time and do not prefer waiting or spending time on non productive tasks, they want instant payment, delivery and communication. The entire Fmcg industry has changed to meet these demands and dark kitchen is one of the byproduct of this change.
Online food ordering and delivery is going to continue to grow for next decade and more(food will always be needed in as far future as i can see) dark kitchens will be a growing trend.
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