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The rise of the dark kitchen and virtual brands, and what it means for restaurant operators.

The rise of the dark kitchen and virtual brands, and what it means for restaurant operators.

Time for dinner - and Australians around the country open up a food ordering app, scroll their favourite cuisines and place an online order for delivery. Simple. But do they give any thought to where your food is being prepared?  

Seems a strange question - it’s prepped and cooked in the restaurant, surely? Maybe, but maybe not. There’s an increasing chance that a delivered dinner has been prepared, cooked, packaged and collected from a ‘dark kitchen’.  

 

What are dark kitchens (aka ‘ghost kitchens’)? 

A dark kitchen is one that exists to prepare meals for delivery only. No option to eat in, no customers coming to collect take-away. Just the cooking staff and the delivery drivers.  

Dark kitchens, so called because there is nothing from the outside to show that it is a kitchen, are facilitated (and sometimes even owned by) 3rd party delivery services such as DoorDash, Menulog, Deliveroo and Uber Eats. Dark Kitchens also weave in their own online ordering sites, offering pick-up and white label delivery services such as DoorDash Drive. Customers order online, the dark kitchen preps the food and hands it over to a delivery service, or perhaps a customer at a pick-up window. 

Just as in the world of retail, where some stores are online and bricks and mortar, like Myer, and others are online only, like Amazon, so it is with restaurants. There are those who add a dark kitchen to complement their eat in premises, and now a growing number of ‘virtual brands’, operating exclusively from dark kitchens.  

 

What is a virtual brand? 

A virtual brand is a brand that only exists online and has no shop front presence. This means that an existing restaurant kitchen or dark kitchen can setup one or more virtual brands and fulfil online orders. The advantage of virtual brands is that the same equipment and supplies can be used, there is a reduction of food waste, and the operator can test out a new concept or cuisine without heavy investment. 

 

What has triggered the growth in dark kitchens? 

Dark kitchens have been around for a few years, although still relatively new to Australia. Their continued growth is founded on: 

  • The growth in apps - with technology advances constantly enhancing user experience, more and more of us pick up our phone to order dinner via an app.   
  • Along came the pandemic - if dark kitchens were gaining in popularity before the events of 2020, the global covid-19 pandemic added fuel to the fire. With delivery being the only option for many restaurant aficionados during the lockdown, the efficiencies of dark kitchens become even more appealing.  
  • Delivery Provider kitchens - the other game changer in the dark kitchen world has been delivery providers such as Deliveroo establishing their own dark kitchen sites. Under the Deliveroo ‘Editions’ model, the delivery provider builds and fits out dark kitchen sites, and then partner with local restaurants, who provide the staff and prepare the meals. Deliveroo’s first Australian Editions site is in Windsor, Melbourne, and includes 8Bit for burgers, fries, milkshakes and hotdogs, and Gelato Messina for a frozen sweet treat.  

 

What are the benefits of a dark kitchen? 

For restaurant operators, there are certainly benefits in the growing trend towards dark kitchens - here’s the top seven reasons they might want to consider this new approach to food prep: 

  1. Low cost way to expand reach - if you want to expand into a new area, a dark kitchen is a lower cost, lower risk way of doing so. For dark kitchens, it’s more important to be close to where people live than a city centre. So rather than buying or renting premises in (expensive) areas with plenty of footfall, you set up a ‘no shopfront’ premises in a residential or industrial area.    
  2. Faster ROI - the lower setup costs of a dark kitchen enable you to return a profit more rapidly.   
  3. Low barrier to entry - If you’re a start-up, the rapid set up and lower costs of a dark kitchen make it easier for you to get into the market, and gives you a stronger chance to compete against established players.  
  4. Lower overheads mean that you can spend more on things that make a big impact on sales and customer experience - like marketing and ingredients.    
  5. Total focus - running a restaurant with the competing priorities of dine-in, take-away and delivery is challenging. With a dark kitchen, you can focus on doing one thing - delivered meals - and doing it really well. In a dark kitchen, with workflow optimised for delivery orders, preparation time can be cut by as much as 10% and operators can focus on the customer’s home dining experience, with, for example, specialised packaging to keep food hot and fresh.      
  6. Market intelligence - when all your orders are placed online, you can capture information about your customers, which you can then use for targeted marketing. This is especially true for customers that reach you through your online ordering site or ordering food through Google. You can use their purchase preferences to send recommendations, offers, etc.  
  7. Known demand - Deliveroo Editions choose their locations and cuisine styles based on identified gaps in the market, based on user searches. If you’re operating from a dark kitchen set up by a delivery service, you can be confident that there’s a demand for your product in that area.  

Customers benefit from dark kitchens too (although they may not know they exist) - they get the chance to order city quality restaurant meals in the suburbs and to try new cuisines and restaurants without having to travel.   

Whilst dark kitchens and virtual brands are relatively new in the Australian market, evidence from overseas would suggest that they will continue to grow. The pandemic has increased consumers’ demand for good food, delivered to their home rapidly and efficiently. And whilst dine-in is a much appreciated treat, especially after lockdown, the likelihood is that the restaurant landscape will continue to accommodate both traditional and ‘dark’ kitchens.  

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