The concept of online ordering via apps, websites and the like are nothing new to the foodservice industry. In fact, it remains a disruptive force for operators for all industry segments. A new wrinkle to online ordering is the emergence of dark kitchens.
A dark kitchen refers to a foodservice operation that produces and delivers without the guest ever seeing the location.
Concepts that rely heavily on delivery, such as pizza restaurants, have been operating like a dark kitchen in a way, since some customers order remotely and get the product delivered and never see the location. Dark kitchens can be set up anywhere and many concepts have already begun to create dark kitchens. In the past, dark kitchens could also refer to a commissary or even a kitchen in the basement. So, this concept is not entirely new, but it continues to gain prominence among chain restaurant operators, among others.
Third-party delivery companies such as Uber Eats and Postmates facilitate the success of dark kitchens for restaurants by giving operators an avenue to get their food to the consumers in their homes or offices. Of course, these third-party delivery companies often charge a pretty penny for this service. And that has some restaurant concepts toying with the idea of self-driving cars. The concept of drones may also represent tech-enabled options for food delivery. If you followed the winter Olympics opening ceremony, you saw how hundreds of drones could be in the air, creating some beautiful images, without smashing into each other. Or foodservice operators could decide to enable delivery the old-fashioned way by hiring their own drivers, like Panera is doing.
Don’t focus on the method too much, at least not for now. What’s driving the advent of dark kitchens is consumers’ appetite for the convenience that food delivery satisfies. What could be more convenient than having your favorite meal delivered directly to you?
As a result, concepts specifically developed and designed to help facilitate dark kitchens continue to come to light, such as Kitchen United. For example, some existing restaurants will share their space with an emerging concept. This allows the newer concept to offer its menu via catering and delivery without having to invest in real estate, infrastructure and more. This lowers the risk for the new concept while creating a revenue stream for the existing one. In other instances, some chains have added dark kitchens in densely populated areas in order to handle their growing delivery business, thus taking some pressure off their traditional locations. Without this option, they would not be able to open a location due to expensive or unavailable real estate.
If you think about it, this dark kitchen trend has been a way of life for retailers many retailer no longer selling via brick and mortar instead focusing exclusively online with delivery. A growing number of restaurant concepts understand this is what consumers want and continue to take action to deliver on it.
If a concept decides to invest in a dark space, the company can likely acquire it with less square footage and at a lower development cost. This happens for several reasons. First, because foot traffic becomes a non-issue, the concept need not pay for prime real estate. Second, the operation won’t have a front of the house, thus lowering the space requirements.
But the benefits do not stop there. Depending on how the concept operates, the foodservice operator could also save money on its production system by designing it in a way that leverages labor more efficiently. And a smaller, more focused dark operations could have lower utility consumption compared to its full-size sibling.
Taking these factors into consideration, along with many other profit-and-loss line items, and dark kitchens develop a more favorable profile from a unit economics perspective. As long as sales are there, a dark kitchen concept may be able to have better unit economics than a traditional restaurant.
Sales, though, represent a crucial success factor for any dark kitchen concept. Today’s online world provides ample opportunity for brands to build awareness and, subsequently, sales. Some concepts can even employ a hub-and-spoke model, where a brand augments typical locations with dark locations.
So, are you ready to “go to the dark side?” Maybe not completely, but it may be worthwhile to consider it as part of your business model.