By Francois Lategan, Head: Retail and Medical, Fernridge
The Covid-19 pandemic has led to many changes in the way we live and work, causing upheaval in many industries. One of the worst affected has been the restaurant industry, resulting in many chefs and restauranteurs having to think outside of the box to adapt to the “new normal”.
One of the innovations that has helped the industry stay afloat during lockdown is the dark kitchen. This concept was born out of third-party delivery apps like Uber Eats and Mr D Food, and refers to kitchens that sell meals exclusively through delivery. Dark kitchens are also known as virtual kitchens, cloud kitchens, or ghost kitchens.
Dark kitchens may be delivery only businesses, but the food they produce is not typical takeout fare. Many dark kitchens in Europe were started by Michelin starred restauranteurs and chefs, offering consumers gastronomic experiences in the comfort of their own homes.
Why are restauranteurs going dark?
There are many benefits to running a dark kitchen. Not having to provide customer seating and waiting areas significantly lowers the cost of rent and there's no need to hire serving staff either. Dark kitchens are a great way for restaurants to reduce overheads while increasing their capacity to cater to a larger customer base.
Another key value offered by dark kitchens is the ability to easily experiment with new brands, menus and concepts. There are no physical premises to take into account when consumer food trends change, so delivery kitchens can quickly move on to a whole different menu or concept in no time.
Even before Covid-19 forced much of the world into lockdown, customers were demanding more personalised experiences. Dark kitchens offer this alongside convenience, allowing the chefs and restaurant owners to forge more personal relationships with customers. Technology is enabling this, allowing dark kitchen owners to leverage the data from the mobile applications used for interacting with the kitchen and the delivery services.
Technology unlocking location
Technology is crucial to the success of dark kitchens. From the mobile apps that allow the ordering of food, to automating and optimising the delivery process, technology is essential to the dark kitchen business model.
By its very nature, this technology opens up new opportunities through the data customers generate. In our research we’ve found, that over and above tracking order histories and preferences, location data can provide valuable insights and help inform the business in every area – from marketing, to expansion opportunities, to potential investments and business growth. When a traditional restaurant wants to open, location is a vital part of the decision-making process. The location has to be convenient and easily accessible for potential customers, and will affect commercial aspects of the business with things like the rental price for premises. For dark kitchens, geolocation can provide even more insight, offering an in-depth view into customer preferences, as well as offering a view into trends that can be acted on quickly.
For example, customers might routinely order from a friend’s house because delivery doesn’t reach their address. Or they may order from one location during the day and another at night. Understanding why customers are ordering in these patterns will help the dark kitchen better establish its delivery radius, and can help tailor marketing messages for them.
Fernridge has developed a specific Dark Kitchen Location Model that enables us to identify the optimal placement of the dark kitchens to serve as large a market as possible, by taking socio-demographic market features, average delivery distances and current sales trends into account. The model aims to identify more local locations for the establishment of dark kitchens to limit the effect of high rentals etc.
Furthermore, focussed analysis of customer loyalty and sales trends enables the end-user to experiment with various types of offerings. This allows dark kitchens to adjust services rendered to gain improved traction aligned to local market nuances and changing food crazes. Geointelligence is vital to keeping owners and chefs aware of what customers are looking for, and where. The data around whether people prefer one type of dish to another at different times of the day, or whether they request specific ingredients for certain meals can help inform how menus can be customised. Similarly, successful marketing campaigns can immediately be identified, and replicated.
The growing popularity of dark kitchens is leading to huge investment in the sector all over the world. Uber Founder Travis Kalanick, for example, invested $400 million in CloudKitchens, which offers serviced kitchens for chefs wanting to create their own dark kitchens. Google has also invested millions, focusing on the Kitchen United brand. While many traditional restaurateurs have adapted to the new delivery-focused trend, there’s room for dark kitchens too. There will always be space for experiential dining experiences, but delivery seems to be the future.