Dark Kitchens - Is it time to take the plunge?
Dark kitchens, ghost kitchens, cloud kitchens, delivery kitchens - call them what you will, but they have had a bad rap over the last few years. The media (and then the public) were scared off them as they implied that they were some back street, behind closed doors, shady operation that could be doing anything to your food! In reality they are bound by the same environmental health as any food operation and the quality of the food is always ultimately decided by the consumers who give it a rating on the delivery app.
At wagamama I successfully opened a number of dark kitchens and got to know all the opportunities and pitfalls. There are a few reasons why you now might want to consider using a dark kitchen:
Growing your reach
Opening a dark kitchen in a location where you are not currently available gives you access to incremental customers but it can also stretch your resources (chef team, supply chain and management time).
Take the pressure off a nearby restaurant
Running delivery operations from an already busy restaurant can be fraught with issues: Where do drivers go?; Do drivers in helmets damage the look and feel of your restaurant?; How do you prioritise delivery orders versus your diners? Where do you pack and collate orders? The list goes on. However, the clear upside of delivery from an existing restaurant is that this is the most cost efficient way to run delivery: your fixed overheads are already sunk costs and the incremental labour is minimal compared with running a standalone delivery unit.
Low cost brand building
Byron Sharp in his seminal book ‘How Brands Grow’ spoke about if you want to grow your brand then you have to make sure it is easy to buy. Therefore, your best chance of creating a brand fan is by making sure that customers can actually order and eat your food. Opening a full restaurant can cost hundreds of thousands but opening a dark kitchen can be done at a fraction of that cost.
Low risk exit
Unlike high street restaurants where you may be tied into a long lease, most dark kitchen providers will give you flexible and short notice periods. So instead of signing up to 10+ years of rent you could give a few weeks notice and move out if things don’t work out.
Standalone unit or multi-kitchen?
A number of multi kitchen providers have arrived onto the market (Food stars/CSS, Deliveroo Editions to name a few). They offer the benefit of guaranteed driver availability and they take on most of the risk of capital outlay but they aren’t always located where you would like them to be. You can get around this by taking on a lease on a standalone unit but your capital outlay, rent and rates land on your own shoulders so you have to be sure that the location will give you enough sales to make the business stack up.
Are there any other pitfalls?
Pick a location where you won’t have local resident issues. I’ve learned first hand what it is like if you pick a location where local residents aren’t happy - they will make your life as hard as possible.
Driver availability. This i
s one to be clear on before you take on a lease on a standalone site. You should speak to the aggregators about ensuring the area has a strong demand for delivery and that there are enough drivers in the area to get your food out.
For brands looking to grow their presence dark kitchens are an enticing opportunity but just be sure that you understand your financial model, sales potential and gear the business to stay agile so that you can change direction quickly or exit quickly if you need to.