Restaurant businesses could shun new site openings and instead turn to installing or leasing delivery-only kitchens to service their growth, experts have said.
Rather than committing to the cost of launching, establishing and running an actual physical restaurant site, fledgling restaurant brands are being innovative by selecting to go down the route of pop-up stands and delivery kitchens thus leading to capital expenditure being recouped faster.
That’s according to a report by The Daily Telegraph, which cited Clockjack Chicken as one of the forerunners of this trend. The chain was one of the first restaurants to sign up to Deliveroo, dealing with orders from its Soho restaurant. But after realising the pressure of juggling both in-house and takeaway orders and the negative effect that the presence of delivery drivers was having on the restaurant, the company decided to launch a delivery only site:
“When we started investigating this and found out more we decided it was attractive,” co-founder, Jerry Goldberg told the paper. “The property costs for a kitchen are significantly lower than a restaurant as you don’t have to have a prime location for a delivery site.”
According to Goldberg, it would cost a minimum of £500,000 to open a small restaurant in comparison to the cost of leasing and fitting out a delivery kitchen for around £100,000.
Goldberg said the rent on the company’s basement kitchen near London’s Monument, which he has had since June 2016, is a quarter of the cost of his Soho restaurant despite it being the same size: “The revenue potential was higher than Soho too because the restaurant is limited to 50 covers but the kitchen-only site could do twice or three times the revenue if the demand was there.”
Another brand preferring to use this business model is Farmstand. The company signed a lease last year for a 2,000 square foot kitchen in Deptford, which acts as the cooking hub from which all of its food is made and then sent to its desired locations.
The Telegraph noted that out of the company’s 12 stands, only one is operated as a regular restaurant. Food is prepared at Farmstead’s kitchen-only site in Deptford and then sent to its stands. Founder Steven Novick said that much of his company’s growth had come from having stands located within third-party premises including a stand once a week at JP Morgan’s Canary Wharf offices.
“I hope we see more of this, it is a capital-light and efficient model. I would like to see more brands doing it – being copied is the highest form of flattery. With business rates going up it can be expensive for businesses to operate and you can get a lot of independents going out of business.”
Moving forward, the company plans to have a mini-stand in each of Planet Organic’s seven London stores and has recently been negotiating pop-up stands in Soho-based PerformancePro gym and JP Morgan’s Victoria Embankment office, according to the report.
Capitalising on the trend for delivery-only restaurants, Deliveroo recently launched Roobox, a kitchen-only concept which allows restaurants it works with to take up a site to help them better deal with takeaway orders or test a concept in a less capital-intensive way.