close

OPINION: Dark Kitchens – what lies beneath the investment?

Delivery kitchen

Dark kitchens have a clear role to play, but the amount of money being invested seems to be overgenerous, writes leading foodservice analyst Peter Backman…

A letter dropped through my letterbox the other day (and that’s an event worth recording in its own right!). It was from the planning office of my local council. It concerned a development in a small-scale trading estate in the area.

The owner is planning to open 22 dark kitchens – that’s right 22 – in a bustling area of north London. Dark kitchens are attracting interest from across the foodservice sector as evidenced by the energetic discussion we had during my Open Hour last week with some of my Premium Briefing Report subscribers. All the threads of our conversations seemed to come back to dark kitchens.

Story continues below
Advertisement

But the trouble with dark kitchens is concisely illustrated by the situation in my area.

It is already served by two Deliveroo Editions and is not far from a Foodstars dark kitchen site – and it now looks as though it will gain another 22 kitchens.

And my area is only one slice of an investment boom in dark kitchens – a boom in which Karma Kitchens, a small, two site, London-based dark kitchen operator has been able to raise a quarter of a billion in investment money for creating dark kitchens across Europe. And other dark kitchen investments are coming in from the likes of USA-based Reef and many others.

What lies behind these investments in dark kitchens?

They are driven by the growing role of restaurant delivery – and the fact that it’s very difficult for anybody to make money out of delivery.

For bricks and mortar restaurants, a key issue is the dual cost structure that delivery demands – the restaurant has to be capable of serving food in two ways – both at the table and via delivery.

Moving to a dark kitchen (or starting up in one) removes the need for front-of-house space. And hence, by not needing to pay for that space, a dark kitchen starts to deliver a profit, on paper at least.

Dark kitchens have a clear role to play, but the amount of money being invested seems to me to be overgenerous, to put it mildly.

And where is this money going? Some is going into marketing and fitting out kitchens, but plenty is going to property owners and developers. I suspect these are the people who will really gain from dark kitchens.

There is clearly a bubble brewing and, like all bubbles, it will burst. The good news is that what will be left behind once the bubble bursts will be the beginnings of a sustainable model for dark kitchens.

Just like the tiny mammals running around in the undergrowth when the dinosaurs ruled the world, which of the dark kitchen models that are left will grow to profitable maturity once the dark kitchen dinosaurs have been wiped out?

Peter Backman is a leading analyst and consultant on the eating out market. You can reach him at 08448 000 456 or via www.peterbackmanfs.com

Tags : dark kitchensdelivery kitchensopinionPeter Backman
Andrew Seymour

The author Andrew Seymour

Leave a Response