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OPINION: What are the implications of dark kitchens for the restaurant industry?

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Whether customers want an excellent dine-in experience or an excellent delivery experience, restaurants must be able to deliver it. And that means operators need to decide if dark kitchens are the answer, writes Jurgen Ketel at Givex. 

There’s no doubt that the food delivery industry has seen massive growth in the last few years. Advances in mobile tech have enabled the success of delivery apps like Just Eat, Deliveroo and Uber Eats.

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Also crucial to their success is the general shift in attitude towards dining out, particularly amongst the younger generation.

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If they can get a restaurant-quality meal delivered directly to their door, that can quite often be more convenient and preferable than going to a physical restaurant.

According to consumer research firm NPD, apps now drive 39% of delivery visits – up 14% year-on-year – and the takeaway industry is now worth £4.9 billion. And the delivery industry hasn’t stopped evolving.

Similar to shared office workspaces, dark kitchens are shared workspaces for restaurants. They’re paid for by delivery companies and house several different restaurant brands, each of which has its own staff and cookers while sharing shelves and facilities. Deliveroo’s Darn Warne has called them ‘the future’ of the delivery industry.

This growth in delivery doesn’t mean that it will completely replace dine-in restaurants. For restaurant brands, it’s essential to meet customers wherever they are – whether they want an excellent dine-in experience, or an excellent delivery experience. Restaurants need to be willing to adapt to change, particularly those in the mid-market that have traditionally relied on the lure of the high street.

There are different pros and cons of dark kitchens for restaurants. The relative importance of these factors will depend on the restaurant’s size, current customer reach, and financial position.

Here are some to consider.

Pros of dark kitchens

  1. Cost savings

Probably the most important advantage of using dark kitchens is the potential to make all-important cost savings, particularly those associated with launching in a new area. Rental costs and rising business rates have made it more difficult than ever to justify the cost of launching a new location, unless you know for sure that it’s going to be extremely popular with dine-in customers.

Aside from costs associated with building the infrastructure within the restaurant itself, the other main cost saving is on labour – theoretically you will only need chefs to prepare the food, as delivery apps will usually provide the delivery drivers.

  1. Customer reach

Working in a dark kitchen means you can reach customers you might never have been able to reach before. It doesn’t matter if the dark kitchen is in an area that your restaurant doesn’t have a presence in – you can simply set up a space with chefs who know how to cook your menu items in the right way, to the right standard. Once your food is delivered to new customers, the message about your great food will spread to new regions.

The relative ease of setting up and closing down dark kitchens also means that you have a chance to experiment a bit more – you can trial a dark kitchen in a new location to see if there is appetite (literally and figuratively) for the restaurant. If it turns out one location isn’t great for your restaurant, you can move on to somewhere else at a relatively low cost and effort.

  1. Investment in the dine-in experience

Being able to save on certain key costs like labour and property can allow restaurant chains to invest more money into their existing locations. People will still want the option and experience of dining out – so while dark kitchens might result in less of a need for physical locations, it gives restaurant chains an even greater incentive to make the physical locations they do have as productive and experiential as possible.

This could mean, for example, installing more customer-friendly and digitally-enhanced ordering technology like electronic point of sale (EPOS) systems, kiosks, and tableside tablets, as well as more advanced kitchen display systems (KDS).

Cons of dark kitchens

  1. Quality concerns

Dark kitchen staff can be trained in the same style as the dine-in restaurant, but there is still a concern that they may not be as consistent as the chefs in your physical restaurant. A lot of successful and growing brands have made their name on the quality of the food – and if they compromise that reputation, it could have a major impact on customer loyalty.

Combine that with a potentially bad delivery driver (that could cause the order to turn up cold, or with missing items) and the concerns over quality – and the resulting damage to the brand – are justified.

  1. Loss of control and insights

Working directly with delivery app partners inherently means giving up a certain amount of control on the part of the restaurant. Not only do you lose an element of control over quality, but also you lose control over the customer experience and journey. In addition, if restaurants are processing a lot of orders through delivery apps and dark kitchens, they often don’t get access to all important data into customer behaviour and buying patterns.

Ultimately, this data is owned by the delivery app – and isn’t necessarily accessible to restaurants unless they are willing to pay for it.  However, these insights are crucial for developing a business strategy, especially management, sales and marketing point of view, as you need to know what is and isn’t selling well. As the delivery industry continues to grow, not having access to this data could be a major obstacle.

  1. Shared profit

Restaurant brands in dark kitchens might not be paying rent, but they do have to share some of their profits. Delivery apps will charge a fair amount of commission for each order placed, so profit margins can be squeezed.

However, this can often be balanced out by an overall increase in sales, owing in part to the enhanced customer reach that dark kitchens and delivery apps help to facilitate.

Adapting to change

While not without their flaws, dark kitchens look set to be an important part of the future of delivery. The potential cost savings and customer opportunities that they can bring to restaurant chains are clear, and there is an opportunity to focus new time and money on making sure traditional, dine-in experiences are the best they’ve ever been. Those that strike this balance accordingly stand to get the most out of dark kitchens.

Jurgen Ketel is managing director EMEA of Givex, a provider of EPOS solutions and management systems to the restaurant, retail and QSR industries. www.givex.com

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