What is a "dark kitchen"?
Dark kitchens are food production facilities that have no dine-in space and sell food exclusively through a delivery service. Also known as ghost kitchens, cloud kitchens, virtual kitchens and delivery-only restaurants, they have surged in popularity during the pandemic while many restaurants were unable to offer customers dine-in options.
Customers order food online which is then communicated to the dark kitchen which cooks and packages the food for delivery. The kitchen will then alert a food delivery driver that the order is ready and they will collect the food and deliver it to the customer’s location.
Due to the lack of costs for service staff and in-house dining options, these food production facilitates can be highly efficient in preparing food for delivery. Food delivery companies claim that the spread of dark kitchens will reduce the costs of food preparation and lead to faster delivery times with locations closer to customers’ homes. It also allows existing restaurants to identify geographical selection gaps in particular neighbourhoods where demand might be high for a particular type of food but there are few nearby restaurants which cater to this market.
Dark kitchens have attracted much attention and have been celebrated as a way of expanding access to restaurants. At the same time, concerns have been raised about grim working conditions with workers shut away in shipping containers on industrial estates.
Most dark kitchens are owned or leased by large commercial food delivery businesses with multiple restaurants operating out of a single location. Other dark kitchens are just one food company renting the space while others consist of multi-brand dark kitchens. Some restaurants outsource many of the aspects of food preparation to a commercial partner and only provide ingredients and instructions for how to prepare the food.
London-based Food Stars, which is part of a US business owned by former Uber chief Travi Kalanick, is one of the largest operators of dark kitchens in the UK with over 100 facilitiates across 17 locations, 14 of which are in London, with the remaining locations in Birmingham, Leads and Manchester.
Deliveroo is another large operator of dark kitchens in the United Kingdom, with many locations across the country. They launched Deliveroo Editions in 2017 which attracted brands such as Dishoom, Chilango, Rosa’s Thai and Five Guys who are charged a fee by Deliveroo to cover rent, rates, waste management and marketing support in exchange for use of a dark kitchen facility.
Market research firm Euromonitor International has predicted that food delivery could be a US$1 trillion market globally by 2030. Dark kitchens have recently proliferated across the country with the rising numbers of food delivery services and increased need for contactless food delivery.
The rise of dark kitchens has facilitated the creation of several virtual brands – brands that either have no physical storefront presence or that are spinoffs of existing restaurants. Virtual brands often exist only as a food option on third-party delivery apps. Rather than offering a full offering of choices, these online-only brands often cater to specific markets, offering food such as pizza, burgers and chicken wings which are popular and travel well.
Virtual brands enable restaurants to create new menus for customers which can be cooked out of their current kitchen and can also allow them to test new ideas without starting an entirely new restaurant. They also enable restaurants to offer novelty dishes such as the Bella Italia inspired “Mac Shack”, a virtual brand which offers different types of Macaroni Cheese, which are not available on Bella Italia’s traditional menu.
Virtual brands received a large boost from the pandemic with a number of restaurants forced to adapt to online food delivery and creating new options for food delivery apps. Las Iguanas owns the virtual brands Blazing Bird and Bang Bang Burrito, while Tossed owns Protein Hut, Houmous Bowls, Whole Green Bowls, Power Bowls and Rainbow Wraps. In some cases, this has led to a proliferation of dozens of virtual brands from a single restaurant.
The emergence of virtual brands has created a new industry of “dark kitchen enablers” such as Flavour Factory, who help restaurants create online brands on delivery platforms through menus, recipes, training and support. However, as the market becomes more crowded, it is becoming difficult for virtual brands to stand out and build a reputation. Flavour Factory offers restaurants an initial induction period in which a large number of brand offerings are trialled which is then reduced to key brands that are selling well.
Deliveroo has used an innovation fund to launch its own range of delivery-only brands that would be listed alongside other restaurant partners on its app. Deliveroo Editions has also partnered with existing brands to offer brands on their platform such as the Ben & Jerry’s Store and the Ice Cream Store both operated by Deliveroo Editions.
Dark kitchen business models
- Single Restaurant Dark Kitchen
From 2016 onwards, a number of large brands began opening dark kitchen restaurants to cater for the growing demand for food delivery. In this model, one brand uses a single kitchen which does not have seating for customers and cooks food for delivery. They may use their own delivery drivers or rely on a third-party platform such as UberEats or Deliveroo to fulfil deliveries.
These traditional dark kitchens work best for established brands who can count on a steady customer base and do not need to rely on a restaurant to drive demand. Wagamama opened its first dark kitchen in 2018 and had plans to rapidly expand to new locations. However, towards the end of 2022 The Restaurant Group, owners of the Wagamama franchise, put plans of expansion on hold in light of softening demand in the market and fears of rising interest rates. At the end of 2019, McDonald’s opened its first dark kitchen in London’s Hanworth district at a time when its deliveries began to account for more than 10% of its UK business. In May 2022, McDonalds announced a global strategic partnership with Deliveroo so that McDonalds food will be offered on the Deliveroo platform to be collected by Deliveroo drivers from MCDonalds stores.
- Multi-Restaurant Dark Kitchen
An alternative set up is for multiple restaurants to collectively own and operate a dark kitchen facility, reducing costs and allowing customers a wider selection of products from the same facility. Restaurants can work together and share data on which products are popular in order to meet local demand. Tiny Cloud Kitchen has operated under a franchise model since 2017 in which it partners with restaurants who join the multi-restaurant dark kitchen. This allows the initial investment to be low and gives the restaurant access to a wider market with Tiny Cloud Kitchen running a multiple delivery platforms from a single dashboard with delivery driver integration.
- Delivery Platform Dark Kitchen
In this model, a delivery platform owns or leases a building with multiple kitchens for staff from restaurants to prepare meals for pickup by its platform delivery riders. Deliveroo Editions offers a host of restaurants which are available at different locations and enable restaurants to deliver their meals to a wider audience who live further away from their original restaurant. Deliveroo Editions also enables virtual brands and Deliveroo-owned brands to offer food services to customers on the platform.
Uber Eats has briefly run an “Eats Delivery Hub” in Paris, but it has abandoned plans to run a dark kitchen business and has stated that it does not plan on purchasing real estate to enter the dark kitchen market. Just Eat is not currently operating any dark kitchens.
- Commercially-Owned Dark Kitchen
In addition to the delivery platforms, other commercial operators also leade out kitchen space without a storefront for other businesses to use as dark kitchens. Some of these businesses are simply hiring out the kitchen space on a yearly, monthly or daily basis while others provide a more comprehensive package which assists new food businesses with almost every aspect of running a dark kitchen. The advantage for food businesses is they can rent out a space with little start up money from around £1,500 a month and start taking orders straight away.
One of the most well-known operators in this space is FoodStars, which began as a stats-up in East London and which was bought by former Uber chief Travis Kalanick. Kalanick’s City Storage Systems bought FoodStars in 2018 and currently offers over 100 kitchen spaces to food businesses across the UK with most of their locations in London. Another prominent example is Karma Kitchen which offers a range of shared kitchen space and has been called by one of its co-founders as the “WeWork for kitchens,” which rents out its facilities to different businesses throughout the day.
- Dark Kitchen Marketplace
Dark kitchen marketpalce companies act as intermediaries between landlords of pubs, hotels and stadiums with existing underutilised commercial kitchen space and food brands that require temporary use of these facilities. These are B2B companies that connect parties and provide a legal framework and booking system. This business model enables ownerse of commercial kitchens to earn extra revenue from them during quiet periods in which they would not otherwise be used. It allows food brands to create short term licencing agreements to test a new market and scale with demand. These contracts can be for delivery-only businesses, but they can also be residencies in which the food is sold to customers at the venue. Oya Kitchens, founded in 2020 and operating across the UK, is a leading example of a dark kitchen marketplace. They do not operate any dark kitchens independently. Their role is to connect the two parties and provide the marketplace for them to reach an agreement.
Where are the dark kitchens?
In what we believe to be a UK first, Autonomy’s Data Unit have mapped exactly where all (or as many as officially on record) of the dark kitchens are in the UK. Click this link to go to the technical blog regarding how exactly they did this, as well as to see the interactive map of these sites.
Their research identified 238 individual Editions partners across 53 locations throughout the UK – read the blog post and navigate the interactive map produced by Sean, linked above and again here.
Tim Bradshaw (2019) ‘The start-ups building ‘dark kitchens’ for Uber Eats and Deliveroo’. Financial Times. Available at: https://www.ft.com/content/a66619b0-77e4-11e9-be7d-6d846537acab.
Alicia Kelso (2019) ‘McDonald’s opens 1st ghost restaurant in London’. Restaurant Dive. Available at: https://www.restaurantdive.com/news/mcdonalds-opens-1st-ghost-restaurant-in-london/566504/.
Dave Lee (2020) ‘Uber Eats gets out of heat of delivery kitchens’. Financial Times. Available at: https://www.ft.com/content/8cbeef94-bfc7-40eb-991a-bc519c058f73.
McDonalds (2022). ‘McDONALD’S TO LAUNCH ON DELIVEROO IN THE UK AS PART OF EXPANDED GLOBAL STRATEGIC PARTNERSHIP’. Available at: https://www.mcdonalds.com/gb/en-gb/newsroom/article/mcdonalds_deliveroo.html#:~:text=17%20MAY%202022%3A%20Deliveroo%20and,in%20markets%20across%20the%20world
Sebastian Murphy-Bates (2019) ‘Uber founder buys more than 100 ‘dark kitchens’ across London in new venture that allows takeaway-only businesses to rent them for £2,500 a month to sell food on apps such as Deliveroo‘. Daily Mail. Available at: https://www.dailymail.co.uk/news/article-6855613/Uber-founder-buys-100-dark-kitchens-London-deal-delivery-food-firms.html.
James Muldoon is a Reader in Management at Essex University and the Research Lead of Autonomy Digital.