The name “dark kitchen” may sound sinister, conjuring up images of a sketchy hideaway hidden deep in a dingy alleyway.
But the reality is actually much more harmless than it sounds. Put simply, a dark kitchen (AKA a “ghost” or “cloud” kitchen), is a restaurant that specialises in producing food for delivery without dining areas or customer seating.
For entrepreneurs looking to start a restaurant business, dark kitchens offer a low-risk entry point into the food industry, while established restaurants can use them to expand into new locations without the expense of setting up a full-scale restaurant.
What is a dark kitchen?
The “dark kitchen” term was first coined in 2015. The term “dark” comes from the fact that they’re hidden from customers and aren’t open to the public. Instead, they are fully equipped spaces – with proper lighting! – where businesses prepare food just for takeaway services.
With the rise in demand for food delivery services, such as Deliveroo, Just Eat and UberEats, the number of dark kitchens quickly began to increase, especially during the COVID-19 pandemic.
In 2020, around 750 dark kitchens were operating around the UK, in cities such as London, Manchester and Leeds. Popularity has grown further since, and the global market is expected to reach $112.53 billion by 2027.
Who uses dark kitchens?
Many different companies use dark kitchens for their operations. For example:
- Restaurant chains: Some popular restaurant chains have their own dark kitchens and carry out orders through third-party services. For example, McDonald’s launched its first dark kitchen in Hounslow in 2019, while Wagamama opened one in Hackney a year prior.
- Delivery companies: Some delivery companies have their own dark kitchens that they rent out to restaurants. For example, Deliveroo’s Editions services allow its partners to rent out dark kitchen spaces and have orders fulfilled by its drivers. Restaurants also pay a fee to cover rent, marketing and other costs.
- Virtual start-ups: These are restaurant businesses that operate online only and do not have a physical location or dining room. For example, Taster has a virtual list of different food items (e.g. Ugly Chicken, Flat Out and Out Fry) which it offers to restaurant partners to add to their own menus.
- Dark kitchen operators: Companies that buy dark kitchen spaces to rent out for brands. For instance, Karma Kitchen works to turn underutilised industrial estates into kitchen units, which in turn are offered as workspaces for restaurants.
What are the types of dark kitchens?
The way dark kitchens work is just like how regular restaurant orders are fulfilled. The customer places an order through a delivery app or online ordering system, the food is prepared in the dark kitchen and drivers collect it to deliver it to customers. Some dark kitchens also allow customers to wait and collect their orders.
However, dark kitchens aren’t all the same and come in different types. These include:
- Traditional dark kitchen: A single restaurant business owns or rents a dark kitchen space, usually specialising in one type of cuisine. They often rely on third-party services (e.g. Deliveroo or UberEats) to deliver food to customers.
- Multi-brand: A dark kitchen is shared by multiple brands under the management of a parent company. Each brand (with its own cuisine type) operates within a designated area of the kitchen. For example, a dark kitchen might serve Italian food under one brand and plant-based meals under another – all operating out of the same kitchen space.
- Aggregator-owned: These are operated by third-party companies that partner with restaurant businesses to rent a kitchen space. Deliveroo Editions is a prime example of an aggregator-owned dark kitchen.
What are the pros and cons?
Running a dark kitchen is a popular choice for businesses that want to solely focus on delivery or takeout, without having to juggle catering to in-restaurant customers on top. However, there are also drawbacks to consider as well. These are the main advantages and disadvantages of dark kitchens:
- Improved sales
- Less staff needed
- No real estate cost
- No geographical barriers
- More expansion opportunities
- Over-reliance on delivery platforms
- Complicated menu management
- Lack of physical presence
- Limited customer feedback
- Inflexible operating hours
Pros of dark kitchens
- Improved sales: Dark kitchens can leverage data analytics to better understand customer needs in different geographical areas. By analysing data from food delivery platforms, social media and other digital channels, they can identify specific preferences, popular cuisines and emerging food trends in real time. In turn, this allows them to improve their menu, adjust portion sizes and introduce new items based on what’s most in demand.
- Less staff needed: As there’s no dine-in service, dark kitchens operate without the need for servers or cashiers. This can significantly reduce the labour costs – and hiring headaches – typically associated with running a traditional restaurant. Without the need to hire, train and manage a large front-of-house team, businesses can focus solely on hiring skilled chefs and kitchen staff to prepare meals efficiently.
- No real estate cost: Running a physical restaurant can be expensive. Payments for rent, utilities, maintenance and furniture can mount up quickly. On the other hand, dark kitchens don’t require a customer-facing location in busy or expensive neighbourhoods, meaning they can operate in more affordable industrial or less central areas. The only essential costs include the rent for the kitchen space itself, utilities and minimal maintenance for the kitchen equipment.
- No geographical barriers: Unlike traditional restaurants, which are limited by their physical location and can only serve customers within a specific area, dark kitchens have the flexibility to operate without these geographical constraints. As they focus exclusively on delivery, they can reach a much wider customer base across different neighbourhoods, cities or even regions, depending on their delivery partners and logistics.
- More expansion opportunities: Expanding a traditional restaurant to new locations is a long and drawn-out process, not to mention expensive too. It involves having to scout potential locations, build a business plan, hire new staff and obtain the necessary permits and licences to operate. Dark kitchens, on the other hand, offer a much faster and more flexible expansion model. Since they don’t rely on physical dining spaces or expensive storefronts, businesses can quickly set up new kitchen facilities in various locations with minimal overhead.
Cons of dark kitchens
- Over-reliance on delivery platforms: While third-party delivery services can provide access to a large customer base and simplify the logistics of delivery, they also charge high commission fees. For example, Deliveroo typically charges a commission fee of 25-35%, as well as onboarding fees when a restaurant signs up. These fees can significantly eat into a dark kitchen’s profit margins, making it difficult to remain profitable. Delivery delays and incorrect orders can also reflect poorly on a brand’s reputation, even if the problem lies with the delivery partners.
- Complicated menu management: If a dark kitchen operates multiple cuisines out of the same kitchen, there can be challenges in managing diverse menus. Unlike traditional restaurants that focus on one type of cuisine, dark kitchens may have to juggle various dishes and ingredients, which can make kitchen operations difficult because staff have to handle different cooking methods, preparation times and ingredient management without compromising the consistency of each dish.
- Lack of physical presence: Without a physical presence, this can hinder businesses from building a strong brand identity and customer loyalty. Moreover, relying solely on digital platforms and delivery apps to attract customers means they have to compete in a crowded marketplace where visibility and brand differentiation are challenging. Customers may have limited exposure to the brand beyond a logo or description on a delivery app, making it harder for dark kitchens to stand out or create lasting impressions.
- Limited customer feedback: While traditional restaurants can engage with diners and address concerns on the spot, dark kitchens rely on delivery services for these interactions, which can limit direct customer feedback. They may also miss out on valuable insights that could help improve their offerings and adapt quickly to customer preferences.
- Inflexible operating hours: Dark kitchens are often bound by the delivery platforms’ operating hours and may not be able to adjust their hours based on demand. In turn, this can limit their ability to cater to late-night or early-morning customers, potentially missing out on sales opportunities.
Dark kitchens offer a flexible and cost-effective model for both new and established businesses. By capitalising on the growing demand for food delivery, these kitchens allow restaurant businesses to simplify operations, reach broader markets and experiment with diverse menus – all without the overheads of traditional restaurant set-up.
That said, as dark kitchens continue to pop up, it’s important for operators to understand the challenges that come with them, like relying on delivery platforms and maintaining brand identity. Ultimately, entrepreneurs should weigh the pros and cons to figure out if a dark kitchen is right for their restaurant business and goals, helping them make the right choices to set them up for success in the industry.
