Dark kitchens: a threat to classic catering?

The proliferation of dark kitchens is challenging the traditional catering model. What exactly are we talking about? What are the advantages and limitations?

Dark kitchen, ghost kitchen or ghost restaurant. But what are we talking about? A concept imported from the United States, it refers to kitchens that produce dishes similar in appearance to those found in restaurants, but available only by delivery. Is the concept a success? According to Adrien de Schompré, founder of Smart Kitchen, the phenomenon is growing by 25% a year, and there are already 1,500 brands on UberEats as well as a dedicated branch Editions branch at Deliveroo. The trend is so promising that Paris-based start-up Dévor has raised €1 million, British player Taster €12 million to expand internationally, and Not So Dark €20 million to open 30 new kitchens. A booming phenomenon that continues to expand, but how far? Will dark kitchens overtake classic restaurants?

What is a dark kitchen?

Dark kitchen, ghost kitchen, cloud kitchen... Many names to define the same concept: a kitchen 100% dedicated to meal delivery, with no dining room, no staff, no service, no customer contact, no decoration and no window display. A single kitchen to house several DNVB brands (Digital Native Virtual Brand) - brands that develop exclusively via the Internet, so that sushi, burgers, tacos and more can cohabit on the same work surface, before being delivered via different delivery platforms.The dark kitchen concept makes it possible to rapidly increase your sales, without the burden of costs and administrative tasks. Increase your sales by renting a low-cost, fully-equipped kitchen in which to prepare and send out large quantities of dishes for delivery. These kitchens are home to entirely virtual brands born of the concept, as well as extensions of well-established restaurants determined to turn it into a new source of revenue while maintaining their traditional activities.

The Panorama group is a case in point. Originally the owner of 5 well-known restaurants in Paris, the group decided to expand in 2018 and opened "Dark Kitchen", recently renamed "Dévor". Three Dévor ghost kitchens have thus emerged in Paris, one in Nice and one in Bordeaux, offering 6 mainly street-food virtual brands. But in February, Jean Valfort, the group's founder, announced that he was going one step further and proposing a franchise model for his ghost kitchens.

The Big Mamma group has also entered the game with its virtual brand Napoli Gang. Positive results for the brand: 133,000 pizzas sold per month, compared with 15,000 in their restaurant in normal times. Having been forbidden to offer their products for delivery until the crisis, will this offer remain ephemeral or become a sustainable one? Freeing oneself from the operational constraints of conventional catering nevertheless requires a timed performance in the kitchen. Consumers have new expectations and new needs. Everything must be organized to ensure delivery under the required conditions: time, temperature, and the desired finished result. So ghost kitchens are not like palace kitchens. They are designed to maximize efficiency and optimize preparation time. After all, when it comes to delivery, speed remains a key factor. Consumers aren't looking for fine dining or a service experience, but for efficiency. By removing all the aspects of a traditional restaurant experience, virtual brands must ensure a single task: to serve a dish of the promised quality in the shortest possible time.

The "ghost kitchen" model is akin to an economy of scale. To be profitable, volume is everything. The recipes on offer are adapted. For example, the founders of Foudie, a dark kitchen based in Toulouse, share a behind-the-scenes look at their virtual brands with France Info . They claim that each recipe is designed for delivery, enabling them to send out between 80 and 150 orders a day. More and more players are jostling for position in this promising market. In 2020, Karma Kitchen, Frichti, Keats and Taster are the most ambitious European companies, according to Statista figures. With Karma Kitchen raising 300 million euros in the past year, followed by Frichti with 50 million euros, these companies demonstrate their belief in the sustainability of ghost kitchens. The growth of dark kitchens is both impressive and questioning.

Why has the dark kitchen phenomenon exploded lately?

The concept, imported from the USA, has been around for some years, but 2020 marks a real turning point. Deliveroo, the only form of catering that has remained authorized since the beginning of the health crisis, has consequently exploded over the past year, and is now part of French consumer habits. Deliveroo has gone from signing up 12,000 restaurants in early 2020 to 20,000 by the end of the year.

The range of offerings is expanding, and against all expectations, more and more gourmet restaurateurs are entering the market. Stéphanie le Quellec offers starred dishes from the emblematic Tour d'Argent, Alain Ducasse diversifies with Ducasse chez moi, and Hélène Darroze adapts her Joia restaurant to offer gourmet burgers. The Tiptoque platform has even been created to bring together all these starred offerings in a single application. As a result, the rise of the delivery service has led to a boom in ghost kitchens. The health crisis has therefore been a growth driver for this business. Sales in the classic restaurant sector are down 55% on 2019, while Taster has doubled its results since containment. Anton Soulier, founder of dark kitchen Taster, claims that "Le Covid has saved the market 3 years". Confinement then curfew, telecommuting, no desire to cook, lack of time to shop or pick up to go, delivery seems since October 2020, almost the only way to eat out. The digitalization of the catering industry has also played an important role in the deployment of dark kitchens. As we detailed in our article, digitalization is now inevitable for restaurateurs if they are to meet new expectations. Technology is at the heart of the success of these dark kitchen businesses. From order to delivery, the customer's journey is carried out via an app. Every point of contact is digitalized. However, the use of these technological means does not affect everyone, but is concentrated more on the new generations.

What advantages do dark kitchens offer managers?

• The initial investment is smaller than that required to launch a restaurant: "6 to 10 times less expensive than that of a traditional restaurant, depending on the equipment you choose", explains Jean Valfort of Dévor, formerly Dark Kitchen.

• Costs reduced to the rental of a fully-equipped kitchen, a brigade, food products and packaging (not to mention the delivery platforms' commission, which remunerates the business brought in and the operational service provided. Here are our tips for setting up a profitable delivery business).
• There's less pressure to find the "ideal location", the well-placed, well-oriented premises... All you have to do now is choose an area where the total volume of customers within 3 km is quite substantial.
• Less human and social administration. Removing the management of a room service reduces staff numbers and the management of unexpected problems with customers or waiters.

• Virtual brands offer flexibility to the founder in terms of menu design, or the very existence of the brand. For example, if the offer is for Mexican specialties but doesn't meet demand, it can simply be repositioned. A virtual brand can thus disappear and appear more easily.
• Being able to modify dishes on the menu at any time means you can adapt your offer to your stock levels, thus minimizing losses, and therefore costs and food waste.
• Speed of execution and agility: the steps involved in defining an original concept to differentiate from the restaurant on the corner, investing in sophisticated decoration, recruiting an efficient team and setting up an adapted kitchen, no longer seem essential.
• New lifestyles are fuelling a growing demand for meal delivery. With telecommuting, lunch breaks for working people and students have taken on a whole new meaning. With neither the time to cook nor access to restaurants, dark kitchens respond to these new lifestyles.

Financial advantages, time savings, flexibility and rapid expansion: are dark kitchens the envy of the world?

But the concept has obvious limitations

• Going to a restaurant, on the spot and enjoying all the experience that goes with the dish, doesn't meet the same needs as ordering a meal at home. The same dish, served on the sofa or on the terrace, cannot be priced the same. Unlike traditional restaurants, dark kitchens have little value to add to their menu, apart from speed of service. It would be difficult for a consumer to pay more than 30 euros for a burger at home.

• Prices are all the lower for virtual brands that are closer to fast-food and street-food, with less elaborate recipes in response to the need for speed. Dévor and Taster's average baskets cost around 20/25 euros. To maximize the number of dishes released in record time, certain techniques are put in place, such as using the same ingredients for different dishes of different brands, says Jean Valfort. A's tacos will be topped with the same meat as B's burgers. A quality deficit that damages the image of dark kitchens, often associated with "junk food".
• The commission charged by delivery platforms frightens many restaurateurs and undermines their margins. You can read more on this subject in our article "Delivery platforms vs. in-house delivery". Let's just remember that the commission remunerates the business brought in and the entire operational service. Percentages can be as high as 40% for dark kitchens.
• However, delivery has certain limitations. Social limits persist, with the precariousness of delivery drivers. Delivery also has ecological limits, as it requires a lot of packaging. Here are a few tips on how to go green in your restaurant!

• Ambitious dark kitchens require additional budgets. Building awareness of a virtual brand, without a storefront or shop window, convincing a consumer to choose you over hundreds of other brands delivered by the platform, differentiating yourself in a fast-growing market, all require an effective digital marketing strategy. And consequently a budget to devote to converting and building loyalty among customers who don't see you. Malou gives you the keys to effective digital marketing with its MalouApp.

Can't dark kitchens and classic restaurants go hand in hand?

Today, many chefs and restaurateurs take a dim view of dark kitchens. Could these hidden kitchens be seen as a threat to the restaurant business?Nicola Ary, owner of Holybelly restaurant , believes that such an abrupt departure from the classic customer experience cannot be the future of the restaurant business. For him, catering isn't just about selling a lot of food, it's about creating an experience.

In the same vein, mon_paname, blogger and editor at Time out Paris, publishes a video in which he expresses his dissatisfaction with dark kitchens. It's a new type of catering that resembles a factory operation. However, it's important to distinguish traditional catering from a ghost kitchen, just as a gourmet restaurant can't be compared to a fast-food restaurant. Simply because they don't offer a place to live, dark kitchens won't replace traditional restaurants, but rather complement the catering offer for a new demand. The figures speak for themselves: 52% of French people say that what they miss most in these times of pandemic is going out to eat.