The tidal wave of dark kitchens and the rapid transformation of this model raise questions about their present and future role in the scope of out-of-home catering. In this first part, François Charpy, restaurant expert, shares with snacking.fr his point of view on those called dark, cloud, ghost kitchens or even ghost kitchens… even if the main players refute the term . This former manager of France Boissons, Quick, Steak’n Shake or Disneyland Paris, is now the founder of Food Strategy & Performance, a consulting structure in marketing strategy, transformation, development, franchising and improvement of the commercial or financial performance of the F&B and catering ecosystem. The dark kitchens, episode 1.
Are dark kitchens multiplying and transforming the catering ecosystem? What is your position ?
First of all, contrary to certain positions, dark kitchens are an integral part of the restaurant world and the fact that renowned chefs such as Pierre Sang Boyer (Deliveroo Editions) or Greg Marchand (OFC) use them is the demonstration. Some operators come from traditional catering like Jean Valfort (Devor). This model, although it is currently gaining momentum at the international level (market studies project the American market at more than 50 billion dollars), is not new because I remind you that Frichti in France was created 6 years and Deliveroo opened its first dark kitchen in London in 2017. The Covid-19 crisis was only an accelerator, revealing deep consumer expectations. This catering offer is complementary to traditional catering and does not operate on the same value creation chain, nor does it deliver the same customer experience. Dark kitchen, ghost kitchen, cloud kitchen, what are we talking about? Restaurants without rooms, without physical interaction with the customer, focused on delivery via aggregators or a dedicated fleet. The location of a dark kitchen does not follow the criteria of traditional catering where visibility and the natural flow in front of the establishment are fundamental. The density of the catchment area within a delivery isochrone is the key success factor. The products are either recipes from existing restaurants or Digital Natives Brands, developed for this model. On the other hand, the recipes must have been developed or adapted for delivery because not all products are transported. No copy/paste or delivery areas that are too large, otherwise there will be qualitative disappointment for customers.
Yet all dark kitchens do not operate on the same model?
No, the panorama of the available offer is wide and may seem complex. Nevertheless, to simplify, it is possible to identify 2 main types of dark kitchens: real estate and operational. Real estate dark kitchens (Cloudkitchen, Karma kitchen, Reef, Deliveroo Editions) rent turnkey shared or privatized kitchens with or without staff to restaurant owners. In addition, they offer facility management (receipt of deliveries, storage, cleaning, maintenance, waste management, tech ordering platform). This solution allows rapid implementation (location search) and reduced costs (rent/construction/equipment, staffing service) for new concepts or geographical expansion of an existing offer. Reef in the USA offers over 300 cuisines in over 200 cities.
The operational dark kitchens operate their entire activity directly in their kitchens with their staff and their recipes. They are either single-brand (Napoli Gang, Big Mamma’s 100% delivery pizza offer, Seazons on subscription, Frichti with an additional grocery offer, Food Chéri for lunch) or are similar to digital food halls marketing a portfolio virtual brands focused mainly on street food, comfort food (7 at Devor including FatFat, Holychick, Saint burger, Squeeze). Rebel Food operates more than twenty brands in more than 450 kitchens in Asia.
But dark kitchens aren’t just for digital brands. The “reversed Franchise” model enables existing brands to develop in new catchment areas or abroad by entrusting operations to operators who produce according to the brand’s specifications. In return, the brands are remunerated by a fee as in a franchise system. It is about digital territorial expansion of national or international brands. For example, Kitopi with its 60 kitchens is the partner of more than 200 brands (including Papa John’s, Shake Shack, Nathan’s, Jolibee) mainly in the Middle East. In the USA, REEF is developing Wendy’s in addition to the brand’s physical network. In France, OFC (formerly Smart kitchen Group) is deploying a veritable digital food hall in its kitchens with brands such as NYP, Frenchie to Go, Matsuri. The interest of these digital foodhalls for customers is to be able to order several offers at the same time with a single delivery, which is not the case to date with aggregators and for partner brands in cross-sampling operations.
A new type of dark kitchens, the “host kitchens” is developing. What is it about ?
An opportunity for restaurateurs operating their own restaurants to join the movement and also transform into dark kitchens in addition to their offer. How ? By becoming host kitchens for operators such as Kbox, NotsoDark or Taster, which offer them to produce a portfolio of proprietary brands 100% dedicated to delivery in their current kitchens. A turnkey service (brands/recipes/supply/tech/training) which makes it possible to use the production capacities available in the form of a brand license agreement, therefore by paying a fee by generating an additional flow of additional turnover. Nevertheless, it is necessary for restaurants to recalibrate their operational organization in order to optimally manage their dual operations and for licensors to set up operational monitoring to maintain constant quality. Several hundred traditional restaurants and hotels have already joined the system in France and England alone. We are in the thousands in the USA. Taster has just announced its hundredth partner restaurant.
Dark kitchen and Franchise, does it make sense?
Becoming a franchisee of a dark kitchen is an interesting innovation because, traditionally, a franchisee chooses a type of product and a brand. However, in the case of a dark kitchen, the choice falls on a multi-brand offer. If a foodhall makes it possible to increase the opportunities for customer orders through the diversity of the menus, the question lies in the power and quality of the brands offered as well as in the marketing and communication investment to emerge and generate flow. Subject, of course, to the validation of the profitability of the economic model for a franchisee.
For franchisors, the advantage of using dark kitchens is either to densify a current network or to open up new territories with significant savings in resources and speed of execution. The densification can be done on a reduced range of best sellers and iconic products leaving the complete experience to the physical network. It remains to define the contractual impacts with the current franchisees, but this is possible by delimiting the catchment areas and specifying the sales channels. Some brands are considering offering their current franchisees an offer of formats integrating dark kitchens.
For a new territory, such an approach makes it possible to test the market, to calibrate the offer, to collect data before starting the search for a Master Franchisee no longer on potential but on results, the negotiation being done by therefore on higher bases. But to date, even if some brands like Wendy’s (#2 burger in the USA with $10 billion in turnover and
5,900 restaurants in 2020) have just signed a partnership with Reef to open 700 dark kitchens in the USA, Canada, UK by 2025, this approach is still cautious. An update of the franchise’s software is underway, but when will a major brand commit to development not in the dark kitchen but in the host kitchen?
How do you see the future?
The catering offer under the impetus of food tech is in the midst of a revolution, is being restructured, supported by customer expectations and we are only at the beginning in view of the various fundraisers carried out over the last 12 months. Dark kitchens are a real growth lever for the catering ecosystem. Maybe it’s time to switch from the term dark kitchen to that of bright kitchen? But only the best will survive. The relevance of the offers, the consistency of the quality and the customer experience delivered will naturally sort out the suitors, technology being only a tool at the service of performance. –The still embryonic AI in catering will allow anticipatory and predictive management in terms of staffing and supply. A new leap forward in perspective!
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