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October 14, 2021updated 18 Oct 2021 4:35pm

The slow and silent rise of dark kitchens

Faceless kitchens cooking up takeaway meals offer a new revenue stream for delivery apps – and could hollow out the UK high street.

By Greg Noone

A few short taps and your phone becomes a cornucopia. Opening up your delivery app of choice conjures a world of lists, prices and lovingly tailored photos of food just minutes away from being whisked to your front door. Here are the flatbreads cradling chunks of sizzling lamb amid pale yoghurt flecked with mint; oleaginous mozzarella dripping from steaming pizza slices; the sauce of a bright red madras sitting on a pristine bed of rice; the dim promise of chips sparkling with salt resting next to a towering, chargrilled beef burger.

It would be naïve to think that these meals would be delivered in a similar state. It’s also a mistake to assume that they would be made inside the restaurant selling them. In fact, an increasing number of the takeaways we order through apps such as Just Eat and Deliveroo are not made in restaurant kitchens at all, but in facilities located at some distance from their main customer-facing venues. Known as ‘dark kitchens,’ these premises are dedicated entirely to producing meals for delivery, gastronomic assembly lines relentlessly feeding the public’s prodigious appetite for takeaways.

Not that you’d know that from the outside. Most dark kitchens are beige, non-descript affairs that look as if they were built with anonymity in mind. There is no limit to their size, however. Restaurants can choose to outsource delivery production to dark kitchens operating out of anything from a shipping container to vast, maze-like warehouses capable of supporting dozens of individual operations. They can also be situated more or less anywhere, from industrial estates to converted commercial premises and even car parks – meaning that restaurants can offer delivery to more customers than ever before.

Consequently, dark kitchens have become a flourishing annexe to the food economy. An estimated 750 of them are operating in the UK alone, with more being set up every day in the US and Europe. For many restaurants, they’re “the answer to a prayer,” says food consultant Peter Backman. With takeaways leaping in popularity since the pandemic, so too has the premium on kitchen space. Dark kitchens allow them to move orders off-site in facilities with much lower rents, says Backman, while protecting the ambience of their restaurants from an increasingly familiar scene: “courting couples trying to smooch in the corner while a guy with a helmet wanders by in a high-vis jacket and leathers.”

[Delivery apps] will never, ever make any money unless they control the bit in the middle, which is preparing the food.
Peter Backman, consultant

These facilities are also a boon for the delivery app companies, such as UK market leaders Deliveroo and Just Eat, which control a sizeable chunk of the dark kitchen market. Both make money from taking commissions on individual orders – but not much, once the cost of delivery is factored in. Dark kitchens promise a more profitable future. Without it, says Backman, “I struggle to think what sort of future they’ve got. As I see it, they’ll never, ever make any money unless they control the bit in the middle, which is preparing the food.”

It’s not all upside. Some dark kitchens have been described as stuffy, windowless affairs where chefs are ‘cooped up like battery hens.’ Others have attracted negative publicity for their location, with at least one major site outside a housing estate upsetting residents thanks to strong cooking smells and the fraught comings and goings of delivery drivers. Perhaps worse, though, is the potential impact dark kitchens are having on the British high street. As takeaways grow in popularity, what hope is there for those casual dining restaurants, weather-beaten by the pandemic, and now forced to compete against the convenience of easy delivery?

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The interior of a Deliveroo Editions in Saint-Ouen, France. (Photo by Aurelien Morissard/IP3/Getty Images)

Balancing acts

These are real problems for the British restaurant sector, which was already in trouble before the pandemic, says Paulina Herrmann, director at consultancy Coverpoint Foodservice. Venues forced to close during last year’s lockdowns had spent the previous two years weathering a “CVA crisis,” as Herrmann puts it, in which customers deserted casual dining offerings such as Pizza Express, Jamie’s Italian and Gaucho’s in droves. These were “very mid-range… brands that scaled-up really quickly at a time when rents were quite high,” says Herrmann. “They started failing because customers got bored.”

While these brands scaled back their bricks-and-mortar presence by the late 2010s, delivery start-ups like Deliveroo and Just Eat expanded rapidly. These apps transformed an ordering process that involved retrieving a set of tatty menus stuffed unceremoniously in a drawer into a frictionless, online-only experience. Within that, both companies could make their money from commissions on meals and service fees. Making a profit out of delivery itself, however, is historically difficult. In fact, one of the few companies that has turned the model to its advantage is the pizza delivery chain Dominos. In “capturing the order, making the product in a factory, processing it in the store and delivering it,” says Backman, the pizza chain “make[s] money – and nice money – out of delivery.”

Dark kitchens are partly an attempt to emulate this model. The arrival of the first Deliveroo Editions facility in 2017 offered the start-up an opportunity to control and profit from a crucial part of the food production process, by opening up off-site kitchen facilities and renting out the space to any restauranteur that would bite. There were clear advantages in the model for restaurants, too, especially the growing number of outlets that were struggling to satisfy both their take-out and in-house orders.

First and foremost, a dark kitchen allows them to set up a new kitchen dedicated exclusively to the delivery, without the high capital costs and exorbitant rents involved in opening a traditional restaurant. They could also expand their product range. Previously, the variety of food on offer was limited by the distance it had to travel: an outlet selling pizza, for example, can cover a much wider radius than a sushi restaurant, purely because the former’s product can better withstand long journeys. Dark kitchens eliminate this problem, insofar as they can be set up more quickly, and much closer to, the source of demand.

The model also allows chefs to experiment with menus, testing the waters with new dishes on the assembly lines of the dark kitchen rather than gambling with the time and resources of the customer-facing restaurant. Whole new brands can even be conceived in this way, too, with pop-ups appearing virtually on delivery apps. “That’s far better than taking out a site in a shopping mall, where you may have to sign a 25-year lease,” says Backman.

Booming investment in dark kitchens

This flexibility has been the key to the success of dark kitchens in the UK and around the world. It also applies to operators, too, who can be anyone from a restauranteur to a delivery app or even a landlord who has a kitchen available to lease. There is no need for a physical restaurant anchoring delivery operations, with some entrepreneurs operating several virtual brands at once within one gigantic dark kitchen facility.

As a result, dark kitchen firms have received an avalanche of investment. In 2019, CloudKitchens, a dark kitchen start-up majority-owned by Uber founder Travis Kalanick received an injection of some $400m from the Saudi sovereign wealth fund. The UK’s Karma Kitchens raised £252m in its latest funding round. “There is a danger of too much investment going in,” says Backman, although he has retreated from his previous view that we’re currently in a bubble. For her part, Herrmann believes the interest will continue to grow in the next few years. Not only did the pandemic result in higher demand for food delivery, but also introduced millions of older customers to the market. “These people are using food service delivery now,” says Herrmann.

That isn’t to say the model is without risk. Restaurants that choose to sign up to a dark kitchen operation run by the likes of Deliveroo typically “will have to agree not to use other delivery apps, limiting brand exposure,” says GlobalData analyst Hannah Cleland. What’s more, while the costs of utility bills and rents of a dark kitchen are low compared to a new bricks and mortar location, these facilities can become expensive for restaurants that don’t have a solid, long-term plan for expansion. “If you sign up to the model where you have to pay a percentage of the [delivery] commission to the aggregator, that can hurt,” explains Herrmann. “Not everyone can pay the 20-30% of sales required.”

If you sign up to the model where you have to pay a percentage of the [delivery] commission to the aggregator, that can hurt.
Paulina Herrmann, Coverpoint Foodservice

Location also matters. While dark kitchens often appear non-descript, they can produce large amounts of food odour, as well as act as a local hub for delivery drivers. This makes them unsuitable for residential neighbourhoods, says Camden councillor Leo Cassarani, who for the past four years has received complaints from residents of a tower block in Swiss Cottage about their nearby Deliveroo Editions.

“You had these moped drivers coming in huge numbers, riding on the pavement, driving down private estate roads or parking where they shouldn’t,” recalls Cassarani. Cooking smells, he adds, regularly drifted into people’s gardens and balconies. Following a planning inquiry, Deliveroo installed odour filtration systems and banned mopeds in favour of bicycles. The dark kitchen is still operating, having been granted a stay of execution by the council last year. Nevertheless, argues Cassarani, there’s still a problem with delivery drivers congregating in places around the neighbourhood where they shouldn’t.

“I’m not saying the riders are individually at fault,” he says, arguing that the work they’ve signed up for is exploitative, badly paid and incentivises hanging around near the dark kitchen to increase the chance of receiving orders. Nevertheless, “there’s nowhere for them to wait,” meaning many end up congregating by the local library. Security marshalls employed by Deliveroo will usher them away, says Cassarani, but the system compels them to idle within the radius of the kitchen, waiting to take their next meal.

Deliveroo disputes all of the claims raised about the Swiss Cottage site. A spokesperson added that “Deliveroo is committed to being a responsible neighbour, and we work very closely with councils and residents in every area where we operate Editions sites to ensure that they are an asset to the local community.”

Couriers from Just Eat and Deliveroo food delivery companies seen in Dublin city centre during the Covid-19 pandemic lockdown. (Photo by Cezary Kowalski/SOPA Images/LightRocket via Getty Images)

Delivering the high street

Even so, Cassarani is worried about what the rise of dark kitchens will do to Camden’s high streets. “Deliveries, takeaways, have always been a very useful and reliable source of income” for local restaurants, he says, and Deliveroo has been a part of that. “But of course, if they’re going to start competing with these hyper-optimised, much more lucrative dark kitchens, then they might struggle.”

For her part, Herrmann remains optimistic. Not every restaurant will need to invest in a dark kitchen operation to survive, she says. “The food service market, luckily, is quite varied and it will always stay that way,” Herrmann argues. “And if you’re a small, local neighbourhood restaurant with a loyal customer base and little ambition, if any, to expand quickly, you don’t need a dark kitchen.”

Backman, meanwhile, believes a starker change is in the offing for the British restaurant industry. Dark kitchens effectively break the profit ceiling imposed on many delivery companies, edging out those casual restaurants who refuse or are not able to supply take-out and don’t offer an in-person dining experience that sufficiently rivals the convenience of a takeaway in front of the telly. In time, those bricks and mortar restaurants that will survive on our high streets will be high-end establishments, catering for special occasions or the novelty of dining out.

This transformation can be seen in other sections of the economy, too. While e-commerce has been a fact of life for years, dark grocery start-ups like Getir and Gorillas are now promising affordable and quick delivery of your weekly veg quota, while dark storage centres hold onto a variety of items poised for shipping. (“That market has exploded out of nowhere,” says Backman.) Meanwhile, streaming services are increasingly persuading viewers to reserve buying expensive cinema tickets for those must-see blockbusters – or at least those that won’t hit Netflix or Prime for another couple of months.

In many ways, all of this seems inevitable. One of the lasting lessons from lockdown, after all, was that digital technologies is now robust enough for all of us to work, shop and even socialise from the comforts of our living rooms. Even so, says Cassarani, “I think people generally value having a thriving high street with interesting restaurants where you can go for a night out, for a meal, or a takeaway.” For the councillor, dark kitchens are just another chisel hollowing out the British high street and makes it all the harder for many restauranteurs to eke a living. “That makes me sad,” he says. “And scares me, a little bit.”

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