Delivery-only kitchens - also known as ghost, dark or cloud kitchens - are a growing trend in the hospitality world, and they present a huge opportunity – Euro Monitor predicts the delivery-only market will grow to $1 trillion worldwide by 2030. We’re certainly seeing this borne out in our enquiry figures at PKL Delivery Kitchens – they’ve been up 1,000% since January.
In this article, we break down the difference between traditional hospitality models and the delivery-only model, how the market is already shifting to new approaches to cope with different types of premises, and what actions an operator can take now to start on their delivery-only kitchen journey.
The traditional commercial kitchen model leaves smaller operators with little chance
Hospitality has traditionally used a model based on brick-and-mortar premises: choose a location, create a décor and menu that will attract customers, launch, and make efforts to build up brand recognition before branching out to a new location, after months or years.
Big chains spend years building up a portfolio of sites, using market research, property experts, spending huge amounts on renovation costs and more, to ensure they have the right premises in the right street of the right towns. With costs north of £500,000 per premises before you’ve earned a penny from them, hospitality has been a business filled with risk and weighted heavily against those with little capital. Delivery kitchens will change all that.
Why delivery kitchens aren’t a fad
The UK’s high streets were a challenging place for hospitality even before the pandemic hit. High rents, plus a crowded market, had seen many casual dining brands go to the wall.
As the traditional model shows, start-up costs for a restaurant can be very high and it can take months to create just one site. This, coupled with the highly volatile and challenging market, make setting up a new concept restaurant very risky.
Compare this to a commercial delivery kitchen. Setup can, depending on the model you use, cost nothing (Deliveroo and other apps charge a licencing fee and/or a charge per transaction) and take a few weeks. Your site is designed for efficiency, doesn’t require front of house staff, menus printing, branded clothing or any of the other costs associated with running a traditional restaurant.
Delivery-only concepts can be setup quickly and cheaply and are inherently flexible. If a menu item fails to sell, change it or drop it. If a new trend convinces you to change your menu completely, you can – just order new stock and train your four or five kitchen staff how to prepare the new dishes.
Working on a modular basis
The first delivery-only/dark commercial kitchens were based around a modular concept, which was pioneered by PKL with Deliveroo in 2015.This is how delivery-only kitchens can be delivered quickly and at a low cost – we can deploy one of our mobile trailers in days and have it operational on site on the day of delivery. Modular units are also easily joined together to increase floorspace, meaning that it’s easy to scale your kitchen operation if it is a success.
The beauty of this model is you scale when you need to – no worries about size constraint. If you need more kitchen space you order it and then use it, like any other resource. This low-cost, fast-moving culture means that a ‘new’ brand can get itself established and expand to multiple sites in months.
At PKL Delivery Kitchens, we have been working with a company that has taken a ‘virtual’ brand – a food brand without a physical site a customer can visit in person - and grown from one to ten sites in nine months, and it’s on track to break £2m in sales in its first year.
This is the reason that delivery-only kitchens are going to play such an important part in the recovery of the high street – restaurants will still open, but they will be tested concepts with established menus and a profitable delivery business behind them that doesn’t disrupt the operation of the main kitchen. Delivery kitchens will help create stronger, better businesses which will dominate the market over the next 10 to 20 years.
Reshaping internal spaces quickly
The concept of delivery kitchens has really caught on in the last year – our enquiries since Christmas have been up 1,000% year-on-year because hospitality operators are starting to appreciate the size of the opportunity offered by delivery-only commercial kitchens. This has boosted the demand for spaces in and around large population centres. Which in turn has created a new challenge for operators: outside space is at a premium, and inside space is typically expensive to transform into a kitchen.
A year ago, our enquiry pipeline was solely for our modular units and mobile trailer kitchens, which would be deployed in brownfield sites, car parks or pre-development industrial sites. Now, we are seeing a big increase in operators looking for a cost-effective way to transform an internal, industrial space into professional kitchens.
That’s why we created Fast Fit Walls – these modular walls can be installed in days and are designed to make it easy to install power and other services wherever a business needs them in the space. They are also simple to take down, move or remove as the needs of the business change.
What operators can do now to capitalize on the delivery-only opportunity
Here’s our advice on what actions you can take now, soon and within the quarter if you are considering setting up a delivery-only or dark kitchen:
Within 30 days: Start thinking about your location – what population centres do you want to target and what kind of concept are you hoping to launch? This will focus your search for real estate and enable you to create a comprehensive kit list for kitchen providers.
Within 60 days: Secure a site – either internal or external - and confirm your menu, company branding and delivery platforms you wish to use.
Within 90 days: Depending on the kitchen solution you choose and your access to real estate, you could be up and running – keep close tabs on the popularity of your menu and keep trying new options to build a brand with dishes customers love. As you build a customer base that loves your food, consider either expanding your brand at that site, or, if another site could help boost your brand recognition better, look for a new base which broadens your reach.