A dark kitchen worker on a stove.
Investments,  Small Business

Dark kitchens: a food delivery business without the dining area

I heard a year ago, about a new concept called Dark Kitchen. As weird as the name sounded, Dark Kitchen is a model of a restaurant without tables, without a counter and that only works with food deliveries by delivery. It is a restaurant model that only exists in the virtual or digital world. For this reason they are called ghost restaurants, virtual restaurants or virtual kitchens. It only has a kitchen prepared to produce food that will be sold through applications (phone apps or websites).

In the same kitchen you can have the operation of several delivery restaurants, each with a type of food and its own brand, independent but in a collaborative space.

It’s not visually depraved of light. 🙂

New Trend for Food Delivery, but has been already in Europe for a while

Many people are earning five times more than normal competing restaurants with a fixed lounge without having to invest in space rental. Restaurant rents are expensive, specially if you want something more pleasant, like a good location, or a restaurant by the water, or inside a fancy hotel with wealthy guests. All amenities have a price.

The business model is not entirely innovative. In Europe, it is best known since the 2000s, and has taken Brazil and other Latin American countries by storm, where operating costs are high. It works in Europe and not in Brazil because it wouldn’t work right in the USA?

Billing five times more than with regular restaurants and even better with fifty percent cheaper operating costs. You can have more than one brand. Three different brands producing within the same kitchen and selling through delivery apps like iFood and Uber Eats. Any type of delivery pizzeria, hamburger, Mexican food, Japanese food, hot dogs, potatoes and more.

An example in Mexico City

IT Burger, in Mexico City, became famous without anyone knowing where it was. It turns out that IT Burger, since it was born in 2018 and until a few months ago, was a “ghost kitchen”, and it was only found in meal delivery apps, like Uber Eats.

Today, IT Burger has more than one such establishment and has already opened its first physical restaurant, with tables and chairs, like the traditional ones.
“Starting out as a phantom kitchen helped us a lot to become famous. It was a new concept and drew a lot of attention. We were the ‘ghost burgers’ burger joint,” tells BBC Mundo – the BBC’s Spanish service – Vicente Cruz, the young businessman Mexican who opened the business with other friends.

A dark kitchen worker on a stove.
A dark kitchen worker on a stove.

 

Some companies emerged to give automation and scale to the delivery operation. Like, Mimic that emerged in early 2019 in response to restaurants’ needs for delivery applications but that found costs to keep a regular restaurant way to expensive.

Mimic, the company, provides the kitchen infrastructure where the food is prepared, and determines the production process and trains kitchen staff.  The startup runs a kitchen in the Brazilian neighborhood of Pinheiros, São Paulo focused on preparing burgers and by the first quarter of 2020, it will open three separate locales: a café, a pizzeria, and a pasta joint.

Other companies investing in the model

A company based in Wilmingtion, Delaware, registered with the Brazilian subsidiary of CloudKitchens, and also plans to work with Uber and Uber Eats.

CloudKitchens, a shared kitchen startup founded in 2015 with Uber co-founder Travis Kalanick among its investors, will land in Brazil in the first half of 2020, after receiving a $400 million grant from the Saudi Arabian sovereign wealth fund earlier this year, and is using money to buy several properties in the US, China, the United Kingdom and in India-–and now, apparently, also in Brazil.

The so-called cloud, ghost or dark kitchens are multiplying rapidly in Latin America. They are behind the scenes of the virtual restaurants, set up just to serve customers who order via apps.

The Outsourced dark kitchen, which would be similar to an old concept that allows a restaurant to outsource almost any process. The final seller is only minimally involved in the cooking process, investing all of its efforts in a flawless, differentiating final product that is sure to delight.

 

Daniel Martins Dark Kitchen in Natal, Brasil.
Daniel Martins Dark Kitchen in Natal, Brasil.

Evolution of the dark kitchen business model has already created categories

The “traditional” dark kitchen would be when one brand owns or rents a single kitchen location without offering a dining room, and generally focus on a single type of cuisine and rely on delivery channels or employees to handle orders and deliveries.

Now, the Multi-brand dark kitchen works with each separate brand/cuisine type has its own unique identity from a marketing perspective and uses data insights to supply the most popular meals based on local demand for each different type of cuisine, but is owned by one parent company.

Aggregator-owned dark kitchens offer empty kitchen space and minimal infrastructure that restaurant businesses can rent. These businesses benefit from the delivery aggregator’s fleet and online ordering and menu creation platform.

And another model, is the Outsourced dark kitchen, which would be similar to an old concept that allows a restaurant to outsource almost any – or every – process, except the finishing touches. This is done in partnership with another business that specializes in food preparation as well as order processing and delivery. The final seller is only minimally involved in the cooking process, investing all of its efforts in a flawless, differentiating final product that is sure to delight.