Levelling the playing field: How delivery-only kitchens democratise hospitality
The world of hospitality has been weighted against the majority for a long time – because the riskcreating a two-tier culture with a barrier to entry for the ‘have nots’ of the hospitality industry.
That’s why we believe that Delivery-only, or Dark Kitchens, are making waves today – because people in the hospitality industry, with dreams of creating their brand, can finally achieve them without the huge risk.
Below I outline the reasons delivery-only kitchens are levelling-up hospitality for the first time.
Capital Expenditure and Cashflow
Setting up a location restaurant is an expensive business – and a lot of that expense is upfront.
The process of setting up a restaurant starts with finding the right area, with the right atmosphere, footfall, and an available building. Once you’ve chosen your site, you need to secure it, and get in.
Typically, a destination restaurant will need design, fit-out, advertising, an expensive launch, staff training, and more, all before you’ve earned a penny from it.
Fashionable streets in big cities can cost huge rents – and this can have a big impact on your pre-launch costs if your site needs a big fit-out. If you have the keys, you’re paying rent, business rates, not to mention the charges for the workmen and materials the fit-out will take. Once you’ve added in cooking and preparation equipment, a cost of £500k is par for the course and costs north of £1million per site are not unusual.
This means as soon as you are operating, there is pressure to service that capital debt with your cash flow. Figures from the US Bank show 82% of small businesses that fail do so because of cashflow problems. 79% of failing businesses state that they should have started their business with more capital.
With a Delivery-only kitchen, you don’t have those large overheads – you can choose to work with a food delivery app and pay a licence fee and/or a cut of sales for your kitchen space.
With a delivery kitchen, you already have all you need: you don’t need a pretty décor, just packaging for your food, a menu, and kitchen staff trained to prepare it, and you’re good to go.
Launching a ‘virtual’ brand like this is quick, cheap, and simple, with fewer costs and staff members to train and manage.
Delivery-only kitchens can help ease the pressure on a new business: reducing the initial expenditure and overheads of a new business.
Be profitable quicker
The other issue with destination venues is time. Concept, finding a site, planning issues, fit-out, and launch can take an inordinately long time – 6 months or longer. This affects new businesses in two ways. Firstly, the longer it takes to set up a business, the higher the costs before you start earning, impacting your cash flow, as we’ve outlined above. Secondly, if your concept is successful, it makes scaling to capitalise on that success a real challenge – you could only reach the second site in a year, and maybe expand to three sites for the next, but if you are looking for explosive growth, traditional bricks and mortar don’t allow it.
But Dark kitchens do.
If you find your delivery kitchen virtual brand is successful, it allows you to boost production easily with more staff and/or kitchen space, and if the growth continues, it’s much easier to add another kitchen space at the heart of a population centre and build your business out. The model really can work – with one brand we’ve dealt with expanding from no sites at the start of the pandemic to 9 by the close of 2020.
Delivery-only kitchens allow you to scale quickly when opportunity knocks, meaning you won’t miss your chance to build something significant.
With a destination restaurant, it’s not advisable to have multiple styles of menu – it confuses customers, makes marketing more complicated, and can damage your marketing messaging.
With a delivery-only commercial kitchen and ‘virtual’ brands, this is not a problem. With no premises and just a presence on delivery apps, all you need is a menu, a logo, and a staff trained in preparing the dishes.
Often, a delivery kitchen will be servicing several menu concepts, allowing the kitchen to maximise its potential for sales, and giving the chance to grow two or more brands at the same time.
“Big data” helps businesses understand their customers and grow fast
Businesses can, thanks to the apps their brands are on, get access to , which gives them a big advantage in this fast-moving world.
This also allows hospitality entrepreneurs to experiment, and rapidly. If a concept doesn’t work, try another, if one dish sells more than any other, use it as the basis of your whole menu, or offer specials. The key here is that the work required to make these changes is minimal and easy to achieve.
It frees businesses to follow the desires of their customers, follow the data they receive through their chosen food delivery platform, and build a business that listens and reacts quickly.
Equipping and maintaining your kitchen is easier
It’s sometimes easy to forget the operational part of a virtual brand, but it’s vital to consider some of the more basic aspects of running a kitchen: buying and maintaining equipment can sometimes be a headache – especially when you are starting a new business and have so many other things – menu, staff, delivery deadlines – to consider. With most Delivery Kitchen providers, a fully managed service is often available, a ‘kitchen as a service’ model which give you the keys after equipping the site for your menu needs.
Delivery –only kitchens are a development that allows anyone working in food to create brands, develop them, and scale them without access to large-scale capital or putting too much on the line if things don’t work out.
In the past, the traditional restaurant and hospitality model has favoured those with capital or financial backing, but this is changing. Anyone with a good menu idea and a logo can now launch and experiment, connecting with customers and potentially building a brand (or brands) around good food that people love.