June 23, 2021
With the introduction of delivery platforms such as Deliveroo, Just Eat and Uber Eats, the demand for food delivery across town and city centre locations has sky-rocketed over the past few years. This is a trend that started years before we first heard the word ‘COVID-19’, yet the pandemic caused another huge uplift in consumers, bored of cooking at home, who were desperate to get some small slice of the outside world.
Data released from CGA’s Hospitality at Home Tracker showed that delivery and takeaway sales were 273% higher in May 2021 when compared to May 2019, a huge figure that had fallen slightly from a massive 345% year-on-year increase on April’s figure. Despite the hospitality market reopening in May, takeaway and delivery sales accounted for half (49.7%) of the restaurant and pub sales despite 91% of restaurants reopening as indoor hospitality was allowed once more from the 17th May (Source: Local Data Company).
These figures demonstrate how important the ‘at home’ market is becoming for the food and beverage sector; not only as a revenue stream unaffected by changing lockdown rules, but also as a way for their brand to reach a new audience. This brand awareness piece is where the need to match quality of delivery food with the in-house experience is of critical importance.
With every extra minute a dish spends in transit, the quality of the food and the consumer’s opinion of the brand is likely to diminish, this being one of the initial concerns some brands had in offering delivery prior to the pandemic. To solve this, restaurants are opening ‘dark kitchens’ otherwise known as delivery or ghost kitchens; units that are fully equipped for food service with no customer-facing fascia, in order to reach customers in areas not currently serviceable by their current bricks-and-mortar portfolio. This type of unit is becoming ever-more popular as hospitality brands move towards delivery-first models and maximise on the growing ‘at home’ trend.
As more and more vacant property comes onto the market in the wake of one of the most challenging years in recent history for the hospitality market, dark kitchens are one of ways surplus space can be utilised. But what types of units are suitable for this type of operation? At LDC, we’ve supported hospitality and quick service brands to find locations for new delivery kitchens to operate from and are seeing a few trends in the way these units are identified.
Firstly (and unsurprisingly) location of these units is critical, not only do they require the square footage for a fully functioning kitchen, but they also need to be situated in an affluent, residential catchment in order to be close by to consumer’s homes. These units tend to be in residential areas within city centres, with a large proportion of residents who do not own a private car but are relatively affluent with disposable money to spend. This provides a captive audience of people who cannot visit a drive-thru location or travel easily to collect food. The requirement to be in residential areas has also seen pubs consider utilising delivery as a potential additional revenue stream during quieter trading periods, especially during the pandemic for venues that lacked outdoor space. Pubs are already well equipped to launch these concepts with chefs, kitchen equipment and the room needed to operate.
Secondly, transport links are also important for these units. Many delivery apps in city centres use bike transport as a fast, agile, and environmentally friendly way of getting food from a to b. Locations which are easily accessible by bike, motorbike or car are critical in helping to reduce delivery times.
Often these locations would not be appropriate for the same brand to open a full customer-facing unit due to location and as such costs tend to be lower (at the moment anyway) for these units. An example of a brand that has focused on this strategy is Wagamama, which have opened 5 delivery-only sites across London since the pandemic under a new fascia of Wagamama Delivery Kitchens. The map below shows their locations across London.
Figure 1: Wagamama Delivery Kitchen locations across Greater London (Source: Local Data Company)
Historically, delivery apps have been seen as a threat to restaurant brands. However recent data points towards the delivery model not only being here to stay but being a big part of future revenue models and one that is resilient to huge economic and social events such as the pandemic. As such, hospitality brands are increasingly prioritising delivery models when planning future property acquisitions to maximise opportunities across multiple channels.
If you are looking to expand or open up a dark kitchen network, please get in touch to hear more about how we can help. You can contact our dedicated team at email@example.com.