While the COVID-19 pandemic delivered a hard hit to the world hospitality business. Yet with the new circumstances, the new business models emerge, with dark kitchen and virtual kitchen being the best examples.
With cloud kitchen, dark kitchen and virtual kitchen at the table, there can be a good deal of confusion. That’s why Ordering Stack comes with a guide that makes everything clear.
This text covers:
- A glimpse of the restaurant reality in the post COVID world
- Virtual kitchen vs. dark kitchen – the definitions
- What to know before launching own dark kitchen business
The restaurant reality in the post-COVID-19 world
The COVID-19 pandemic has been a harsh experience for the HoReCa business, mostly due to the nationwide lockdowns, an experience unseen before. During March 2020 the Lockdown has been imposed in nearly all countries, including Australia, EU countries and US. The situation was considered so serious that in Brazil, where president Jair Bolsonaro has been denying the pandemic, crime organizations and street gangs have forced the lockdown in favelas – crowded slums surrounding large cities.
With the lockdowns imposed, the hospitality business suffered severe losses. According to the UKHospitality tracker, the sector has faced an 87% plummet in sales in the second quarter of 2020. And this is only one example.
With thousands of people locked in their homes, the food delivery business thrived – not all of them were willing or skilled enough to cook for themselves. According to Statista, there were significant increases in most of European countries, with France being a leader witnessing a 24% growth in restaurant delivery users and 32% of users willing to order food after the lockdown.
With the growing interest in food delivery, new business models emerged in HoReCa – the virtual kitchen and dark kitchen.
Virtual kitchen vs. dark kitchen – definitions
While the business model behind a dark kitchen and the virtual kitchen are comparable and similar, there are significant differences that must be taken into consideration.
What is a virtual kitchen
Virtual kitchen is an addition to the existing brick-and-mortar restaurant that offers offline meals. Thus, a virtual kitchen is an additional customer acquisition channel and while using the same techniques and technologies as a dark or cloud kitchen, it is not considered a priority in the operations.
What is a dark kitchen
Contrary to a virtual kitchen, a dark kitchen or ghost kitchen) is a full-fledged business, which operates as a delivery-only restaurant, with all the equipment and staff required to prepare food for the takeout.
A dark kitchen is rarely joined with an offline business of any type.
Benefits of dark kitchen model
While the virtual kitchen usually operates conjoined with the offline restaurant, some benefits of the model can be seen. Yet the full power of the approach is seen when it is done in a clear form – without running a brick-and-mortar restaurant. By that, all the advantages are seen, including:
Significantly lower costs
A fast-food restaurant or a cafe is a high-cost business that operates usually on a low margin and a high volume of orders. That’s why there are so many businesses like that in a transportation hub or near busy streets, where is a flow of new customers who need to eat in a hurry available.
When it comes to the dark kitchens, there is no need to rent a location near the hub or in the city center to attract customers. There is no need to hire a waiting staff, decorate the interior or deliver all paperwork required to serve meals on-site.
While all the bills required to run the kitchen will stay, there will be a significant saving on the client-side. There will be no need for power-consuming lighting systems or digital signage, popular in fast food restaurants. Customers will not use water to wash their hands – there will not be them on site.
Last but not least, there will be savings on staff – all people on the payroll will be focused on cooking or promotion – with little to no exceptions.
Sharing costs – another type of saving
Another interesting example comes from the operations model available for dark kitchens only. Ordering supplies and ingredients can be done in bulks and further used for every online brand – supplies like oil, flour, rice or milk are used in multiple cuisines. Thus, running several online cooking brands delivers the scale required to make wholesale orders and by that – get better prices.
Being unchained from the offline restaurant provides the dark kitchen with flexibility unseen in this type of business before. Actually, in a traditional HoReCa business flexibility is heavily limited by high costs, coming mainly from the offline branch. All of this you can read also in our article – Cloud Kitchen the new model of operations in HoReCa.
Extremely flexible brand
The brand is one of the assets that are hard to measure for the restaurant. Yet for every business, a brand is hard to build an increasingly valuable with time and effort. When it comes to the restaurant, a brand is formed from everything the customer encounters when getting in touch with it, including:
- The type of cuisine served
- The interior design
- The waiting staff approach and quality of service
- The food quality
- And so on…
When it comes to a dark kitchen, where there are no offline aspects of the business, Thus, the brand is communicated and experienced with digital-only channels and the food itself. It makes any brand manipulation easier. From establishing a news sub-brand (a vegan, for example) or optimizing the menu – everything is done in a measurable and controllable environment of website and digital communication channels.
Putting that simply – apart from marketing, the food quality is the only element that builds the dark kitchen’s brand. And that makes the business much easier.
Opening for new groups of customers
With establishing a new brand or sub-brand with ease, significantly better access to the new groups of customers comes. For a traditional barbecue restaurant, building up a presence in a vegan space would be troublesome. When it comes to the dark kitchens, building up the presence in any niche given comes with equal ease.
What to know before trying out a dark or virtual kitchen
If the dark or virtual kitchen model seems appealing, one needs to take several aspects into consideration, before even thinking about launching own business of this type (or supporting his or her restaurant with the digital branch). These includes:
Picking the right tech
When it comes to running the dark kitchen, everything is tech-based. From collecting the orders to managing them to processing them. There is no physical ability to manage the workflow through passing the notes or shouting between the ordering place and the kitchen. To work effectively, the company needs a sophisticated tech system like Ordering Stack, that encompasses all aspects of restaurant management.
With the entering into the dark kitchen reality, one needs to expect to receive masses of orders coming from multiple channels. And thus, the organization is the key to survive and not disappoint any of the customers. The dark kitchen puts “fast” back into “fast food”.
Location is still the thing!
While there is no need to rent a place near the busiest street, the location is still relevant when it comes to the dark kitchens. In this type of business, it is not relevant if it is near the potential customer – but it is relevant if it is easily commutable to the potential customer. Thus, renting a warehouse-like space in a transportation hub near the city center is a much better idea than working on the outskirts. The longer the transportation time, the worse the customer experience.
There are significant savings when compared to renting a typical restaurant place near the main street, yet the renting cost still remains relevant.
Get ready to rethink the marketing
As mentioned above, multiple aspects of running the restaurant go digital-only. Thus, the marketing needs also to abandon the brick-and-mortar principles heavily rooted in the restaurant business. If the company operates in the dark kitchen model, there will be a high need for a skilled digital marketer on board.
And this cost cannot be underestimated. Modern digital marketing is a tough nut to crack and the business owner needs either to invest into upskilling him or herself, partner with a talented digital marketer, or hire one for a good price.
Dark kitchen differs from the virtual kitchen, being an extreme approach to the idea of running the delivery-only restaurant. Yet the changes accelerated by the COVID-19 pandemic and new habits of the customers will make this way of operating increasingly popular.
If you wish to talk more about the dark kitchen, virtual kitchen, and cloud kitchen models and the tech aspects of running this type of restaurant, don’t hesitate to contact us now!