Interest in the 'dark kitchens' associated with food delivery platforms has been accelerated by COVID-19, as hospitality retailers and landlords look at new ways of delivering products and services, a new research has found.

CBRE's Australian Online Meal Delivery & Dark Kitchens report provides an in-depth look at the country’s online meal delivery market, which has resulted in strong revenue growth in recent years and prompted the need for cafes and restaurants to increase their capacity and output – turning many hospitality retailers to dark kitchens as a low-cost alternative to meet the output demanded.

Leif Olson, CBRE Australia Director of Retail Leasing, said dark kitchens typically serviced 20-30 restaurant brands and were operated out of warehouse spaces in the backstreets of high-density, inner-city areas – where meal-delivery was in high demand.

At a glance:

• CBRE has released Australian Online Meal Delivery & Dark Kitchens, providing an in-depth look at the country's online delivery market.
• According to CBRE, Dark kitchens typically serviced 20-30 restaurant brands and were operated out of warehouse spaces in the backstreets of high-density, inner-city areas.
• The report indicates dark kitchens offered many benefits for hospitality retailers and consumers alike – including a greater market reach (and increased revenue) for food providers, and more options for consumers. 

These operations were already in focus given the growth in average household income and changing consumer habits, which has been driving demand for readymade, delivered meals in Australia – translating to an average annual market growth of 76 per cent over the past five years, with revenue expectations of approximately $872 million this year and over $1 billion in 2021.

Report author Kate Bailey, CBRE’s Head of Logistics & Retail Research, said dark kitchens offered many benefits for hospitality retailers and consumers alike – including a greater market reach (and increased revenue) for food providers, and more options for consumers. 

Source: Getty Images supplied by CBRE

“Another key advantage of dark kitchens, where offered by delivery service providers such as Deliveroo, is the absence of rental fees – or where rental fees apply, running costs are minimised via monthly rental agreements, as opposed to multi-year lease terms,” she said.

“While some contracts offer a potentially rent-free use of dark kitchens, delivery service providers are known to instead take a larger percentage of each sale that comes out of the dark kitchen.”

“Dark kitchens give consumers access to a wider variety of food providers, faster delivery and product that is on-par with orders prepared in a dark kitchen’s restaurant equivalent,” Ms Bailey added. 

Mr Olson said dark kitchens were either provided and managed by the delivery service provider or internally setup and managed by the restauranteurs themselves. 

“An increasingly popular strategy for dark kitchen providers is to fit-out an array of 20ft containers with commercial kitchen equipment – positioned on a central, inner-city site – to allow for a faster, lower-cost alternative to traditional commercial kitchen setups; it is also more scalable, versatile and easily deployable on vacant land,” he said,.

“This is a great addition to traditional bricks and mortar hospitality offerings, where it’s important restauranteurs are able to curate signature dining experiences – it’s a low-cost rental option that takes pressure off the bottom line and enables food providers to put product in front of a wider customer pool.”

Global providers include Karma Kitchen, CloudKitchens and Kitopi, with locations in America, Europe and Asia – while Deliveroo is the only multinational provider in Australia, with over 250 dark kitchens at approximately 35 locations globally.

A local example of a dark kitchen is the Deliveroo site in Windsor, Victoria. Opened in 2017, in an alleyway behind Chapel Street, the site has been, or is currently being, used by restaurants such as Kong, Messina, 8Bit and more.

The site, which includes two full-scale professional kitchens and a large waiting room with phone chargers and an order display screen for Deliveroo’s riders, was built and fitted out by Deliveroo, then leased free-of-charge to restaurants and other brands – with brands pay nothing upfront, but Deliveroo charging a higher commission fee on orders placed through the Deliveroo app.

Click here to download a copy of the report.

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