Recently, you might have heard about dark kitchens. Well, the concept is relatively new. But what exactly is a dark kitchen?
Dark kitchens are virtual kitchens with no seating capacity. They sell meals online and through delivery only. Also known as cloud kitchens, they’ve become a major hit during covid-19.
But the concept of getting food through delivery or pickup is nothing new. Drive-through is the most prominent example.
So, what makes them so famous? And now, why is everyone searching for what is a dark kitchen restaurant?
Well, it’s what this guide is all about.
Dark Kitchen Business Model
Dark kitchens sell food online through delivery apps. The consumer either places an order on the website or through Doordash, Just eat or uber eats.
As soon as the order is placed, the chef starts cooking food and handover it over to the delivery person. Then, the food reaches the customer within 25-40 minutes.
This whole process includes no person-to-person interaction. All customers need to do is order and receive their food.
Now, some restaurants have also introduced pick-up services, where the consumer can pick their own food, i.e. like, a drive-through experience.
Is Cloud Kitchen Same As Dark Kitchen?
Yes, both are exactly the same. A dark kitchen is known for its several variants, including:
- Ghost Kitchen
- Cloud Kitchen
- Delivery Only Restaurant
Whatever you like to call it. In a nutshell, all three are the same, utilizing the same business model.
Cloud Kitchen Market Size UK
In 2022, over 25 million people ordered food online, 18% more compared to 2021. That’s roughly equivalent to 1/3rd of the UK’s population.
But from where does this whole food come? This is where the cloud restaurants came in. The online food delivery market in the UK is likely to reach US$3.3bn in 2023.
Now, over 29.4% of Brits order food through online platforms. An average 7.2% growth rate is expected.
How Many Dark Kitchens Are There In The UK?
Right now, there are only 750 cloud restaurants operating in the UK. Around 33% growth is expected this year. Overall, it is a relatively new market with huge potential.
Cloud Kitchen Requirements In The UK
Anyone can open a cloud kitchen. But there are a few requirements that you must fullfill. The profitability will depend on your restaurant’s location and service.
Once you’ve decided on your business model, there are 7 requirements that you’ll need to fulfil.
1. Register Your Business
To start with, you’ll need to register your dark kitchen as a business. Depending on the type, you can register it as a small company or a partnership business.
Well, as per Law, you’ll need a licence and insurance to register your business in the UK.
2. Get Your Licence
This is the most crucial step. You’ll need to register and get your licence from local authorities at least 4 weeks before you start selling food to customers, as per England Hygiene Regulation 2013.
You’ll be dealing with meat, vegetables and dairy. So, ensure a proper waste disposal permit.
3. Follow The Food Safty Regulations
You are bound to follow the rules set by the FSA and the principles of Hazard Analysis and Critical Control Points (HACCP) procedures.
4. Suitable Kitchen Space
Even though you won’t be serving in-house, still you’re required to follow the law. Your kitchen must be hygienic and have suitable conditions to cook food. It must also have;
- Good ventilation
- Lighting and air source
- Proper drainage facility
- Separate storage space
5. Cloud Kitchen Equipment List
Keep in mind that it is not your regular home designer kitchen, where you’ll cook occasionally. You’ll need the following:
- Outdoor Exhaust Hood
- Commercial Refrigerator
- Proper Cooking Range
- Storage Containers
- Commercial Dishwasher
- Built-in Double Oven
- A Deep Fryer
- Installed Suppression System
You can adjust the size of the cookware dispensing on the size and initial orders.
6. Menu And POS System
Lastly, you’ll need to make your menu. It will be easy if you’re selling through delivery apps. If you’re planning to launch your own website, then it will take around 3 months for a proper setup.
How Much Does It Cost To Start A Cloud Kitchen?
To start a ghost kitchen/delivery only, you’ll need anywhere between £5000 to £20,000. The cost varies depending on several factors, including;
- Size of kitchen
- Licence and permit (cost up to £1000)
- Essential equipment
- Marketing and advertisement
- Number of staff
You also have to pay the marketplace platform fee if you’re getting orders through online delivery apps. If you’re renting the place, then you also have to pay monthly rent, which can be around 35% of the total expense.
Is Cloud Kitchen Profitable?
Yes, cloud kitchens are profitable. After all the groceries and business costs, the profit margin is around 20% to 25%. A virtual delivery-only restaurant is likely to become profitable in the first 5 months.
Benefits Of Cloud Kitchen
There are several benefits of a dark kitchen restaurant. From cost friendly to customization, there are many things that you can achieve.
1. Experiment With Menu
With a delivery-only restaurant, you can play with your menu. You can introduce exotic dishes without designing a whole separate theme. This gives all control to your hands.
2. Cost Effective
Since you won’t be welcoming any costumes. So, you can skip all restaurant decor and seating. This will save you tons of money. Furthermore, you’ll be saving more if you opt for the farmer’s market.
3. Minimum Staff Required
With virtual kitchens, you also don’t need to hire an army of waiters and chefs. Only two people can manage all the order tracking, preparation, packing and delivering food.
4. No Hefty Rent To Pay
On average, property rent consumes 50% of the total budget. Well, say goodbye to it now. There is no need to pay the hefty rent as you can set up your ghost kitchen anywhere, regardless of the size of available space.
5. More Profit Potential
In the first year, a virtual restaurant is expected to make over 15% profit. While cutting expenses, the profit potential can be increased up to 30% within three years.
6. Minimum Investment Required
You don’t have to spend a lot of money to open a dark restaurant. A minimum investment is required, with a guaranteed profit. Furthermore, the registration process is also easy and straightforward.
7. Low Energy Bills
Now, you don’t have to worry about oven electricity consumption anymore. You only need to cook when you get an order. And generally, you only need to cook once to serve over 5 people.
8. You’re Your Own Boss
Cloud kitchens will give you freedom (and more returns). Now, you can manage things according to your own schedule. The cherry on top is that you’re not answerable to anyone (except the food authorities).
Disadvantages Of Cloud Kitchen
Well, running a business is not that easy. It is not like that you’ll open a business and there will be orders waiting for you. Here’re the 4 common disadvantages of cloud restaurants.
1. Tough Competition
Now, there is a huge spike in people opening virtual food businesses. Due to this, it can be tough to get orders for the first few months. In such cases, you may also have to give discounts to attract customers.
2. Hefty Technological Cost
Unfortunately, the real estate cost is now replaced by the technology cost. You have to set a budget for running ads, digital marketing or an SEO expert for your business website.
3. No Proper Structure
Truth to tell, there is no proper structure for an online food business. Everyone thinks that it’s profitable and you can start it with a low budget. This result in poor hygiene, and overall whole industry loses consumer trust.
4. Who’s Cooking My Food?
Everyone wants to know how their food is cooked. Unfortunately, cloud restaurant owners don’t interact with costumes, as most of them come from delivery apps. Due to this, most Brits don’t like to order from a dark kitchen.
The Future Of Cloud Kitchen
Even with all the flaws and competition, the future of cloud restaurants is bright in the UK. It is expected that the number of registered-only delivery restaurants will be increased by 300% by 2024 (currently over 750).
The virtual restaurant market stands at $3.3bn. Now over 24% of Brits order through apps, and with the pickup service, it sums up over 30%. That’s quite a number for small businesses.
With over 75% return customer ratio, it is safe to conclude that the cloud kitchen is the future. And it is just the begging of a new era.
Wrapping It Up!
Dark kitchens are now everywhere, and they are here to stay. Their business model is selling meals exclusively through delivery only. Another famous name for it is “cloud kitchen”.
Currently, there are over 750 cloud kitchens in the UK, and the number is expected to increase by 300% in the coming years.
The biggest benefit of it is that anyone can open a cloud kitchen. But it is also a curse in a blessing. With more business, there will be more competition, but it benefits the customer.
We hope that this article helps you understand the deep insight of the dark kitchen business model. Well, in the meantime, be happy and keep on chasing your dreams.