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  • This is a dark kitchen, also known as a virtual, or ghost kitchen.

  • It sounds a little intimidating, and for many in the food industry, it is.

  • These kitchens are creating a whole new ecosystem of food preparation and delivery designed

  • to cater directly to online customers.

  • The global online food delivery market made more than $91 billion in 2018 and is projected

  • to generate revenues of nearly $165 billion by 2024.

  • The industry's meteoric rise has seen several large online delivery companies pop up.

  • In the U.K. alone, Deliveroo, Uber Eats and Just East are battling for a piece of the

  • multi-billion-dollar pie.

  • To offer more food delivery options to areas with unmet demand, companies such as Deliveroo

  • started to provide remote 'dark' kitchens' to restaurants.

  • These facilities, which consisted of portable cabins and windowless shipping containers

  • were criticised by some, saying many customers were unaware that this was where their food

  • was coming from. Despite the negative response, dark kitchens are becoming increasingly popular,

  • with Uber Eats recently opening its first kitchen in Paris.

  • And for many companies it's an industry that is offering new business opportunities.

  • There are a variety of approaches start-up companies are taking to offer a delivery-only food service.

  • Some are simply focused on setting up and hiring out kitchens in the right urban locations.

  • London-based company Karma Kitchen offers shared kitchen space to catering companies

  • and restaurants that want to set up dark kitchens.

  • Co-founders and sisters Gini and Eccie Newton started the company after struggling to find

  • affordable kitchen space for their own catering business.

  • One of our biggest challenges and close to failures was actually finding kitchen space,

  • and we just couldn't believe that there was nothing kind of flexible and affordable

  • in the market that we could just move into.

  • It was 24 hours a day, seven days a week rent, but we were actually only using the kitchen

  • for a short amount of time and when we solved that problem for us,

  • we ended up kind of solving it for a few more people.

  • One of those people is Chloe Stewart who is founder and CEO of Nibs Etc,

  • a sustainable food company that makes granola from food waste.

  • So this is our juice pulp granola.

  • So it's made from fruit and vegetable pulp that normally gets thrown away, so it reduces

  • waste and it's super nutritious in the process.

  • I know time is money in this business, so what do I need to do?

  • Yeah, so basically if you could wrap this?

  • So how long have you been making your granola in Karma Kitchen?

  • I've been here just over a year actually, and it was the perfect sort of next step after

  • being at home because I've never spent a lot of time in commercial kitchen so learning

  • how people organize and keep track of ingredients and date things.

  • It's something I wouldn't have gotten sort of being on my own.

  • How's that?

  • That is a perfect looking granola bag.

  • Look at that, a pro.

  • Buying and then renting out kitchen space to businesses like Chloe's is a model that

  • even former Uber CEO Travis Kalanick has invested in.

  • His company City Storage Systems, which in the U.S. operates under the brand CloudKitchens,

  • acquired dark kitchen start-up FoodStars back in 2018 and with it more than a hundred commercial

  • kitchens in several locations across London.

  • Some companies are going even further.

  • Dubai-based kitchen services company Kitopi has created a cloud kitchen network that not

  • only provides the infrastructure for food delivery operations,

  • but also cooks and delivers the food themselves.

  • We purchase, supply and store your ingredients.

  • We prepare and cook your food at our facility.

  • This means restaurants will be providing food to customers that they've had no involvement

  • in cooking and preparing, apart from the use of their name on the packaging.

  • The dark kitchen market is expected to grow fast.

  • In Europe last year it was worth more than $250 billion.

  • It's set to more than double in size by 2026 to be worth around $650 billion.

  • Demand for cloud kitchens is being driven by the online food delivery industry.

  • According to the CloudKitchens website, its commercial kitchens are 'optimized for delivery,'

  • and Karma Kitchen says between 30 to 40% of its space is occupied by delivery-only restaurants.

  • Suhail Hasan is the founder and managing director of Tinseltown Group,

  • a collection of brick-and-mortar and virtual delivery restaurants.

  • About three years ago, Uber approached us.

  • We had zero percentage of deliveries and now we're between thirty and forty percent and

  • growing every week. The advantage of coming into like a shared kitchen, it allows you to trial a concept.

  • Working with Uber Eats they give us a lot of data and information of what areas we need

  • to be going into, what products are selling.

  • Very, very low capex compared to what we were used to in the past. Running costs are significantly

  • less and we're able to trial a concept and it gives us a very quick and efficient route to market.

  • Two kitchens down from Tinseltown is another restaurant that has seen the success of

  • expanding their food delivery operation.

  • He had this idea, and it was actually a great idea because I think deliveries are the future.

  • Ivo and Filippo are both from the Italian capital, Rome.

  • They have one brick-and-mortar restaurant called Al Dente in central London, but following

  • the increased demand for deliveries they decided to hire a dark kitchen.

  • Panna cotta, this is the panna cotta.

  • It's a really good option.

  • You're not locked into a contract.

  • You pay monthly and you don't have to risk the amount of capital that we had to risk

  • initially, let's say, to set up the whole restaurant.

  • Here you move in, you have everything ready and it's just a matter of seeing whether

  • people in the area like what you're selling.

  • It's not something that you usually order to get delivered.

  • That was our mentality, you know.

  • So, even then, we were not that sure how good the pasta would be in terms of deliveries,

  • but it ended up being quite a successful part of the business.

  • We cover a certain area now in Fitzrovia.

  • We cover Mayfair, some part of the City, so we're constricted let's say.

  • Most online food delivery companies set a delivery radius, which varies from city to city.

  • Its aim is to reduce the time food is in transit.

  • So if a restaurant wants to expand its delivery market size, opening a dark kitchen seems

  • to be the simplest option.

  • Hawaiian and Japanese-inspired restaurant Maki & Bowl has done just that.

  • They have one brick-and-mortar restaurant in west London and have now rented kitchen

  • space in east London at Karma Kitchen.

  • We can go to the city and we can like test the waters without having to invest really big.

  • So having a physical shop, people can come in, they can see our faces, we can smile at them.

  • Over here they don't see our faces but hopefully when they do order and it comes to their desk

  • or wherever they are, they have that first bite and hopefully they'll fall in love

  • and say, you know what, this is good.

  • For restaurants wanting to expand, dark kitchens seem like a great option, but for the customer

  • ordering delivery, is the origin of their food clear and transparent?

  • Do people know when they order your food from this site that it's coming from a dark kitchen?

  • I think they do because...

  • Why?

  • I don't know actually. Maybe they don't, you're right.

  • You know, maybe they don't because if you Google Maki & Bowl, we've actually got a

  • physical site, but you won't find us in Hackney so they might be thinking,

  • 'How are they here?'

  • I got a call in the other restaurant from people that order from here, from Karma Kitchen,

  • and I had to explain to them that your dish came from another kitchen actually.

  • I don't know if the person who's ordering that actually knows that it's come from

  • here, but is that a problem?

  • I don't think so.

  • The customer wants a consistent product.

  • They want a good product that they like with a good brand, and they want it to taste nice

  • and it needs to be affordable.

  • Beyond the appeal of dark kitchens, what does this business model mean

  • for traditional brick-and-mortar restaurants?

  • In 2019, British TV chef Jamie Oliver saw his restaurant empire collapse with the closure

  • of 22 of its 25 restaurants, resulting in roughly 1,000 job losses.

  • He blamed online food delivery services as one of the main reasons his restaurant chain went under.

  • And as online deliveries become the norm, some property experts believe this will reduce

  • the number of bricks-and-mortar restaurants,

  • subsequently increasing pressure on Britain's local high streets.

  • Do you think you're going to close bricks-and-mortar stores?

  • Because that's one of the concerns is that high streets are going to suffer?

  • And you're right.

  • You're not wrong there, high street is suffering.

  • We started off as bricks-and-mortar, and we're adapting to how the market changes.

  • The business case of having a big clumpy restaurant doesn't exist anymore.

  • A whole segment which is delivery, it's here to stay.

  • There are negative connotations around dark kitchens.

  • I mean the word dark seems quite sinister.

  • Why is that?

  • It's such a new changing landscape, and actually there aren't that many in the U.K.

  • So people panic when it's unfamiliar.

  • They're not comfortable with it, and that's quite a natural reaction.

  • It's a bit separated from the original restaurant perhaps, but it's the same restaurant, same

  • people, same owners and the same chefs who are doing all of this work.

  • If people did come to our kitchen, I think that they would be really happy with where

  • their food was being produced.

  • It's increasingly likely that the food you order online will come from a dark kitchen,

  • but whether this is a sustainable model for the food delivery industry remains to be seen.

  • For the moment though the convenience and speed that these facilities offer means many

  • are betting on them playing a key role in the revolution.

  • Hi guys, thanks for watching our video.

  • We hope you enjoyed it.

  • If you did please subscribe to our channel but before you do that we'd love to know

  • your thoughts on dark kitchens and the online food delivery industry.

  • Do you know where your food's coming from?

  • Comment below the video to let us know and we'll see you next time.

This is a dark kitchen, also known as a virtual, or ghost kitchen.

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Dark kitchens: Where does your food delivery really come from? | CNBC Reports

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    Summer posted on 2020/06/08
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