How ghost kitchens' business models could threaten the future of traditional dine-in restaurants

Dark kitchens were already gaining popularity before the pandemic.

Getty Images / Education Images / Contributor

• Dark kitchens are gaining popularity, enabling restaurants to cut costs during the pandemic. 
• Spanish broadcaster RTVE estimated 25% of home food deliveries now came from dark kitchens. 
• If the trend continues, traditional dining establishments will likely find it difficult to recover.
• Visit the Business section of Insider for more stories.

The COVID-19 pandemic has changed the food industry forever and brought new trends with it.

Among them are "dark kitchens" or "ghost kitchens."

Dark kitchens consist of premises where food is prepared for home delivery or collection but do not have a dining area or waiters.

The business's customer service and dining area rental aspects are removed, cutting costs and enabling a direct relationship with consumers.

The concept was already gaining popularity before the pandemic, taking over fast-food chains and supermarkets.

Many restaurants also share premises and facilities to cut costs even further.

Over the last year, dark kitchens have grown exponentially in popularity.

Grocery giant Kroger announced in October that it was opening more dark kitchens to meet surging delivery demand, and Chipotle outlined plans to open its first dark kitchen in November, although the chain has been using digital kitchens within its restaurants for some time.

In many ways, dark kitchens have been the saving grace of the pandemic, allowing restaurants to continue operating despite restrictions that ban diners from visiting their establishments.

25% of food deliveries during the pandemic come from dark kitchens, according to Spanish broadcaster RTVE.

It's not just restaurants that are catching on - it's delivery giants too.

Food delivery firm Deliveroo, now worth $7 billion, said it would spend its latest funding win of $180 million partly on investing in dark kitchens.

This will enable them to increase their profit margins hugely as they will no longer be dependent on delivery commissions from restaurants.

However, there are concerns that dark kitchens could threaten traditional dining establishments, as they cannot compete with the larger profit margins, quicker deliveries, and lower prices offered by dark kitchen restaurants.

If they do not return in numbers equivalent to pre-pandemic levels, it will be difficult for restaurants to recover from the losses incurred over lockdowns and closures will be inevitable.

Read the original article on Business Insider

from Business Insider https://ift.tt/3v2C8j9