DARK KITCHEN REVOLUTION A BOON FOR BUSINESSES, BUT NOT EVERYONE IS A FAN
▶ The food-delivery industry is adapting to changing demands, writes Patrick Ryan
Dark kitchens are helping to change how and what we eat. Takeaway pizza used to be a weekly treat, but now, many of us get our daily meals from a motorcycle rider who brings it to our front door.
The change has been rapid and dramatic, especially as people who wanted to limit interaction during the pandemic turned to apps to order their food.
Dark kitchens offer restaurants a place to prepare their food in different areas, making it available to more customers.
“Cloud kitchens have contributed greatly to improving the quality of service rendered to customers,” says Joe Frem, delivery company Talabat’s vice president of cloud kitchens and concepts in the Mena region.
“Our facilities have a capacity to deliver between 600 to 1,000 daily orders on any given day, with the catchment area limited to a 15-minute drive time.
“This helps our partners deliver better service to our customers.”
Talabat has seven kitchens in the UAE, with plans to increase the number to 12 by the end of the year.
The company says each kitchen can cater for up to 35 different restaurant brands at a time.
Online sales for the UAE’s food and beverage market surged 255 per cent in 2020, to $412 million, according to a study by Dubai Chamber of Commerce and Industry released in February.
They are projected to reach $619m by 2025.
Delivery companies are stepping up their operations to meet demand.
Talabat, which recorded 90 per cent year-on-year growth in online orders during the first half of 2021, announced plans to double its riders to reduce delivery times and tap into the potential of “quick commerce”.
Dark kitchens for faster deliveries sound ideal, but what does that mean for the traditional restaurant industry?
A recent survey by Dubai Restaurants Group showed 70 per cent of dine-in restaurants in the emirate were exploring the idea of investing in the sector.
With a clear shift in consumer behaviour, Mr Frem says the dark kitchen market is proving to be so popular that many companies are setting up to operate without an actual kitchen or restaurant of their own.
“Cloud kitchens present restaurants with the opportunity to reach their customers at a very low cost,” he says.
“This has shaped the food scene, because what was a high barrier to entry is now marginally much lower.
“With a lowered risk, confidence is increasing and we are allowing not only established brands to expand their territories, but new SMEs to enter the market, as well as giving entrepreneurs the confidence to introduce different cuisines and concepts to the market.”
But restaurants that rely solely on online orders, with no actual premises of their own, are missing out on potential business, he says.
“The main disadvantage is not gaining the organic traction that comes from being physically present in front of customers,” Mr Frem says.
“We always recommend our partners to adopt the bricksand-clicks business model, which entails a mix between bricks and mortar and cloud kitchen locations.”
It takes a colossal amount of food to operate dark kitchens, which is good news for food suppliers.
On a given day, 200 kilograms of chicken, 100kg of red meat, 80kg of potatoes and 40kg of rice is used in each of Talabat’s kitchens across the country.
New dark kitchens are appearing all over the Emirates.
Deliveroo has two kitchens on Hessa Street in Dubai, including the world’s largest, as well as kitchens in Business Bay and Jumeirah Lakes Towers.
DKitchen in Dubai Silicon Oasis is home to 25 restaurant brands, and serves up to 3,000 meals a day.
“The introduction of dark kitchens has given restaurateurs the opportunity to deliver directly to customers while avoiding the expenses associated with retail models,” says Manhel Naser, chief executive of AWJ Investments, the company behind DKitchen.
“This allows for food to be prepared in an efficient, low-cost environment and at great speed, turning it into a production and processing environment rather than a culinary dining experience.”
While dark kitchens help to drive revenue, he says restaurant brands need to make sure they do their homework before committing.
“We studied the current dark kitchen market very closely and found that many are struggling to drive profit due to their operational costs, aggregator fees and lack of supply chain knowledge,” he says.
“The operation of a dark kitchen is complex and needs to be finely tuned to reap generous profits.
“It carries a risk of failure due to high costs, especially if the facility is not managed by operators with production and delivery experience.”
Another entrant to the UAE dark kitchen market is Abu Dhabi’s Erth, which has launched a “central production unit” that can provide 100,000 meals a day in a 9,000 square metre building, where 150 chefs from 25 different countries operate.
“The inauguration of the CPU is a significant boost to the food services sector here in Abu Dhabi and across the UAE,” says Alain Verhoeven, Erth’s catering facility director.
But not everyone is convinced the rise of dark kitchens is going to be good news for consumers in the UAE.
“It’s going to have a negative effect on people’s health because the majority of what’s being made in dark kitchens is unhealthy fast food,” says Nick Alves, chef at the popular Dubai restaurant Folly.
“I understand there is a growing market for dark kitchens because they are cheaper and more convenient.
“But it’s a case of quantity over quality and it’s going to do a lot of damage to the traditional restaurant industry.”
Naim Madaad, the founder of Gates Hospitality in Dubai, is also critical of the effect dark kitchens will have on his industry.
“It will definitely have a negative impact on our business and there are multiple levels of danger,” Mr Madaad says.
“I will never touch these guys because they are hiding behind shadows.
“A lot of the time we don’t even know where the kitchen is that the food is being made in, which is not the case with traditional restaurants.”
He says customers will not get the same quality they will receive from a more traditional restaurant, because the emphasis with dark kitchens is on pushing out as much food as possible.
“It’s often one kitchen catering for up to 10 different cuisines in dark kitchens,” he says.
“Some of them are doing amazing quality foods, to be fair, but how likely is it they will be able to sustain it?
“What one chef is an expert in 10 different styles of cuisine?”
Many companies are using dark kitchens to enter the market without an actual kitchen or restaurant of their own