A strategic approach to dark kitchens - Simon Browning

About Simon BrowningI’m a freelance hired specialist in the foodservice industry, (loosely considered under the consultancy bracket) I look after the strategic creation and development of new business channels. I’m mainly retained by a number of foodservice brands and act as part of their team, often responsible for the ongoing management and strategic development of those channels and sometimes handing them over as BAU for their channel managers to run. Most notably I’ve been Strategic Partnerships Director for Krispy Kreme for over 8 years (ongoing) with overall responsibility for delivery, on-demand, scheduled and B2B. I’ve overseen delivery numbers in double digit growth for a number of years and now we see high triple digit % increases as the market has exploded in recent weeks sometimes being 100% of a brands site turnover. These are my thoughts around dark kitchens and the part they can play in a brands strategic growth. As part of Airships Professional Network you are very welcome to explore any of the topics talked about here and other subjects as part of the free help we are offering all networked foodservice businesses. We’d love to help further so please do take any contact up on their particular expertise. Very best wishes for the challenges ahead and I hope this can help you survive and thrive.Simon

What is a dark kitchen and why you should be considering the channel

Dark kitchens aren’t new of course, but their consideration is on many an agenda as we approach the wider re-opening of the foodservice industry. It is my belief that all operators need to consider multiple business streams to take advantage of the shopping habits that are becoming habitualised through the Covid period.Dark kitchens are part of the asset strategy and can provide a very inexpensive way to reach new customers without the need of new retail sites.Of course the consideration should, at first, be to offer delivery from your existing sites.If you then want to extend your reach then a dark kitchen is a great way to do this.

What are you trying to achieve

Like every good plan you need a clear objective.Dark kitchens are great for

• Extending reach
• Selling your current offer to new customers
• Selling a new brand to new customers

Trialling Dark kitchens with short term contracts can form a great test for your brand in a new area or for testing new concepts

Commercial plans. Beware long term plans on today’s numbers 

Volumes at 400% to 600% up on pre-covid levels are not going to remain for all. As the market begins to open up, customers will begin their slow return to visiting sites they consider to be safe. Yes, delivery will remain above pre-covid levels - it feels we’ve advanced 5 years in 8 weeks - but build from a pre-covid % up rather than working down from today’s level. For example, if you halved 600% up you’re still betting on being 300% up on pre-covid.I’ve also talked to lots of brands and operators in recent weeks, and there’s not one that isn’t considering delivery or new delivery only brands - the market is going to get very very competitive.

Reach 

Here’s a great free tool for working out your reach https://www.freemaptools.com/find-population.htm Something that I have found so useful but so simple is to work out your per-capita of reach spend. If you contact me directly I’ll happily share with you the template I’ve built.

• Plug in every site you currently run delivery from
• Using the tool above work out your delivery population reach
• Add in your average weekly sales by store
• Divide the two to give you the spend per head of capita reached
• You’ll need two figures - one sales column for pre-covid and one for current levels
• Then when you want to target a new area you can safely forecast your weekly sales in any new area
• This has a god rate of accuracy although there are a number of factors that may affect it.
• These are too numerous to list for every operation.

Again, I’m happy to help if you contact me.

One offer / multi offers

Delivery still has to provide the customer with a value for money experience. Dark kitchens provide new reach, and once you’ve worked through your reach forecasts then you should consider add-ons and even entire new brands to run from the same kitchen space. This is true of all delivery and you’ll want to sweat the dark kitchen asset as hard as any other. Your delivery partners are normally great at advising the gap in the market you are operating in and can advise what additional menus or add-ons you could / should be testing.Partnerships with other brands can work well in complimentary offers, so where you might have the main course covered someone like Krispy Kreme ;-) might be the answer. (Shameless plug!)

The options 

So, you’ve done the numbers, checked your reach and decided your offer or offers.Multiple dark kitchen spaces are mainly found in London - I’m building my knowledge here so please do email me with any I miss - and I know I’ll miss lots.London multiple sites - I won’t list all the pros and cons here - that could be another article - but again email me.

• Foodstars - https://www.foodstarsuk.com/
• Karma Kitchen https://www.karmakitchen.co/
• Share Dining https://sharedining.co.uk/
• Kitopi - (A different kind of model - not a true dark kitchen) https://www.kitopi.com/
• Deliveroo - Exlcusivity required to platform - not the best option IMO
• Dephna -  New to me https://www.dephna.com/commercial-kitchens/dark-kitchens

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Regions

• Titus Dark Kitchens - https://www.titusdarkkitchens.co.uk/ new to me

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Independents & Partnerships

• This is something I’m looking to increase my knowledge of
• Brands seeking space
• Space seeking tenants

Summary

• Consider dark kitchens as a great way to reach new customers
• Plan where you want to be and use the reach sales forecasting tool
• Consider how many brands you want to operate
• Speak to your 3p delivery platform if you use them for insight
• Choose your kitchen partner/s
• Sign short term flexible contracts - both parties should only want to the same - for you to be successful
• Smash your targets / grow your brands / reach new customers / make some money