Following my post on Dark or Ghost Kitchens in May 2021, I thought a follow-up post covering Australia would be appropriate. There has been lots of recent movement in this space and they are interesting. Hence this post on Australia’s dark kitchens and alleyways.
Why alleyways you ask.? Read on.
So who are players by segment in dark kitchens?
Here is the broad breakdown of segments in Australia’s dark kitchens ;
- The online food delivery businesses that started this trend such as Deliveroo and similar outfits.
- Entrepreneurs that see an opportunity in dark kitchens including those with no past food history.
- Food establishments with multiple branches that prefer a single common kitchen to handle only delivery orders.
- Former food establishment operators that have turned their outlets into dark kitchens. They no longer serve customers at their premises.
Covid I suspect helped move the trend faster as restrictions were placed on access to restaurants. It made sense for some to close down their restaurants and focus on deliveries to cut cost.
I will cover Deliveroo in segment 1 and Chef Collective in segment 2 as good indicative examples.
They both have been open with their plans and activities. Deliveroo is British and Chef Collective is seeded by American capital.
Segments 3 and 4 are difficult to track because variations in operations and size, typically small to medium.
Segments 3 and 4 also are less likely to require a change in business registries or filing of new regulatory papers.
After all they are still in the cooked food business. Local authorities have also yet to define a specific dark kitchen classification. And it would be incorrect to lump them together with catering outfits.
Why Melbourne and dark kitchens?
Why Melbourne indeed?
Nearly every media article seems to indicate as the go-to-place in Australia to start a dark kitchen.
It’s a big city and has scale. But that should also place Sydney in the running. My guess is due to its prominent ethnic diversity which translates into diverse cuisines and options.
Melbourne has strength in ethnic numbers with their large Italian, Greek and Asian communities. And we all can relate to their cuisines.
Though Sydney comes in first as multi-cultural on the basis that it has more foreign born Australians, to my mind it is not as diverse ethnically. You just have to walk the streets of Sydney and Melbourne and you can see and sense the difference in diversity.
Now for a quick backtrack to get the definition right
In a nutshell a dark or ghost kitchen is a purpose-built commercial kitchen. There is one catch though, no customers at the premises. They only have kitchen staff. They depend wholly on deliveries.
One other clear and distinctive feature is their location. They are located in semi industrial, warehouse sites and alleyways where rent is cheaper.
Hidden by choice
The hidden location or lack of an online profile or image are intentional. Hence the terms “dark ” and “ghost”
Nowhere in the online apps, website, order form, menu or receipt does the actual location of the kitchen is mentioned.
Contact centres staff for online food delivery are trained not to reveal the location of these kitchens to customers.
I guess it is not a palatable idea yet for food to be cooked at an alleyway or semi-industrial location. Even if they meet the municipal food hygiene inspection standards.
Ask 10 friends where they think the food comes from. Also ask if they know about Australian dark kitchens. My guess is that it will be a “no” on both counts.
Deliveroo and its dark kitchen in Melbourne
Deliveroo built its first dark kitchen in Australia 5 years ago in 2017. In an actual alleyway behind Chapel Street in the Melbourne suburb of Windsor.
Hang on, did I mention 5 years ago? Yes I did and I too was surprised that its presence was not reported earlier. How time flies.
Here is the The Melbourne Age article including a video clip about it. Despite the location, the kitchen looks really good and the staff professional.
Deliveroo has bench strength in this model as it has opened 250 such dark kitchens in 25 cities around the World. Others may not be far behind but they have yet to show their hand among the online food delivery players.
In the Deliveroo Melbourne model, there are no upfront fees for restaurants to take up tenancy. Deliveroo charges a higher commission fees for orders placed and delivery done from their dark kitchens.
Since then Deliveroo has opened a second location in 2018 at Cambridge Street, Collingwood in a warehouse. I understand two other Deliveroo dark kitchens have followed, location unknown.
Chef Collective and their leased kitchen model
Chef Collective started their first dark kitchen hub in Cambridge Street, Carina Heights Brisbane in early 2021. This was followed quickly with a hub in Arden Street, North Melbourne. They are planning for another Melbourne hub at Abbottsford later in the year and North Sydney location planned for 2022.
Their model is different. They are not in the restaurant business nor are they in the online food delivery business in Australia. Just dark kitchens. They offer 12 month leases as a start to anyone who is in the food trade to prepare food. They have tied with Deliveroo, Uber Eats and others to handle online deliveries for kitchen tenants.
Are there others?
Oh yes. My guess is Australia’s dark kitchens have a larger foodprint than what is mentioned in the media.
There are lots of independent and undeclared dark kitchens operating in various cities. They are typically small. They either stopped operating as a restaurants or have leased space in an off-site location to run a dark kitchens. Safe to say that some may not be operating with the right permit or the required inspections for a food outlet.
They depend heavily on online food delivery companies such Uber Eats, Doordash, Deliveroo and others to shape their menus, work out discounts and carry out deliveries. With online delivery companies proving themselves, the move to dark kitchens is done with confidence.
Dark kitchens are a great way for those who are unsure of committing too much capital or new to the food industry. Why bother running a full blown restaurant with sizeable capital outlay compared to taking up tenancy in a dark kitchen. In fact the dark kitchen can be period of learning before starting one’s own restaurant.
It is also an attractive proposition for established businesses who have space constraints in their current location. Diverting delivery orders to a satellite kitchen makes sense. It is a win win situation for all including the customer. The customers get their order faster and does not have to compete with dine in customers.
Interesting variations in dark kitchens models
One case that I am aware of where more than one restaurant and cuisine are advertised but it is done by the same kitchen with the same staff.
The usual online food delivery brands such as Deliveroo, Uber Eats etc do carry 2 separate identities and menus in their app for such cases even though food is prepared by the same kitchen staff.
If you saw a restaurant with a signboard saying Mexican and Chinese food with the same kitchen and staff, you as the customer would probably pause. You can do exactly that with a dark kitchen as the customer has no idea it’s the same kitchen.
Here is another example where multiple cuisines are done in the same kitchen by the same staff.
There are small and medium sized operators that have started dark kitchens offering spaces for a few food operators. It’s a lease arrangement but they leave it to tenants to sign up with their online food delivery service of choice.
The revenue for these dark kitchen entrepreneurs comes from kitchen lease and equipment rentals and supporting services.
I did note that other big online food delivery companies are rather coy with their plans for dark kitchen. They do not want to reveal much in terms of their involvement or plans in the dark kitchen space for various reasons. And that’s understandable.
I however have no doubt that every city in Australia has dark kitchens used by some major fast food chain or restaurant chains.
Accommodating couriers
Large dark kitchens do have an interesting feature. Specific facilities to accommodate couriers.
Couriers are key to the online food delivery model. Allocated parking spaces and purpose built waiting room, staff pantry and lockers for couriers at dark kitchens are now integral in professional setups.
They can watch TV between runs, use the battery of charging points purpose built for them, connect to the Wifi and have their meals and refreshments.
These waiting rooms have order display screens providing status of orders which saves the couriers talking to the kitchen staff.
This allows for the fast and efficient pick-up of orders and bundling of orders to the same locations. A well organised and pleasant work environment that helps retain couriers.
This is not all for Australia’s dark kitchens
As the model evolves there will be challenges that dark kitchens operators will face. And it will come from their tenants as well as online food delivery companies.
It will also come from Councils who are responding to complaints from residents. Mainly on heavy traffic of couriers and 24 hours operations of these dark kitchens. Particularly when allowed to operate in mixed use zones close to residential areas.
The third challenge is likely to come from the Australian Competition and Consumer Commission. Focus will be around trade restrictive practices, pricing practices and monopolistic and cartel like arrangements that do not benefit consumers or even the kitchen tenants.
Nothing sinister. New business models go thru experimental phases of trying and testing. It may actually follow a logical path but end up sometimes with unexpected outcomes.
I do plan to cover the challenges to this model in another post as dark kitchens may not be the bed of roses for all in the long run. The story of Australia’s dark kitchens and those around the World have a way to go. So keep watching.