The food delivery industry has been growing at a staggering 20%+ per year, with food delivery apps like Deliveroo reporting a 50% revenue growth year on year. While several restaurants were forced to close due to the coronavirus pandemic, dark kitchens or cloud kitchens have grown their business, as people increased their orders for food at home.
It’s a booming business and an opportunity for entrepreneurs who are tapping into this growing market. It’s profitable and attractive for a number of reasons, including that it requires a very low initial investment and little prior knowledge which can be acquired quickly through courses like our own. Being such a nascent industry, it’s important to know how to set up a dark kitchen, the benefits, the risks (low), the initial investment (very low), and potential regulatory issues, amongst other things. It’s not necessary for you to know how to cook, or an other specifics of the specifics of the gastronomic industry, although any knowledge you have will be in your favor:
1- What is a Dark Kitchen?
Dark kitchens, also known as cloud kitchens or ghost kitchens, are delivery-only restaurants, that is, they don’t offer dine-in services.
This trend emerged after the growth of food delivery apps such as Deliveroo, Just Eat or Uber Eats, which serve as distribution channels for these dark or cloud kitchens.
2- How to set up a dark kitchen? Do I need to know how to cook?
You can set up your dark kitchen to sell your own food, or you can approach it as a real estate business, where you sublet your kitchen space to local restaurants or chefs. In this scenario you don’t need to be an expert in food preparation or restaurant operation.
In any case, the most important choice to make is where to locate your dark kitchen? This will depend on the business model you decide to pursue.
3- What are the business models for a dark kitchen?
There are several formats of dark kitchens or cloud kitchens, the stand-outs being:
– Existing restaurants: adapt an existing restaurant that is out of business and turn it into a kitchen for delivery-only.
– Shared kitchens: these are spaces similar to co-working spaces but for cooks.
– Modular kitchens: these are temporary kitchens that come ready-equipped in a shipping container format, which you can install in different places.
Each model has its advantages and disadvantages. We offer more details in our course on the business of dark kitchens. If you have questions you can also contact us at any time through the details at the bottom of the page.
4- How do dark kitchens earn money?
You have two options:
a) Selling your own food: you save on staff costs (waiters) and the rent of your kitchen will be cheaper than that of a centrally-located restaurant.
b) Subletting the kitchen space to local restaurants or chefs: you must rent the kitchen space first (on a monthly basis) and equip it as necessary. This space is then sublet (with a margin) to local chefs. You can add more value with services such as marketing, technology help or logistics (eg distribution) and charge additional fees.
5- How can I attract clients to a dark kitchen?
If you sell your own food to the end user, you can do it via home delivery apps like Uber Eats or Deliveroo. If you sublet your kitchen to third parties, these chefs or restaurants will be your customers, so you should carry out a benchmarking study in your area before going out to sell to them. It’s something we expand on in our course if you are looking for more details.
6- What legal requirements do I need to set up my dark kitchen?
The permits to set up a cloud kitchen or dark kitchen depend on your local government regulations. You should check with the local government where you plan to operate. In general, regulation is not complex, but you must apply locally. We recommend that you inform your local authority about your plans to make sure you avoid trouble, for example with local neighbours for potential noise issues. You may need a food license (which can take up 12 weeks to be issued) and planning permission (eg for adapting an existing restaurant).
7- How can I start my dark kitchen business and earn money?
We recommend you checkout our course on how to set up your dark kitchen. It is something you can start with a relatively small initial investment and without previous knowledge, for example:
a) investigate the local supply and demand for meals online (for example, using the home delivery apps);
b) identify a place to install your dark kitchen, and then;
c) have prior conversations with local restaurants or chefs to see if they are potentially interested.
Until then, you haven’t invested a penny, just a little bit of your time. Then you can talk to kitchen providers (we can help you) to finalise the monthly costs. You can sign a pledge with your local “customers” before proceeding, and try a pilot for a few months, using home delivery apps like Uber Eats or Deliveroo for outsourcing distribution and customer acquisition.
If you want to join our community and check out our business resources, learn more here.