Realist, not conformist analysis of the latest financial, business and political news

The Economic Case For Dark Kitchens

The latest move by the likes of Deliveroo and all that is to create “dark kitchens”. That is, places ’round the back of the trading estate which prepare the food which is to be delivered. A restaurant without the restaurant that is. And, the point of the exercise, without the rent bill for a high footfall location.

At which point it is obvious why dark kitchens are existing. Because once it’s possible not to need the high footfall location why bother paying for it? Something explained at more length here:

We’re now in the business of electronic order and delivery, geographic location matters only by area, not by street. We can thus stick that kitchen where the rent’s cheap and save, perhaps, 20%, 25%, of our total cost base.

Actually, we can save more than that, for we no longer need the front of house staff bill, we can get away with only the actual production staff in the kitchen itself. That should be another 15% or so off our costs. Dark kitchens might well mean that we can shave 40% off our cost base. Which is a lovely profit opportunity, isn’t it?

The problem, of course, is everyone else can read the same runes. Which is going to lead to a significant change in the restaurant business itself. Far from delivery being an added revenue source for extant restaurants it’s going to be, in time, a significant drain on their revenues.

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4 years ago

Demands for an extra tax on people benefiting from using cheaper premises in 3… 2… 1…

4 years ago
Reply to  jgh

Sure! Seeing a class of businessmen emerge to meet their customers’ actual needs (that is, for professionally cooked food – and not to have strangers with spoiled children at adjacent tables), only a special tax on them will avoid #IncomeInequality versus those businessmen electing not to meet those needs.

Michael van der Riet
Michael van der Riet
4 years ago

A lot of the profit of a sitdown comes from the booze. As far as takeouts go, it’s simple cost accounting. The marginal cost of that takeout is the food cost plus the cost of the container plus, if you do your own deliveries, the cost of the guy on the scooter. If eat in already absorbs all the kitchen overheads, the percentage profit on takeouts should be higher than that on eat in. There’s core product and there’s enhanced product. The product of a sitdown is not just the food. It’s the ambience and the clientele. Sexy people want… Read more »

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