As Australia’s hospitality retailers look towards delivery services to bolster business during the COVID-19 pandemic, an emergent dark kitchen trend is feeding Australia’s growing meal delivery economy.
This is a key takeaway of the Australian Online Meal Delivery & Dark Kitchens report, the latest instalment of CBRE’s Market Snapshot series.
The report provides an in-focus look at the country’s online meal delivery market, which has resulted in strong revenue growth in recent years and prompted the need for cafes and restaurants to increase their capacity and output – turning many hospitality retailers to dark kitchens as a low-cost alternative to meet the output demanded.
Leif Olson, CBRE Australia Director of Retail Leasing, said dark kitchens typically serviced 20-30 restaurant brands and were operated out of warehouse spaces in the backstreets of high-density, inner-city areas – where meal-delivery was in high demand.
These operations were already in focus given the growth in average household income and changing consumer habits, which has been driving demand for readymade, delivered meals in Australia – translating to an average annual market growth of 76% over the past five years, with revenue expectations of approximately $872 million this year and over $1 billion in 2021.
Interest has been accelerated by COVID-19, as hospitality retailers and landlords look at new ways of delivering products and services, a growing number of restaurants are engaging with food delivery platforms and dark kitchens to boost their revenue.
Report author Kate Bailey, CBRE’s Head of Logistics & Retail Research, said dark kitchens were becoming increasingly popular worldwide, as shared spaces used for the preparation and distribution of online food delivery orders from services such as Deliveroo and Uber EATS.
Ms Bailey commented that dark kitchens offered many benefits for hospitality retailers and consumers alike – including a greater market reach (and increased revenue) for food providers, and more options for consumers.
“Another key advantage of dark kitchens, where offered by delivery service providers such as Deliveroo, is the absence of rental fees – or where rental fees apply, running costs are minimised via monthly rental agreements, as opposed to multi-year lease terms,” Ms Bailey.
“While some contracts offer a potentially rent-free use of dark kitchens, delivery service providers are known to instead take a larger percentage of each sale that comes out of the dark kitchen.”
Other benefits of dark kitchens for hospitality retailers include increased access to consumer preferences and information from delivery service providers, lower capex and the ability to market-test locales before signing up for a bricks and mortar lease.
“Dark kitchens give consumers access to a wider variety of food providers, faster delivery and product that is on-par with orders prepared in a dark kitchen’s restaurant equivalent,” Ms Bailey added.
Mr Olson said dark kitchens were either provided and managed by the delivery service provider or internally setup and managed by the restauranteurs themselves.
“An increasingly popular strategy for dark kitchen providers is to fit-out an array of 20ft containers with commercial kitchen equipment – positioned on a central, inner-city site – to allow for a faster, lower-cost alternative to traditional commercial kitchen setups; it is also more scalable, versatile and easily deployable on vacant land,” Mr Olson said.
“This is a great addition to traditional bricks and mortar hospitality offerings, where it’s important restauranteurs are able to curate signature dining experiences – it’s a low-cost rental option that takes pressure off the bottom line and enables food providers to put product in front of a wider customer pool.”
Global providers include Karma Kitchen, CloudKitchens and Kitopi, with locations in America, Europe and Asia – while Deliveroo is the only multinational provider in Australia, with over 250 dark kitchens at approximately 35 locations globally.
A local example of a dark kitchen is the Deliveroo site in Windsor, Victoria. Opened in 2017, in an alleyway behind Chapel Street, the site has been, or is currently being, used by restaurants such as Kong, Messina, 8Bit and more.
The site, which includes two full-scale professional kitchens and a large waiting room with phone chargers and an order display screen for Deliveroo’s riders, was built and fitted out by Deliveroo, then leased free-of-charge to restaurants and other brands – with brands pay nothing upfront, but Deliveroo charging a higher commission fee on orders placed through the Deliveroo app.
This is a key takeaway of the Australian Online Meal Delivery & Dark Kitchens report, the latest instalment of CBRE’s Market Snapshot series.
The report provides an in-focus look at the country’s online meal delivery market, which has resulted in strong revenue growth in recent years and prompted the need for cafes and restaurants to increase their capacity and output – turning many hospitality retailers to dark kitchens as a low-cost alternative to meet the output demanded.
Leif Olson, CBRE Australia Director of Retail Leasing, said dark kitchens typically serviced 20-30 restaurant brands and were operated out of warehouse spaces in the backstreets of high-density, inner-city areas – where meal-delivery was in high demand.
These operations were already in focus given the growth in average household income and changing consumer habits, which has been driving demand for readymade, delivered meals in Australia – translating to an average annual market growth of 76% over the past five years, with revenue expectations of approximately $872 million this year and over $1 billion in 2021.
Interest has been accelerated by COVID-19, as hospitality retailers and landlords look at new ways of delivering products and services, a growing number of restaurants are engaging with food delivery platforms and dark kitchens to boost their revenue.
Report author Kate Bailey, CBRE’s Head of Logistics & Retail Research, said dark kitchens were becoming increasingly popular worldwide, as shared spaces used for the preparation and distribution of online food delivery orders from services such as Deliveroo and Uber EATS.
Ms Bailey commented that dark kitchens offered many benefits for hospitality retailers and consumers alike – including a greater market reach (and increased revenue) for food providers, and more options for consumers.
“Another key advantage of dark kitchens, where offered by delivery service providers such as Deliveroo, is the absence of rental fees – or where rental fees apply, running costs are minimised via monthly rental agreements, as opposed to multi-year lease terms,” Ms Bailey.
“While some contracts offer a potentially rent-free use of dark kitchens, delivery service providers are known to instead take a larger percentage of each sale that comes out of the dark kitchen.”
Other benefits of dark kitchens for hospitality retailers include increased access to consumer preferences and information from delivery service providers, lower capex and the ability to market-test locales before signing up for a bricks and mortar lease.
“Dark kitchens give consumers access to a wider variety of food providers, faster delivery and product that is on-par with orders prepared in a dark kitchen’s restaurant equivalent,” Ms Bailey added.
Mr Olson said dark kitchens were either provided and managed by the delivery service provider or internally setup and managed by the restauranteurs themselves.
“An increasingly popular strategy for dark kitchen providers is to fit-out an array of 20ft containers with commercial kitchen equipment – positioned on a central, inner-city site – to allow for a faster, lower-cost alternative to traditional commercial kitchen setups; it is also more scalable, versatile and easily deployable on vacant land,” Mr Olson said.
“This is a great addition to traditional bricks and mortar hospitality offerings, where it’s important restauranteurs are able to curate signature dining experiences – it’s a low-cost rental option that takes pressure off the bottom line and enables food providers to put product in front of a wider customer pool.”
Global providers include Karma Kitchen, CloudKitchens and Kitopi, with locations in America, Europe and Asia – while Deliveroo is the only multinational provider in Australia, with over 250 dark kitchens at approximately 35 locations globally.
A local example of a dark kitchen is the Deliveroo site in Windsor, Victoria. Opened in 2017, in an alleyway behind Chapel Street, the site has been, or is currently being, used by restaurants such as Kong, Messina, 8Bit and more.
The site, which includes two full-scale professional kitchens and a large waiting room with phone chargers and an order display screen for Deliveroo’s riders, was built and fitted out by Deliveroo, then leased free-of-charge to restaurants and other brands – with brands pay nothing upfront, but Deliveroo charging a higher commission fee on orders placed through the Deliveroo app.
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About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates) and serves real estate investors and occupiers through more than 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
