With the exponential rate at which the food-delivery industry has been growing, F&B brands operating only out of dark or ghost kitchens are expected to outnumber physical restaurants in the next three-to-five years, according to a Redseer Consulting report on the sector.
Riding on the back of a Covid-19-induced surge for online ordering of food, the UAE was set to see a doubling of growth in dark kitchens to $100 million in 2020 from 2019.
Within this context Deliveroo opened its fourth and largest dark kitchen site, with 12 industrial kitchens, on Dubai’s Hessa Street last month. The food delivery giant originally launched Deliveroo Editions in 2017 with their six-kitchen site in JLT.
“We made a bet in 2017 that this was going to be an important way of expansion and today, especially on the back of the market being better than we expected, more and more restaurants are finding that this is a great offering for them. We are filling up these spaces rapidly which is great,” Anis Harb, Deliveroo’s general manager for GCC, told Arabian Business.
“Because the delivery market is getting so big, it is getting much cheaper to launch businesses through dark kitchens. You’re going to see more and more virtual brands online with the delivery world having more concepts than the real world in the next three to five years,” he continued.
Anis Harb, Deliveroo’s general manager for GCC.
“We are very excited to continue investing in this space because we think it is a great proposition for customers, riders and restaurants,” he added.
The RedSeer market study said with the dark kitchen penetration in the UAE expected to double by 2023 from the current level of 400 brands spread over 80 locations, the kitchen-as-a-service model will witness great growth potential going forward, acting as the backbone supporting the rest of the business models.
The overall online food delivery segment in the UAE is expected to grow by a 23 percent compounded annual growth rate, with the rising penetration of dark kitchens, the study added.
To Harb, dark kitchens are a “win-win situation” where restaurants can be innovative without carrying too much risk and food delivery services can expand their reach and grow their customer-offerings.
“Restaurants go to dark kitchens because they don’t have a presence in the area so they are able to expand their footprint without having to invest anything because we cover all the capital expenditure, and have no rent requirement,” explained Harb.
“We are able to provide better services to our customers and be a better partner to the restaurants and riders as dark kitchen sites are easier for pick-up than restaurants with customers. If you are able to have a kitchen that is focused only on deliveries then you are able to have a much better delivery experience all around. You are also bringing new selections to the area which makes customers, and hence Deliveroo, happy,” he continued.
The overall online food delivery segment in the UAE is expected to grow by a 23 percent compounded annual growth rate.
Deliveroo charges a commission on orders made from its editions kitchens and Harb said they rely on their expansive customer-data to identify the sites of their dark kitchens.
“We have a ton of data on what the customers want and where the demand is, and we know what selection is missing in the areas, so we build a site with a selection mix in mind. We then invite restaurants that already have a relationship with Deliveroo to go into those sites,” outlined Harb.
Going forward, Deliveroo plans to grow its groceries-delivery vertical in the region, something it introduced earlier this year and plans to develop gradually.
“We started going into grocery this year but is one of the things that we are slowly rolling out: we have a Deliveroo express mart that you would find on the app with 1,500 SKUs of essentials from the market,” said Harb.
“We are hiring better and better talent and generally continuing to invest in an infrastructure that would support a much larger business,” he continued.
Follow us on
