Fill in the details
Fill in the details
Dark Kitchen Market Research
Publication date: 24.06.22
Reading time: 5 minutes
We are witnessing a ‘second advent’ of dark around the world. It is the COVID-19 pandemic that has goaded the market into action. Restaurants have been forced to shift to a cost-cutting meal delivery business model, thus retrenching financially across the board.
There’s little verifiable data about the market, and the scarce information that does exist varies from source to source. Experts are still divided on the prospects of this segment and which of the emerging business models will likely reign as standard. We in Dsight are positive about a remarkable future of the dark kitchen segment — hence this Report that we hope will bring answers to some of the pressing questions.
Definitions, to start with:
Dark kitchen — a restaurant that has no interior to come and sit down in, and cooks only to courier meals ordered via its website or app (or via an external service aggregator).
Shared kitchen — a large kitchen room fully equipped and connected to the public utilities required for dark kitchen business. There may be many independent catering brands sharing a single room where the owner makes monthly proceeds by renting the space out to each of the tenants.
Cloud kitchen — a company that operates under a number of brand names in a single physical kitchen. The market has not embraced the term yet, leaving much room to ambiguity. Some refer to it as just a dark kitchen business owning more than one brand name; others believe it is but a number of independent brands in one space, thus confusing cloud kitchen with shared kitchen. To allow no misconstruing, we opted not to use this term widely in this Report.
We drew upon the data and sources which were available at the time of writing this Report, including open market data, expert publications, research, and investment stats for the last three years. We also interviewed experts and did our own analysis based on the information collected.
========================================
MARKET OVERVIEW
The dark kitchen catering format that serves only by delivering meals directly to the customer is no news to the market. It has been around for quite a while but gained traction just recently with a sharp rise in e-commerce and communication capabilities. The customer no longer needs to make a call — clicking on an app to order meal is enough. The new delivery concept has equal appeal for both consumers and entrepreneurs. It wasn’t that easy at the outset; a person had to first find the website of the restaurant he wanted food from, put down or commit to memory the meal he found and wanted, and then call the restaurant to actually order.
Today, ordering just takes a brief visit to the apps of some service aggregators, like Yandex.Meal and Delivery Club in Russia or Deliveroo, Uber Eats, DoorDash and many others overseas. The technology makes customer communication effortless and seamless, and also helps restaurant owners balance the books by no longer spending on their proprietary delivery services, website maintenance, call centers, marketing, etc. — not to mention the average cost of entering the catering market. For a dark kitchen, it’s upward of $50,000 just to cover an actual kitchen room and space for couriers coming to get the meals. For a conventional restaurant, we already talk about $350,000 and more to pay rent and keep large catering spaces.
========================================
The ongoing technology boom is not the only reason why dark kitchens are gaining so much traction. Consumer preferences were apparently shifting even before the COVID-19 pandemic. In 2018, Business Insider posted a 40% yoy increase in restaurant bankruptcies in the UK. NPD Group found that today an estimated 63% of the Chinese order meals online on a daily basis, and so do about 50% of the Americans and the British. In Russia, online delivery has yet to gain that much ground, but the situation is changing, and an estimated 42% of locals have their meals brought right to their doors at least once a month.
According to Data Insight, in 2020 more than 7% of Russian restaurants that had practiced deliveries before embraced the dark kitchen model. Populous cities with 0.5-to-1 million people drove the trend. The bigger a city, the more money restaurants can make with high enough demand for online catering. In Moscow Oblast, the vast populous region surrounding the City of Moscow, 14% of all restaurants that practice meal deliveries have adopted the dark kitchen format.
Lifestyle in bustling metropolises and around them also does influence consumer behavior. For example, Moscow City and Oblast residents may spend more than three hours a day commuting between homes and places of work — a stark disincentive to cooking at home and an enticement of having it all delivered.
Changes in the real estate market are obliquely conducive to a shift in consumer preferences, too. RBC reported that most new studio apartments commissioned in metropolises have just two-burner ovenless cooking stoves — yet another factor discouraging home cooking and making their owners think of clicking a delivery icon. Some visionaries even expect meal subscriptions to be part of restaurant business down the road.
========================================
Pandemic-driven growth
Dark kitchen businesses have always showed perkiness; but in 2020 the concept took the eating world by storm. It was the pandemic that kept people away from physical restaurants and had them re-tune in to their old wish to get stuff brought over to them. Dark kitchens and other FoodTech segments immediately cashed in on this, demonstrating the viability of the model and pushing even some of the debt-laden catering old-timers onto this new cost-saving playground.
In Australia, for example, online meal delivery has become par for the course across all age groups. According to CBRE, four million Australians aged above 14, or 19% of the entire population, eat what catering businesses deliver. CBRE forecasts a relatively even age group balance as the services win more hearts.
Strong as COVID-19 impact may be on the development of this segment, it is not the only one that matters here. Small business’ struggle for survival is a powerful driver of dark kitchen growth, but it has been matched by the deep pockets that tend to favor the easing of food and meal deliveries and have already joined the fray.
Russia’s dark kitchen market is still in its infancy. Experts expect the meal delivery segment to be worth over $8bn four-to-five years from now. Regulatory restrictions Russia and the rest of the world imposed as the coronavirus was spreading have strongly adjusted consumer behavior, leaving the FoodTech market in seventh heaven.
In the midst of COVID-19 delivery services rode high. For example, Deliveroo Hong Kong reported a staggering 60% month-on-month increase in orders in January 2020 and a 20% year-on-year rise the next month. The new model had taken root so firmly in the mind of the consumer that when the restrictions were partially (or in some regions completely) lifted, orders for delivery kept growing, and so did the average price tag. That further encouraged demand for space for dark kitchens and dark stores alike. In Moscow, rent doubled. Tenants were both restaurants and service aggregators like Yandex.Meal and Delivery Club that had decided to open their own dark kitchens. Confidence in the dark kitchen format will hardly wane for as long as the coronavirus remains a deadly adversary, and the market players will increasingly scramble for space to accommodate their dark kitchens and dark stores.
========================================
Dark kitchens are hardly an incidental trend that comes and goes, as evidenced by the explosive growth of online orders we have been witnessing across the world. The age-old catering formats will keep adapting to new realities — but not all of them. Fast food outlets can easily embrace the dark kitchen model — unlike craft cuisine restaurants that simply can’t operate in this environment.
Some catering pundits have misgivings about post-pandemic milk and honey in dark kitchens. They believe a considerable number of restaurants will scrap the format in a couple of years as restaurant business is not only about making money — it’s also about an air of serenity and enjoyment.
That is all true; but the experts tend to underestimate the depth of changes in consumer habits. Delivery is now so easy that people order more food for less money, compared to classical restaurants, and look unlikely to voluntarily turn their back on the opportunity.
=======================================
MARKET OVERVIEW. Segmentation
Segmentation
Dark kitchen classics
The dark kitchen industry may be alternatively referred to as ‘ghost kitchen’ or ‘virtual kitchen.’ No matter what the name is, it’s all about cooking for delivery.
There is no physical space for customers in classical dark kitchens; couriers immediately respond to orders that come through aggregation apps, a dark kitchen’s proprietary website, or any other online order management system.
Players vary significantly in the dark kitchen industry. There are seasoned brand names such as DOSTAevsky or Kitchen in the Neighborhood, and there are also tiny businesses that serve small communities and can only be found through service aggregators. Customers are miscellaneous in all possible senses, and so are meals offered. The latter include healthy food, corporate meals, weekend meals, and many others.
Hybrid models
The hybrid model complements classical dark kitchens in the market. It has been pioneered by the catering majors such as McDonald’s and Starbucks which started out as conventional restaurants with customer tables.
As time went on, takeout and home-delivered meals began to account for an ever-growing share of those companies’ revenues, and the dark kitchen concept did a lot to keep their books in the black even when the pandemic struck.
For example, in September 2020 a fast food retailer called Wendy’s shook hands with India’s Rebel Foods on the opening of its 250 ‘cloud kitchens’ across the country. That was little short of a U-turn for a company that had played a classical game before, and a nice prop for Wendy’s in the face of the pandemic.
Service aggregators and logistics providers
Logistics is key to the success of the meal delivery industry as it is the mind and limbs of virtual restaurants. Most orders that keep dark kitchens afloat come from logistics and aggregation platforms. The top players in the segment are Uber Eats, Deliveroo, and Delivery Club.
Western service aggregators open their own ‘cloud kitchens’ to get directly involved in serving clients. San Francisco-based Doordash blazed the trail in this when the company launched a kitchen next to Redwood City with an eye to helping businesses, including the famous Chick-fil-A restaurant, step up delivery volumes.
Service companies
Service companies help dark kitchens thrive by offering complementary services such as shared kitchens (coworking space for kitchens), software to streamline order and resource management, robotic solutions for kitchens, POS terminals / payment services and marketing solutions, etc.
Shared kitchen is a relatively new trend in the industry — and successful, too, as exemplified by Kitchen United’s experience. The provider offers its space mostly to food start-ups, pop-up restaurants, banquet and corporate catering businesses, mobile food vendors, etc. Shared kitchens have professional cooking equipment, storage space, and video surveillance and security systems. As coworking spaces they can also host events.
To make dark kitchen growth sustainable, innovation breakthroughs are a must — hence a plenitude of solutions coming to improve anything from waste management to payment and order management optimization.
========================================
MARKET OVERVIEW. Trends
Trends
Orthodox players launch dark kitchens
According to RBC, as of early 2020 60% of Russia’s largest catering chains were no greenhorns in meal delivery. They had already begun doing that through their own delivery services or through service aggregators. Proceeds from meal delivery accounted for 62.2% of revenue at pizza chain Domino’s Pizza and 60% at Japanese cuisine restaurant Tanuki.
It was McDonald’s that first launched a Russian dark kitchen in the fall of 2019. In April 2020, the CoffeeMania chain followed in McDonald’s footstep with its 27 outlets; its dark kitchen cooks and then contacts couriers from Yandex.Meal and Delivery Club.
Doordash, Deliveroo and other sizable delivery services and restaurant service aggregators pioneered this model in the West. Deliveroo opened its dark kitchen as far back as 2017; to push this side of the business, a special arm called Edition was set up. Then the pandemic weighed in, driving 60% month-on-month growth in January 2020 and 20% year-on-year growth in February. Starbucks, too, opened its dark kitchen in late 2019 to test the waters in the industry.
Grocery retailers and aggregators have been increasingly setting sights on this business model as well. Samokat, for one, had tested the format and in June 2021 announced plans to launch up to 20 dark kitchens in Moscow and other regions. In March 2021, X5 Retail Group, a big holding company, acquired dark kitchens from Salmon in Plenty.
A few years ago Delivery Club experimented with its own ‘cloud kitchen’ — without much success, though. More experiments followed in 2019 in a joint project with Arkady Novikov, a prominent restaurant owner. In 2020, Delivery Club and Sberbank used its freshly established joint venture to buy Kitchen in the Neighborhood. Yandex also took a crack at dark kitchening in 2018.
Analysts expect big players to keep exploring the dark kitchen segment both on their own and as part of M&As.
=======================================
Real estate related trends
Space for cooking in short supply
Restaurant owners run into real problems when planning dark kitchens in apartment buildings, as such a business must be approved by local residents. There are dedicated nonresidential rooms in new apartment blocks; but in pursuit of high revenues from retail tenants for this space, the real estate developers make the rooms unsuitable for commercial cooking. Down the road, but hardly before 2023, we may expect real estate companies to take requirements for food-making into account.
Dark kitchens are typically housed in separate small buildings such as abandoned warehouses or boiler houses. They are expected to have electricity and purified water supply, sewage, good ventilation, strict internal zoning with clean areas, and a shipment zone.
In Moscow, ILM reports a growing deficit of rentable ground floor space as old manufacturing sites get increasingly bulldozed to allow more residential development. Other factors that cause the shortage include an e-commerce boom, which steps up demand for such rooms, a ban on new warehouse construction, and the current sprawl of sanitary protection zones across the city (surrounding cemeteries, for example). There are nine food production clusters in the Russian capital today.
Shared kitchen and other formats
There are a growing number of companies that offer dark kitchen restaurants accommodation in their own rooms with full equipment, infrastructure and utility services provided, and even assistance in delivery offered. Such large kitchen areas are now known as ‘shared kitchens’ and bring together multiple restaurant brands that operate next to each other but independently. In the average working space of 350–550 square meters six-to-ten tenants may co-exist. The space owner gets a monthly rent, making the shared kitchen a modification of coworking space for restaurants. It requires just a fraction of the investment one would have to make to open and manage a classical restaurant, and businesses are increasingly setting sights on the model.
========================================
Globally, companies that do this kind of business are numerous. CloudKitchens, founded by Travis Kalanick, the ex-CEO of Uber, pioneered the ‘turn-key’ cloud kitchen concept back in 2016 and has emerged as the biggest player in the segment ever since. The company owns more than a thousand kitchens out for rent in 40 different areas.
Virturant, Mission Kitchen, Herd and others are less conspicuous but drive the segment as well. Start-up teams are emerging with the mission to upgrade the shared kitchen concept — Milan-based Kuiri, for one. The young company started by trimming the standard kitchen space per brand from customary 50 square meters to just 15 while placing state-of-the-art equipment there. Then its proprietary IT kitchen management platform was offered. In its next move, the team launched contractual assistance in delivery.
A B2B customer’s lifetime in the shared kitchen and the space the business owner has are the key metrics to evaluate a shared kitchen project. In Russia, investors are gingerly about such initiatives. Space owners prefer just renting rooms out with no strings attached to avoid risks. Seasoned restaurant businesses seeking expansion opt rather to rent ready-to-use infrastructure than look for and repair cheap dilapidated rooms. None of the projects launched, including Tvoe Mesto that started last year, has broken even so far.
However, the growing commercial space crisis is increasingly putting the screws on space owners, making them experiment in order to get at least some dividends from their property. The shared kitchen format is gaining traction as a test bench for projects in their salad days which do not need conventional kitchens to try out a product range for future customers, streamline work with suppliers, and train staff.
The shared kitchen is just one of the dark kitchen options businesses have to experiment with. In Australia, for example, owners have elected to use 20-feet containers with kitchen equipment which they place in neighborhoods that show strong demand for delivered meals. Reduced cost, scalability and easy and rapid deployment on any free spot are among the key advantages of the approach.
Some prefer bringing dark kitchens into any storage facility in town. In the U.S., a company called Reef Neighborhood Kitchens decided to monetize the parking lots they owned by opening dark kitchens there. A real plus here is proximity to customers.
In Russia, such experiments are very isolated. Moscow-based DOSTAevsky has attempted a dark kitchen project in a van that moves from place to place. Dmitry Ryazantsev, a restaurant expert, is putting together mobile kitchens for glampings (outdoor camping sites with hotel-type amenities and comforts such as beds, electricity and access to indoor plumbing which are not usually used in traditional camping) and apparently bets on this as a format to thrive soon.
========================================
Robotization
Dark kitchens do not shun partnerships with robotics makers. The latter keep getting increasingly focused on cost optimization RPA solutions for the former.
For example, a British start-up called Moley Robotics has developed an automation-driven kitchen. In addition to conventional cookware and utensils it is equipped with two multiple-DOF articulated robotic arms capable of stirring food, flipping burgers, controlling cooking temperature, and doing other things seasoned chefs do in less futuristic kitchens. This nimble 24-jointed structure is powered by 20 motors and 129 sensors. There’s another example: the Flippy, an automated grill and baking arm by Miso Robotics.
Bowlton, a global start-up of Russian origin, has come up with their own robots and even proprietary software to power these. According to the company, their multi-component robotic system can cook up to 300 meal courses (salads, soups, and various hot bowls) per hour, a workload of 13 human cooks in a conventional environment. And it is reported to do that at twice the speed a human cook is capable of. This modular system is easily customizable to meet the user’s needs, the developers said. Salmon in Plenty, a Russian dark kitchen chain, is already using one of Bowlton’s products, Robopoke, which can cook a popular Hawaiian dish called poke (diced raw fish with rice and veggies).
There are cooking robot makers in Russia, too. One of such projects is Blindozer, the world’s first vending machine that can bake pancakes with a wide assortment of fillings. The pancakes are stored in two refrigerators at +1°C. It takes 2.5 minutes for the robot to complete the pancakes; the system is even said to be able to check ingredients’ expiry dates. As many as 30 different fillings can be fed into the robot. The system can be obtained on a franchise basis and currently operates at the Moscow Vnukovo International Airport as well as a number of shopping malls and business centers in Moscow.
========================================
RPA improvements are one side of the story; enhanced logistics is another. Some players experiment with robotized delivery. Yandex, for one, has launched its Yandex.Rover project to deliver meals by using wheeled robots capable of moving fast down a sidewalk. The machines tap Yandex.Maps and GPS/GLONASS satellites to navigate. In other countries, Amazon runs the show with such projects. Not without competition; in July 2021 Yandex.Rover teamed up with the U.S.’ Grubhub to launch robotic meal delivery across American college campuses. At this stage, the concept appears more about fun than business practice; but companies across the world are thinking of how to make it monetizable and client-friendly.
The pandemic has barred entry into Russia and many other countries for an army of inexpensive workforce from abroad. Low-level kitchen and logistics staff are in short supply across the globe, a factor that further drives the development of robotic solutions.
All this is true; but the ‘human touch’ phenomenon remains a factor, too. People prefer people to cook for them. Customers’ mixed emotions about machine-cooked meals may impede the advent of kitchen robots.
That said, robotization will likely pick up steam and raise more and more investments. Start-ups will be the primary driver because restaurants, which do look forward to process optimization at their kitchens, are not quite in the money to risk experiments.
‘Ready-to-eat’ hangs in the balance
There are segments which are so close to dark kitchens: ready-to-eats (pre-cooked food) and ready-to-cooks (recipes). The market is far from saturation, and the ready-to-eat segment is on the rise, driven in Russia by Yandex.Lavka, Samokat, and some others. Subscription services, such as Grow Food and Performance Food, show exponential growth each year.
If at the end of the day hyperlocal delivery services like Kitchen in the Neighborhood or Gotovo manage to rein in prices, they will reign supreme in the market. Freshly cooked food is an asset as the customer does not have to worry about storage and cooking.
========================================
Grow Food, Yandex.Lavka and Samokat all offer ready-to-eats, but their target audiences are different. Grow Food primarily serves healthy lifestyle advocates who value their time too much to kill it on counting calories. The company is on the move, opening new food production sites and offering clients customized approach. This segment is unlikely to change down the road.
The overseas markets are in sync with Russia’s. Companies such as Freshly and Fresh N Lean focus on niche market services that include healthy food and weight-losing diets.
Ready-to-eat projects report high enough capex and uneven utilization of fixed assets. Factories that cook subscription-based ready-to-eats work mostly at night for new meals to be all prepared for delivery in the morning, and sit idle at daytime. Other business models should be deployed to balance the utilization.
Segments appear apt to mingle and merge, giving rise to mixed formats, and some experts believe dark kitchens may overwhelm the ready-to-eat market as we know it. Dark kitchens may gain even more traction when their scale-up stage comes and equalizes the costs of getting meals delivered and cooking meals at home.
As far as the ready-to-cook segment is concerned, it is a niche market product that is priced 30–40% above foodstuffs from a store; so demand for it varies with people’s well-being. In Russia, there are companies in this segment such as Yandex.Chef, Elementaree, Chefmarket, and others; overseas, HelloFresh, Dishroom, and many more. Young mothers and married couples are the main customers. Their product lines will likely join delivery and retail services as their complementary product. Elementaree can already be ordered from Samokat, and Yandex.Chef from Yandex.Lavka.
Meal kits (pre-portioned and sometimes partially-prepared food ingredients and recipes to prepare home-cooked meals) are not particularly sought-after in Russia, but they are all the go internationally. HelloFresh recently referred to their customer flow as ‘boom’. The ready-to-cook segment is winning more hearts abroad than in Russia.
========================================
Hyperlocal delivery
Today people lead a much faster life than before, especially in metropolises. The consumers now want his wants satisfied as rapidly as possible. Meal delivery is no exception.
Hyperlocal delivery within 30–40 minutes is the new normal which may be further trimmed in a near future. To ensure the speed, a deliverer opens multiple small meal cooking and delivery outlets within just a few kilometers of his target neighborhood. To gauge the speed, a special metric has been coined, ‘click-to-eat,’ which shows the time between ordering a meal and getting it delivered.
The click-to-eat metric could be improved by applying motor vehicles and robots, and by learning to deeply understand the customer’s expectations.
The primary factor for delivery acceleration is technology that helps step up a courier’s payload. To make a business successful, one must complete 1.5–2 deliveries per hour, a frequency that largely hinges on how many orders come in.
Whether there are possibilities to continue reducing the time for hot meal delivery, or there are limits, remains an open question. On the one hand, people are growing used to having their orders delivered real fast, with the target click-to-eat metric now truncated to 12 minutes, and expect more world records. The faster the delivery, the higher the customer’s loyalty to a certain delivery business, especially if a fast delivery admirer orders a meal to his office in the midst of work activities. On the other hand, in their race for speed dark kitchens may run afoul of their own standards for financial performance. A quality dish takes 20 minutes on average to cook to perfection, and logistics may be too expensive to run it mercilessly. For friends who order sushis or pizzas for a laid-back meeting, the speed of delivery is of little importance.
The Russian delivery market is already mature, especially in Moscow where the average delivery time is 35 minutes. In Europe, the market is lagging a little bit behind — in some places. In others, the speed is a must. For example, in London deliverers operate 30% faster than their Moscow colleagues. The model is very efficient in highly populous metropolises where people can afford to pay for it. In smaller towns, hyperlocal delivery businesses may fall into the red.
========================================
Marketing and customer communication
Competent marketing and liaison between a business and its clients are the cornerstones of any dark kitchen’s success story.
Too much information tends to leave potential customers snowed under. The excess leads to induced psychological blindness to advertisements. For promotion to really work marketing strategies should refocus from promoting specific products towards establishing emotional ties that do not look or sound like selling tools. Kitchen in the Neighborhood deploys one of Russia’s most winning customer communication channels in the market — in addition to the very competitive prices that still shape consumer preferences in this country because of the population’s low purchasing power.
Hyperlocal offline marketing, targeted ads in the social media such as VK, and business partnerships work best in Russia when it comes to bringing new clients. The average cost of charming a customer is not so easy to determine as it depends on the average purchase price, customer retention, and other factors. Experts surveyed by Dsight believe the $9 customer acquisition cost (CAC) is a good marketing result; if a business has obtained a new client for a CAC of just $3 per person — it is a promotion virtuoso. When planning a new dark kitchen, its owner has to budget an X amount of dollars to buy equipment and 5X to cover marketing costs.
According to Yandex, in 2020 more than 60% of meal delivery orders came from smartphones, a fact that necessitates a proprietary mobile app or at least mobile website version for each restaurant and aggregation service. A dark kitchen project called Gotovo started out with just a mobile website version — and found out it was barely used as customers placed most orders via aggregation services. As it turned out, the customers found it more convenient to order pay delivery through an aggregator’s mobile app than to save a little by going to the company’s website version and ordering directly from the deliverer. When Gotovo launched its mobile app, it accounted for 70% of all orders. The website attracted 20% of customers, and aggregators helped the remaining 10%. Statistically, people favor aggregation services as those offer a wider choice; nonetheless, developing own communication channels is in the dark kitchen’s best interest.
The quality of food and proven sanitary standards also play a critical role in customer acquisition and retention. Restaurant owners will have to convince potential customers that their dark kitchens are clean and no worse at cooking than classical restaurants. Live stream videos from a kitchen may really help, opined DoDo Pizza and 6 Seasons that practice that on a regular basis.
========================================
Healthy food is still a strong trend, with people increasingly associating what they eat with how they feel and look. There is a niche market for specialties, too.
Ordinary food no longer exhilarates some customers; they look for what experts refer to as functional foodstuffs that are filling enough to satiate even in small quantities. An estimated 62% of those surveyed by Nielsen said they prefer snacks to normal breakfast, and 53% buy those to feel full during the day.
Services that offer maximum meal customization are also on the rise. Separate vegan menus have long been par for the course; special gluten- and lactose-free restaurant diets have not. Neither have raw foodism and the Paleolithic diet. Few offer these in the FoodTech market. There is an emerging group of kitchens that offer customers the opportunity to collect ingredients for a future meal on their own by requesting those from various apps.
All the trends we have just mentioned support niche markets. The mainstream market is all about pizzas, Japanese cuisine, burgers, barbecue, and Chinese or Vietnamese cuisine. Just look at Salmon in Plenty that has been extending its product line by adding the poke and other stuff — and still gets the lion’s share of proceeds from selling sushis and rolls. The pizza is filling and inexpensive, and this combination makes it a winner. Japanese cuisine lures as it’s too complex for home cooking. In addition, both the pizza and the sushi do not require strict temperature regime for delivery — unlike steaks, for example.
Yandex found that 31% of the Russians prefer sushis and rolls, followed by pizza lovers (28%), pie aficionados (5%), and burger fans (3%). The Muscovites’ preferences are more or less in step with the rest of Russia, according to the experts we approached, while in St. Petersburg, Japanese cuisine accounts for 60–70% of the market.
Customers tend to re-order the same things over and over again. The frequent use of the ‘Repeat prior order’ button in an app shows high conversion rates. For example, at sushi restaurants most proceeds come from classics such as the California and Philadelphia rolls.
A dark kitchen that is eager to improve its customer retention rate must remember that delicacies, however exquisite, may become run-of-the-mill one day. People have a growing number of aggregation services to choose meals from. To step up customer loyalty, a kitchen should change its dainties at times — like Kitchen in the Neighborhood does on a regular basis. When planning assortment diversification, one should also take into consideration whether a chef can manage the cooking of a range of different dishes using the same equipment.
========================================
About Innotechnics
Innotechnics specializes in tech market analysis, trend forecasting, and startup scouting. Leveraging a proprietary database of over 60,000 tech firms, we deliver insights tailored to your needs. Let's discuss how we can support your vision.
There’s little verifiable data about the market, and the scarce information that does exist varies from source to source. Experts are still divided on the prospects of this segment and which of the emerging business models will likely reign as standard. We in Dsight are positive about a remarkable future of the dark kitchen segment — hence this Report that we hope will bring answers to some of the pressing questions.
Definitions, to start with:
Dark kitchen — a restaurant that has no interior to come and sit down in, and cooks only to courier meals ordered via its website or app (or via an external service aggregator).
Shared kitchen — a large kitchen room fully equipped and connected to the public utilities required for dark kitchen business. There may be many independent catering brands sharing a single room where the owner makes monthly proceeds by renting the space out to each of the tenants.
Cloud kitchen — a company that operates under a number of brand names in a single physical kitchen. The market has not embraced the term yet, leaving much room to ambiguity. Some refer to it as just a dark kitchen business owning more than one brand name; others believe it is but a number of independent brands in one space, thus confusing cloud kitchen with shared kitchen. To allow no misconstruing, we opted not to use this term widely in this Report.
We drew upon the data and sources which were available at the time of writing this Report, including open market data, expert publications, research, and investment stats for the last three years. We also interviewed experts and did our own analysis based on the information collected.
========================================
MARKET OVERVIEW
The dark kitchen catering format that serves only by delivering meals directly to the customer is no news to the market. It has been around for quite a while but gained traction just recently with a sharp rise in e-commerce and communication capabilities. The customer no longer needs to make a call — clicking on an app to order meal is enough. The new delivery concept has equal appeal for both consumers and entrepreneurs. It wasn’t that easy at the outset; a person had to first find the website of the restaurant he wanted food from, put down or commit to memory the meal he found and wanted, and then call the restaurant to actually order.
Today, ordering just takes a brief visit to the apps of some service aggregators, like Yandex.Meal and Delivery Club in Russia or Deliveroo, Uber Eats, DoorDash and many others overseas. The technology makes customer communication effortless and seamless, and also helps restaurant owners balance the books by no longer spending on their proprietary delivery services, website maintenance, call centers, marketing, etc. — not to mention the average cost of entering the catering market. For a dark kitchen, it’s upward of $50,000 just to cover an actual kitchen room and space for couriers coming to get the meals. For a conventional restaurant, we already talk about $350,000 and more to pay rent and keep large catering spaces.
========================================
The ongoing technology boom is not the only reason why dark kitchens are gaining so much traction. Consumer preferences were apparently shifting even before the COVID-19 pandemic. In 2018, Business Insider posted a 40% yoy increase in restaurant bankruptcies in the UK. NPD Group found that today an estimated 63% of the Chinese order meals online on a daily basis, and so do about 50% of the Americans and the British. In Russia, online delivery has yet to gain that much ground, but the situation is changing, and an estimated 42% of locals have their meals brought right to their doors at least once a month.
According to Data Insight, in 2020 more than 7% of Russian restaurants that had practiced deliveries before embraced the dark kitchen model. Populous cities with 0.5-to-1 million people drove the trend. The bigger a city, the more money restaurants can make with high enough demand for online catering. In Moscow Oblast, the vast populous region surrounding the City of Moscow, 14% of all restaurants that practice meal deliveries have adopted the dark kitchen format.
Lifestyle in bustling metropolises and around them also does influence consumer behavior. For example, Moscow City and Oblast residents may spend more than three hours a day commuting between homes and places of work — a stark disincentive to cooking at home and an enticement of having it all delivered.
Changes in the real estate market are obliquely conducive to a shift in consumer preferences, too. RBC reported that most new studio apartments commissioned in metropolises have just two-burner ovenless cooking stoves — yet another factor discouraging home cooking and making their owners think of clicking a delivery icon. Some visionaries even expect meal subscriptions to be part of restaurant business down the road.
========================================
Pandemic-driven growth
Dark kitchen businesses have always showed perkiness; but in 2020 the concept took the eating world by storm. It was the pandemic that kept people away from physical restaurants and had them re-tune in to their old wish to get stuff brought over to them. Dark kitchens and other FoodTech segments immediately cashed in on this, demonstrating the viability of the model and pushing even some of the debt-laden catering old-timers onto this new cost-saving playground.
In Australia, for example, online meal delivery has become par for the course across all age groups. According to CBRE, four million Australians aged above 14, or 19% of the entire population, eat what catering businesses deliver. CBRE forecasts a relatively even age group balance as the services win more hearts.
Strong as COVID-19 impact may be on the development of this segment, it is not the only one that matters here. Small business’ struggle for survival is a powerful driver of dark kitchen growth, but it has been matched by the deep pockets that tend to favor the easing of food and meal deliveries and have already joined the fray.
Russia’s dark kitchen market is still in its infancy. Experts expect the meal delivery segment to be worth over $8bn four-to-five years from now. Regulatory restrictions Russia and the rest of the world imposed as the coronavirus was spreading have strongly adjusted consumer behavior, leaving the FoodTech market in seventh heaven.
In the midst of COVID-19 delivery services rode high. For example, Deliveroo Hong Kong reported a staggering 60% month-on-month increase in orders in January 2020 and a 20% year-on-year rise the next month. The new model had taken root so firmly in the mind of the consumer that when the restrictions were partially (or in some regions completely) lifted, orders for delivery kept growing, and so did the average price tag. That further encouraged demand for space for dark kitchens and dark stores alike. In Moscow, rent doubled. Tenants were both restaurants and service aggregators like Yandex.Meal and Delivery Club that had decided to open their own dark kitchens. Confidence in the dark kitchen format will hardly wane for as long as the coronavirus remains a deadly adversary, and the market players will increasingly scramble for space to accommodate their dark kitchens and dark stores.
========================================
Dark kitchens are hardly an incidental trend that comes and goes, as evidenced by the explosive growth of online orders we have been witnessing across the world. The age-old catering formats will keep adapting to new realities — but not all of them. Fast food outlets can easily embrace the dark kitchen model — unlike craft cuisine restaurants that simply can’t operate in this environment.
Some catering pundits have misgivings about post-pandemic milk and honey in dark kitchens. They believe a considerable number of restaurants will scrap the format in a couple of years as restaurant business is not only about making money — it’s also about an air of serenity and enjoyment.
That is all true; but the experts tend to underestimate the depth of changes in consumer habits. Delivery is now so easy that people order more food for less money, compared to classical restaurants, and look unlikely to voluntarily turn their back on the opportunity.
=======================================
MARKET OVERVIEW. Segmentation
Segmentation
Dark kitchen classics
The dark kitchen industry may be alternatively referred to as ‘ghost kitchen’ or ‘virtual kitchen.’ No matter what the name is, it’s all about cooking for delivery.
There is no physical space for customers in classical dark kitchens; couriers immediately respond to orders that come through aggregation apps, a dark kitchen’s proprietary website, or any other online order management system.
Players vary significantly in the dark kitchen industry. There are seasoned brand names such as DOSTAevsky or Kitchen in the Neighborhood, and there are also tiny businesses that serve small communities and can only be found through service aggregators. Customers are miscellaneous in all possible senses, and so are meals offered. The latter include healthy food, corporate meals, weekend meals, and many others.
Hybrid models
The hybrid model complements classical dark kitchens in the market. It has been pioneered by the catering majors such as McDonald’s and Starbucks which started out as conventional restaurants with customer tables.
As time went on, takeout and home-delivered meals began to account for an ever-growing share of those companies’ revenues, and the dark kitchen concept did a lot to keep their books in the black even when the pandemic struck.
For example, in September 2020 a fast food retailer called Wendy’s shook hands with India’s Rebel Foods on the opening of its 250 ‘cloud kitchens’ across the country. That was little short of a U-turn for a company that had played a classical game before, and a nice prop for Wendy’s in the face of the pandemic.
Service aggregators and logistics providers
Logistics is key to the success of the meal delivery industry as it is the mind and limbs of virtual restaurants. Most orders that keep dark kitchens afloat come from logistics and aggregation platforms. The top players in the segment are Uber Eats, Deliveroo, and Delivery Club.
Western service aggregators open their own ‘cloud kitchens’ to get directly involved in serving clients. San Francisco-based Doordash blazed the trail in this when the company launched a kitchen next to Redwood City with an eye to helping businesses, including the famous Chick-fil-A restaurant, step up delivery volumes.
Service companies
Service companies help dark kitchens thrive by offering complementary services such as shared kitchens (coworking space for kitchens), software to streamline order and resource management, robotic solutions for kitchens, POS terminals / payment services and marketing solutions, etc.
Shared kitchen is a relatively new trend in the industry — and successful, too, as exemplified by Kitchen United’s experience. The provider offers its space mostly to food start-ups, pop-up restaurants, banquet and corporate catering businesses, mobile food vendors, etc. Shared kitchens have professional cooking equipment, storage space, and video surveillance and security systems. As coworking spaces they can also host events.
To make dark kitchen growth sustainable, innovation breakthroughs are a must — hence a plenitude of solutions coming to improve anything from waste management to payment and order management optimization.
========================================
MARKET OVERVIEW. Trends
Trends
Orthodox players launch dark kitchens
According to RBC, as of early 2020 60% of Russia’s largest catering chains were no greenhorns in meal delivery. They had already begun doing that through their own delivery services or through service aggregators. Proceeds from meal delivery accounted for 62.2% of revenue at pizza chain Domino’s Pizza and 60% at Japanese cuisine restaurant Tanuki.
It was McDonald’s that first launched a Russian dark kitchen in the fall of 2019. In April 2020, the CoffeeMania chain followed in McDonald’s footstep with its 27 outlets; its dark kitchen cooks and then contacts couriers from Yandex.Meal and Delivery Club.
Doordash, Deliveroo and other sizable delivery services and restaurant service aggregators pioneered this model in the West. Deliveroo opened its dark kitchen as far back as 2017; to push this side of the business, a special arm called Edition was set up. Then the pandemic weighed in, driving 60% month-on-month growth in January 2020 and 20% year-on-year growth in February. Starbucks, too, opened its dark kitchen in late 2019 to test the waters in the industry.
Grocery retailers and aggregators have been increasingly setting sights on this business model as well. Samokat, for one, had tested the format and in June 2021 announced plans to launch up to 20 dark kitchens in Moscow and other regions. In March 2021, X5 Retail Group, a big holding company, acquired dark kitchens from Salmon in Plenty.
A few years ago Delivery Club experimented with its own ‘cloud kitchen’ — without much success, though. More experiments followed in 2019 in a joint project with Arkady Novikov, a prominent restaurant owner. In 2020, Delivery Club and Sberbank used its freshly established joint venture to buy Kitchen in the Neighborhood. Yandex also took a crack at dark kitchening in 2018.
Analysts expect big players to keep exploring the dark kitchen segment both on their own and as part of M&As.
=======================================
Real estate related trends
Space for cooking in short supply
Restaurant owners run into real problems when planning dark kitchens in apartment buildings, as such a business must be approved by local residents. There are dedicated nonresidential rooms in new apartment blocks; but in pursuit of high revenues from retail tenants for this space, the real estate developers make the rooms unsuitable for commercial cooking. Down the road, but hardly before 2023, we may expect real estate companies to take requirements for food-making into account.
Dark kitchens are typically housed in separate small buildings such as abandoned warehouses or boiler houses. They are expected to have electricity and purified water supply, sewage, good ventilation, strict internal zoning with clean areas, and a shipment zone.
In Moscow, ILM reports a growing deficit of rentable ground floor space as old manufacturing sites get increasingly bulldozed to allow more residential development. Other factors that cause the shortage include an e-commerce boom, which steps up demand for such rooms, a ban on new warehouse construction, and the current sprawl of sanitary protection zones across the city (surrounding cemeteries, for example). There are nine food production clusters in the Russian capital today.
Shared kitchen and other formats
There are a growing number of companies that offer dark kitchen restaurants accommodation in their own rooms with full equipment, infrastructure and utility services provided, and even assistance in delivery offered. Such large kitchen areas are now known as ‘shared kitchens’ and bring together multiple restaurant brands that operate next to each other but independently. In the average working space of 350–550 square meters six-to-ten tenants may co-exist. The space owner gets a monthly rent, making the shared kitchen a modification of coworking space for restaurants. It requires just a fraction of the investment one would have to make to open and manage a classical restaurant, and businesses are increasingly setting sights on the model.
========================================
Globally, companies that do this kind of business are numerous. CloudKitchens, founded by Travis Kalanick, the ex-CEO of Uber, pioneered the ‘turn-key’ cloud kitchen concept back in 2016 and has emerged as the biggest player in the segment ever since. The company owns more than a thousand kitchens out for rent in 40 different areas.
Virturant, Mission Kitchen, Herd and others are less conspicuous but drive the segment as well. Start-up teams are emerging with the mission to upgrade the shared kitchen concept — Milan-based Kuiri, for one. The young company started by trimming the standard kitchen space per brand from customary 50 square meters to just 15 while placing state-of-the-art equipment there. Then its proprietary IT kitchen management platform was offered. In its next move, the team launched contractual assistance in delivery.
A B2B customer’s lifetime in the shared kitchen and the space the business owner has are the key metrics to evaluate a shared kitchen project. In Russia, investors are gingerly about such initiatives. Space owners prefer just renting rooms out with no strings attached to avoid risks. Seasoned restaurant businesses seeking expansion opt rather to rent ready-to-use infrastructure than look for and repair cheap dilapidated rooms. None of the projects launched, including Tvoe Mesto that started last year, has broken even so far.
However, the growing commercial space crisis is increasingly putting the screws on space owners, making them experiment in order to get at least some dividends from their property. The shared kitchen format is gaining traction as a test bench for projects in their salad days which do not need conventional kitchens to try out a product range for future customers, streamline work with suppliers, and train staff.
The shared kitchen is just one of the dark kitchen options businesses have to experiment with. In Australia, for example, owners have elected to use 20-feet containers with kitchen equipment which they place in neighborhoods that show strong demand for delivered meals. Reduced cost, scalability and easy and rapid deployment on any free spot are among the key advantages of the approach.
Some prefer bringing dark kitchens into any storage facility in town. In the U.S., a company called Reef Neighborhood Kitchens decided to monetize the parking lots they owned by opening dark kitchens there. A real plus here is proximity to customers.
In Russia, such experiments are very isolated. Moscow-based DOSTAevsky has attempted a dark kitchen project in a van that moves from place to place. Dmitry Ryazantsev, a restaurant expert, is putting together mobile kitchens for glampings (outdoor camping sites with hotel-type amenities and comforts such as beds, electricity and access to indoor plumbing which are not usually used in traditional camping) and apparently bets on this as a format to thrive soon.
========================================
Robotization
Dark kitchens do not shun partnerships with robotics makers. The latter keep getting increasingly focused on cost optimization RPA solutions for the former.
For example, a British start-up called Moley Robotics has developed an automation-driven kitchen. In addition to conventional cookware and utensils it is equipped with two multiple-DOF articulated robotic arms capable of stirring food, flipping burgers, controlling cooking temperature, and doing other things seasoned chefs do in less futuristic kitchens. This nimble 24-jointed structure is powered by 20 motors and 129 sensors. There’s another example: the Flippy, an automated grill and baking arm by Miso Robotics.
Bowlton, a global start-up of Russian origin, has come up with their own robots and even proprietary software to power these. According to the company, their multi-component robotic system can cook up to 300 meal courses (salads, soups, and various hot bowls) per hour, a workload of 13 human cooks in a conventional environment. And it is reported to do that at twice the speed a human cook is capable of. This modular system is easily customizable to meet the user’s needs, the developers said. Salmon in Plenty, a Russian dark kitchen chain, is already using one of Bowlton’s products, Robopoke, which can cook a popular Hawaiian dish called poke (diced raw fish with rice and veggies).
There are cooking robot makers in Russia, too. One of such projects is Blindozer, the world’s first vending machine that can bake pancakes with a wide assortment of fillings. The pancakes are stored in two refrigerators at +1°C. It takes 2.5 minutes for the robot to complete the pancakes; the system is even said to be able to check ingredients’ expiry dates. As many as 30 different fillings can be fed into the robot. The system can be obtained on a franchise basis and currently operates at the Moscow Vnukovo International Airport as well as a number of shopping malls and business centers in Moscow.
========================================
RPA improvements are one side of the story; enhanced logistics is another. Some players experiment with robotized delivery. Yandex, for one, has launched its Yandex.Rover project to deliver meals by using wheeled robots capable of moving fast down a sidewalk. The machines tap Yandex.Maps and GPS/GLONASS satellites to navigate. In other countries, Amazon runs the show with such projects. Not without competition; in July 2021 Yandex.Rover teamed up with the U.S.’ Grubhub to launch robotic meal delivery across American college campuses. At this stage, the concept appears more about fun than business practice; but companies across the world are thinking of how to make it monetizable and client-friendly.
The pandemic has barred entry into Russia and many other countries for an army of inexpensive workforce from abroad. Low-level kitchen and logistics staff are in short supply across the globe, a factor that further drives the development of robotic solutions.
All this is true; but the ‘human touch’ phenomenon remains a factor, too. People prefer people to cook for them. Customers’ mixed emotions about machine-cooked meals may impede the advent of kitchen robots.
That said, robotization will likely pick up steam and raise more and more investments. Start-ups will be the primary driver because restaurants, which do look forward to process optimization at their kitchens, are not quite in the money to risk experiments.
‘Ready-to-eat’ hangs in the balance
There are segments which are so close to dark kitchens: ready-to-eats (pre-cooked food) and ready-to-cooks (recipes). The market is far from saturation, and the ready-to-eat segment is on the rise, driven in Russia by Yandex.Lavka, Samokat, and some others. Subscription services, such as Grow Food and Performance Food, show exponential growth each year.
If at the end of the day hyperlocal delivery services like Kitchen in the Neighborhood or Gotovo manage to rein in prices, they will reign supreme in the market. Freshly cooked food is an asset as the customer does not have to worry about storage and cooking.
========================================
Grow Food, Yandex.Lavka and Samokat all offer ready-to-eats, but their target audiences are different. Grow Food primarily serves healthy lifestyle advocates who value their time too much to kill it on counting calories. The company is on the move, opening new food production sites and offering clients customized approach. This segment is unlikely to change down the road.
The overseas markets are in sync with Russia’s. Companies such as Freshly and Fresh N Lean focus on niche market services that include healthy food and weight-losing diets.
Ready-to-eat projects report high enough capex and uneven utilization of fixed assets. Factories that cook subscription-based ready-to-eats work mostly at night for new meals to be all prepared for delivery in the morning, and sit idle at daytime. Other business models should be deployed to balance the utilization.
Segments appear apt to mingle and merge, giving rise to mixed formats, and some experts believe dark kitchens may overwhelm the ready-to-eat market as we know it. Dark kitchens may gain even more traction when their scale-up stage comes and equalizes the costs of getting meals delivered and cooking meals at home.
As far as the ready-to-cook segment is concerned, it is a niche market product that is priced 30–40% above foodstuffs from a store; so demand for it varies with people’s well-being. In Russia, there are companies in this segment such as Yandex.Chef, Elementaree, Chefmarket, and others; overseas, HelloFresh, Dishroom, and many more. Young mothers and married couples are the main customers. Their product lines will likely join delivery and retail services as their complementary product. Elementaree can already be ordered from Samokat, and Yandex.Chef from Yandex.Lavka.
Meal kits (pre-portioned and sometimes partially-prepared food ingredients and recipes to prepare home-cooked meals) are not particularly sought-after in Russia, but they are all the go internationally. HelloFresh recently referred to their customer flow as ‘boom’. The ready-to-cook segment is winning more hearts abroad than in Russia.
========================================
Hyperlocal delivery
Today people lead a much faster life than before, especially in metropolises. The consumers now want his wants satisfied as rapidly as possible. Meal delivery is no exception.
Hyperlocal delivery within 30–40 minutes is the new normal which may be further trimmed in a near future. To ensure the speed, a deliverer opens multiple small meal cooking and delivery outlets within just a few kilometers of his target neighborhood. To gauge the speed, a special metric has been coined, ‘click-to-eat,’ which shows the time between ordering a meal and getting it delivered.
The click-to-eat metric could be improved by applying motor vehicles and robots, and by learning to deeply understand the customer’s expectations.
The primary factor for delivery acceleration is technology that helps step up a courier’s payload. To make a business successful, one must complete 1.5–2 deliveries per hour, a frequency that largely hinges on how many orders come in.
Whether there are possibilities to continue reducing the time for hot meal delivery, or there are limits, remains an open question. On the one hand, people are growing used to having their orders delivered real fast, with the target click-to-eat metric now truncated to 12 minutes, and expect more world records. The faster the delivery, the higher the customer’s loyalty to a certain delivery business, especially if a fast delivery admirer orders a meal to his office in the midst of work activities. On the other hand, in their race for speed dark kitchens may run afoul of their own standards for financial performance. A quality dish takes 20 minutes on average to cook to perfection, and logistics may be too expensive to run it mercilessly. For friends who order sushis or pizzas for a laid-back meeting, the speed of delivery is of little importance.
The Russian delivery market is already mature, especially in Moscow where the average delivery time is 35 minutes. In Europe, the market is lagging a little bit behind — in some places. In others, the speed is a must. For example, in London deliverers operate 30% faster than their Moscow colleagues. The model is very efficient in highly populous metropolises where people can afford to pay for it. In smaller towns, hyperlocal delivery businesses may fall into the red.
========================================
Marketing and customer communication
Competent marketing and liaison between a business and its clients are the cornerstones of any dark kitchen’s success story.
Too much information tends to leave potential customers snowed under. The excess leads to induced psychological blindness to advertisements. For promotion to really work marketing strategies should refocus from promoting specific products towards establishing emotional ties that do not look or sound like selling tools. Kitchen in the Neighborhood deploys one of Russia’s most winning customer communication channels in the market — in addition to the very competitive prices that still shape consumer preferences in this country because of the population’s low purchasing power.
Hyperlocal offline marketing, targeted ads in the social media such as VK, and business partnerships work best in Russia when it comes to bringing new clients. The average cost of charming a customer is not so easy to determine as it depends on the average purchase price, customer retention, and other factors. Experts surveyed by Dsight believe the $9 customer acquisition cost (CAC) is a good marketing result; if a business has obtained a new client for a CAC of just $3 per person — it is a promotion virtuoso. When planning a new dark kitchen, its owner has to budget an X amount of dollars to buy equipment and 5X to cover marketing costs.
According to Yandex, in 2020 more than 60% of meal delivery orders came from smartphones, a fact that necessitates a proprietary mobile app or at least mobile website version for each restaurant and aggregation service. A dark kitchen project called Gotovo started out with just a mobile website version — and found out it was barely used as customers placed most orders via aggregation services. As it turned out, the customers found it more convenient to order pay delivery through an aggregator’s mobile app than to save a little by going to the company’s website version and ordering directly from the deliverer. When Gotovo launched its mobile app, it accounted for 70% of all orders. The website attracted 20% of customers, and aggregators helped the remaining 10%. Statistically, people favor aggregation services as those offer a wider choice; nonetheless, developing own communication channels is in the dark kitchen’s best interest.
The quality of food and proven sanitary standards also play a critical role in customer acquisition and retention. Restaurant owners will have to convince potential customers that their dark kitchens are clean and no worse at cooking than classical restaurants. Live stream videos from a kitchen may really help, opined DoDo Pizza and 6 Seasons that practice that on a regular basis.
========================================
Healthy food is still a strong trend, with people increasingly associating what they eat with how they feel and look. There is a niche market for specialties, too.
Ordinary food no longer exhilarates some customers; they look for what experts refer to as functional foodstuffs that are filling enough to satiate even in small quantities. An estimated 62% of those surveyed by Nielsen said they prefer snacks to normal breakfast, and 53% buy those to feel full during the day.
Services that offer maximum meal customization are also on the rise. Separate vegan menus have long been par for the course; special gluten- and lactose-free restaurant diets have not. Neither have raw foodism and the Paleolithic diet. Few offer these in the FoodTech market. There is an emerging group of kitchens that offer customers the opportunity to collect ingredients for a future meal on their own by requesting those from various apps.
All the trends we have just mentioned support niche markets. The mainstream market is all about pizzas, Japanese cuisine, burgers, barbecue, and Chinese or Vietnamese cuisine. Just look at Salmon in Plenty that has been extending its product line by adding the poke and other stuff — and still gets the lion’s share of proceeds from selling sushis and rolls. The pizza is filling and inexpensive, and this combination makes it a winner. Japanese cuisine lures as it’s too complex for home cooking. In addition, both the pizza and the sushi do not require strict temperature regime for delivery — unlike steaks, for example.
Yandex found that 31% of the Russians prefer sushis and rolls, followed by pizza lovers (28%), pie aficionados (5%), and burger fans (3%). The Muscovites’ preferences are more or less in step with the rest of Russia, according to the experts we approached, while in St. Petersburg, Japanese cuisine accounts for 60–70% of the market.
Customers tend to re-order the same things over and over again. The frequent use of the ‘Repeat prior order’ button in an app shows high conversion rates. For example, at sushi restaurants most proceeds come from classics such as the California and Philadelphia rolls.
A dark kitchen that is eager to improve its customer retention rate must remember that delicacies, however exquisite, may become run-of-the-mill one day. People have a growing number of aggregation services to choose meals from. To step up customer loyalty, a kitchen should change its dainties at times — like Kitchen in the Neighborhood does on a regular basis. When planning assortment diversification, one should also take into consideration whether a chef can manage the cooking of a range of different dishes using the same equipment.
========================================
About Innotechnics
Innotechnics specializes in tech market analysis, trend forecasting, and startup scouting. Leveraging a proprietary database of over 60,000 tech firms, we deliver insights tailored to your needs. Let's discuss how we can support your vision.