A Lightbulb Moment for Dark RetailOwen Mitchell
Off-site food-prep sites – commonly known as Dark Kitchens – are booming in the UK in line with a surging £4.9bn food delivery market, which now makes up 8% of the overall UK food service sector. Just Eat’s announcement this week that the company will hire 1500 new employees over the coming year is testament to the market’s rapid growth, which, of course has been accelerated by the lockdowns of 2020/21. In London alone, restaurants are selling an extra 900,000 meals a week via popular apps like Just Eat – and there is no doubt the pandemic has presented new opportunities for businesses to enter the market by capitalising on consumers’ increased appetite for delivery.
US-burger chain Wendy’s is just one example, betting on the resilience of the food delivery market post-Covid. Earlier this month the retailer announced plans to open 700 dark kitchens as it boosts its footprint across the US, UK and Canada. Dark kitchens will be a cornerstone of Wendy’s plans to expand in the UK, where it will test the market through delivery apps before committing to the extra cost of renting and fitting out premises on the high street.
Significantly, restaurants are not the only retailers targeting online delivery platforms. This week, UK pharmacy chain Bootsannounced its products would be available for home delivery through Deliveroo, meaning customers will be able to order 400 products from medical supplies to toiletries and snacks. The deal underlines Deliveroo’s intent to apply the ‘dark kitchen’ model to other retail categories.
Dark kitchens have put an end to postcode food envy, and it looks like we can expect the trend to not only impact our diets, but the layouts of our cities too. High streets were once the focal points of retail, but Boots’ announcement underpins the continued sector-wide shift to e-commerce, and growing demand for fulfilment/logistics real estate – increasingly within high-density urban areas. The next frontier in real estate selection looks likely to be less about storefronts and footfall and more about how well-connected an area is for rapid deliveries.
With Amazon’s investment, and newer start-ups continuing to enter the industry, is it only a matter of time before we see dark clothing stores join dark kitchens, pharmacies and supermarkets in reimagined urban business venues? Commercial real estate may finally be seeing light at the end of the tunnel after a tough 18 months. Meanwhile, it seems the ‘Dark’ era has only just begun.