Food delivery and the rise of ghost kitchens

Online platforms, particularly the online retail sector, driven by changing tastes and the availability of a variety of products, have grown exponentially. The food delivery sector in particular has grown and expanded so rapidly that it has spawned an entirely new business model, bringing together established restaurants and fast food outlets and delivery service providers through tech builders providing an online platform.

And that’s where Uber Eats Kenya found itself this June, marking four years in the country and faced with the rise and growth of “ghost kitchens” as the space for food delivery expanded, forcing it to experiment with integrating such kitchens as partners in their business plan.

A “ghost kitchen” is a professional food preparation or cooking facility set up to deliver meals with delivery only and is also referred to as a dark kitchen or cloud or virtual kitchen.< /p>

“Virtual, or dark, kitchens are growing in popularity around the world, and many consumers enjoy their services because they tend to Offer new and more diverse dishes than established restaurants or fast food outlets. They are basically e-restaurants or kitchens dedicated solely to providing food for delivery. They don’t tend to have a shopfront or dining-in-restaurant version,” said Kui Mbugua, the general manager of Uber Eats Kenya. They’re just kitchens.

Fancy names aside, the concept of “ghost” or “dark” kitchens has long fed the working class across East Africa. The menu varies from vendor to vendor.

In Kenya they are simply ‘hot lunch deliverers’ people who cook, pack and deliver in ‘unknown’ kitchens, or sell from office to office to workers in malls, construction sites and even schools, mainly through word of mouth. Today the mobile phone has made this easier and better because customers simply have to call ahead to place their orders.

In Uganda the same concept exists across the economic spectrum. In Tanzania, the Mama ntilie concept works the same way, with ready meals either delivered or served in corridors and sidewalks off the street. There are no established restaurants.

But with the advent of online platforms and mobile phones allowing for their widespread use, this old concept of food delivery took a commercial turn to groceries and with companies like Uber Eats, Jumia Foods and Bolt other smaller companies taking it to a new level, partnering with big brands and established restaurants and fast food outlets to deliver their groceries more efficiently via online platforms. The concept is the same, but technology is king here.

But the rise of dark kitchens is nagging at this heavily commercialized grocery delivery business. The food offered by dark kitchens is unbranded and comes at a less commercial price because the platform used is less formal and simple.

Ghost kitchens also indicate the economic situation. They offer cheaper food at a lower cost by minimizing operations by not having physical dining rooms, just kitchens. Also, the fact that they don’t rely on third party vendors gives them the advantage of being able to reach their customers easily as the service is direct.

And as Ms. Mbugua says, “They generally start very small -Up and expansion costs and can easily test and experiment with their menus, meaning they represent good competition for established large delivery companies like Uber Eats, Jumia Foods and Bolt Foods who work with well-known grocers.

< p>She said that’s why Uber Eats has dabbled in dark kitchen offerings with some of its restaurant partners.

“Existing retailers on our platform sometimes also have dark kitchens that they’re experimenting with on different menu items and kitchens that are not naturally connected to their existing brand, and then they can use our platform to get feedback and optimize the marketability of the products,” sa she said.

She said such experiments have helped her merchants continue as Deliv completely dark kitchens or use what they learn to set up dine-in services.

“By working together with partners like that, we’ve been able to help them identify choice gaps in the different cities we operate in and they then launch data-driven virtual kitchens that support their core business when their core business is dine-in customers, around that to help grow. Or if they just deliver, they can be very flexible with minimal running costs and better profit margins.”

But Kenya is a dynamic market with a lot of potential, so competition ghost kitchens is not a big problem. “We will just continue to bring our best practices, leveraging our global reach, technology and the relationships we have built in the marketplace with our partners, consumers and delivery drivers,” she said.

Yet, so dynamic Whatever the market, unless the business plan takes into account the local food ecosystem at large, the food delivery business can also be difficult. Nairobi recently quit because the company’s founder and CEO, Robin Reecht, officially said it was failing had to raise funds to keep the operations going and was responsible for the “economic downturn and tightening of investment markets”. local.

KUNE wanted a cloud kitchen that offers high-quality and cheap mass-produced meals and also sets up its own online delivery platform. She has not delivered any of these despite using up the $1M seed funding.

The restaurant and general hot food sector in Kenya has always been diverse with nice sectors. All urban areas of Kenya have the regular “chips and chicken” fast food outlets. This was dominated by the Kenchic brand for decades, but later independent operators flocked to and expanded the fast food segment, eventually attracting international brands such as Pizza Inn, Debonairs, Burger Hut, Dominoes, KFC, etc. These are some of the brands that are now being served by tech-enabled food delivery companies.

Then there are the licensed kiosk food suppliers with established on-site kitchens and dining areas, offering a wide but fixed menu. The food here is typically home-cooked quality, served in generous portions (inflation permitting) and always fresh. Always off the main streets, these places have an unpretentious ambience but great quality. They tend to serve a huge market across all economic classes. In the beginning they hardly delivered, but today they offer both In-Dining and Call-In deliveries thanks to online platforms where they advertise like any other company. These establishments always appear informal, but adhere to all official health and business requirements.

The true informal food vendors, working out of dark kitchens, are those who sell food to small business people in offices and shopping malls. < /p>

So the emergence of large delivery companies that rely on technology has not disrupted the food delivery sector per se, but served a specific segment of customers. The companies were just improving what established restaurants were already doing, but they’re now bringing the same food to more people, easily and faster.

And the proof is in the implementation by companies like Uber Eats, who have needed to expand their businesses Streams to include food, alcohol, beauty and wellness deliveries. And in 2021, it has expanded even further to include supplies for pharmacies, supermarkets, flower shops, gas stations and water deliveries.

In general, the delivery business as a whole is growing. “We’ve seen growth, and not just in our business, but in the industry as a whole,” Ms. Mbugua said. “The entire supply market is really an industry of the future. We’ve barely scratched the surface of its potential, not just in Kenya but across the continent.”