by The foodservice industry across Europe has seen a massive transformation in the past few years due to the rise of virtual or ghost kitchens. These kitchens that operate only for delivery and takeaway without any physical storefront have picked up steam and are disrupting the traditional restaurant business model.
Dark kitchens, ghost kitchens and cloud kitchens refer to commercial kitchen spaces that are primarily used for the preparation and delivery of meals directly to customers and operate without a physical storefront or front-of-house dining area.
Dark kitchens are commercial kitchens facilities specifically designed for delivery and take-out preparation without any customer-facing services. They allow food operators to enter new markets at a lower overhead cost.
Ghost kitchens focus solely on delivery and takeout orders received through third-party platforms like Deliveroo, Just Eat or Uber Eats. They may have one or more virtual restaurant brands operating from the same kitchen space.
Cloud kitchens are larger shared commercial kitchen spaces that are rented out to multiple food businesses and restaurant brands to prepare delivery-only meals on demand. They provide a flexible and cost-effective infrastructure for startups and independent restaurants.
Rising Popularity in Major European Markets
The concept of virtual kitchens first gained popularity in dense urban centers like London and Paris due to their high rental costs and limited real estate availability for traditional restaurants. However, over the last two years, ghost kitchens have seen increased adoption across Europe due to the pandemic-induced shift to delivery services:
– In the UK, the number of cloud and dark kitchens doubled during the lockdowns with operators like Deliveroo Kitchens, Rekom UK and Virtual Dining Concepts setting up multiple facilities nationwide.
– Several large commissary kitchens and incubators emerged in France led by Finnish startup Anthropic, La Cuisine and Cuisine Fantôme to offer delivery-only menus from hundreds of restaurant brands.
– Cities like Berlin, Munich and Hamburg witnessed a 3x growth in ghost kitchen startups in 2021 with German operators like Kitchen United and Lokal setting up dark kitchen hubs.
– Popular Spanish chains like La Salvaje expanded into new markets through cloud kitchen partnerships allowing regional and international delivery reach.
– Cities across Italy, Portugal and other Southern European countries also saw a rise of local cloud kitchen facilities serving independent restaurants and delivery-only food stalls.
Business Models and Growth Strategies
Europe Dark Kitchens Ghost Kitchens Cloud Kitchens operators have adopted different business models to scale across Europe:
– Commissary kitchen model – Large companies like Anthropic operate centralized production facilities that smaller restaurants and food trucks can rent kitchen/storage space from to expand delivery reach.
– Virtual restaurant brands – Operators run multiple delivery-only brands from the same kitchen space targeting different cuisines and price-points both locally and internationally through third-party delivery platforms.
– Franchise partnerships – Brands like SaladStop! have grown their European footprint by partnering with local cloud kitchen franchises and delivery agents.
– Delivery infrastructure – Companies focus on providing the delivery backend infrastructure and merchant services for independent brands and restaurants to enter the delivery market.
– Internationalization – Initial success in domestic cities allows expansion to other European countries through joint ventures, acquisitions or managing cross-border commissary kitchen partnerships.
– Economies of scale – Large centralized kitchen facilities allow optimizing costs through shared resources and automation while catering to multiple customer orders simultaneously.
Future Outlook and Challenges
With increased digitization and demand for flexible cloud infrastructure from restaurants and food brands, the ghost kitchen segment is projected to grow over 25% annually in Europe in the coming years. However, some challenges that could impact future growth include:
– Competition – Traditional delivery companies entering the commercial kitchen space may compete on pricing and brand power.
– Regulation – Standardization of licensing, safety and documentation requirements for virtual kitchens across EU countries is still evolving.
– Profitability – High commission rates charged by third-party apps and reliance on promotions for orders pressure operator margins.
– Customer acquisition – Building discoverability and direct customer relationships without a physical location is difficult particularly for new virtual brands.
– Labor shortages – Finding skilled chefs and kitchen staff willing to work in centralized production environments can be challenging.
Overall, the virtual foodservice sector has immense potential for European cities by providing a scalable solution for startups while enabling incumbent restaurants to reach new customers through delivery. With continuous innovation in both technology and operating models, ghost kitchens are here to stay as a major disruptive force in the region’s evolving foodscape.
*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it
