COVID-19 impacted the F&B industry in dramatic ways. Few countries were prepared for the pandemic, and although some industries thrived with the opportunity, many restaurants started to struggle. One study found that 93% of restaurants in Singapore witnessed a drop in revenue, and 80% had to find ways to cut costs to stay afloat.
Even as the negative effects of the pandemic on dine-in restaurants wane, F&B owners continue to face challenges. Issues like high rental costs remain amidst rising inflation in Singapore. This, coupled with the shift in consumer preference towards food delivery, makes the dark kitchen model a better and more effective business model for F&B owners.
What, then, does the dark kitchen model offer that traditional restaurants simply cannot?
Ways the dark kitchen model is the better business model for F&B enterprises
- Lower upfront and operational expenditure
- Taking advantage of a growing food delivery industry
- All the data restaurateurs ever needed at their fingertips
- Launch within weeks
- Cost-effective expansion into new markets and areas in your city
- The magical combination of low risk but high reward
- Piggy-back off the success of delivery platforms
1. Lower upfront & operational expenditure
Restaurants are complex businesses to run. Historically thin profit margins of just a few percent make running brick-and-mortar locations a challenging ordeal for many. On top of this, upfront costs that range from SGD$ 50-600k make expanding and opening new restaurants near-unaffordable.
CloudKitchens® offer an alternative to this, with opening costs as low as SGD$10k, and operational costs a mere fraction of traditional restaurants. This is possible for many reasons, including the fact that the dark kitchen provider takes care of all the permits, construction, renovations, and facility maintenance. Plus, the lack of a dine-in space removes the need for large front-of-house teams.
2. Taking advantage of a growing industry
It’s no secret that the food delivery industry is expanding rapidly. Long before the pandemic, the market was growing year-on-year, signifying itself as a ripe opportunity for those willing to experiment with something new.
CloudKitchens® set you up for success in this new industry landscape and allow food entrepreneurs to get a foot in the door before competition gets incredibly steep.
3. All the data restaurateurs ever needed at their fingertips
The CloudKitchens® model does not simply mean remote kitchens. Operators like Smart City Kitchens offer a suite of high-tech benefits in each kitchen space designed to help streamline and grow your business. In our dark kitchens, all delivery apps and orders can be monitored and managed through a single tablet at the centre of the kitchen. Insightful data is also collected, allowing restaurants to see which are their most profitable dishes, find bottlenecks in their cloud kitchens operations, understand their most beneficial pricing models, and much more. This way, restaurants can stay organised and streamline their operations to maximise profits.
4. Launch within weeks
Our CloudKitchens® spaces are turnkey solutions, meaning opening and expanding is a natural business progression – not a pipedream. Whereas a traditional dine-in restaurant can take up to a year to open, dark kitchens take just weeks. This fact alone makes scaling up your business as it grows an easy and straightforward task.
5. Cost-effective expansion into new markets and areas in your city
The location of your restaurant plays a huge factor in whether it will be successful or not. Having a dine-in restaurant way out from the city centre might offer cheaper rent, but without foot traffic you’ll struggle to get enough customers. Delivery-focussed restaurants and CloudKitchens® are very much the same – but with a different set of needs.
Most delivery customers are ordering from home in residential areas. This is where most delivery-focused restaurants try to set up shop, but there are numerous other factors that come into play when deciding the ideal location including the type of restaurant, like the demographic of the areas of interest.
At Smart City Kitchens, we’ve done the research necessary to identify key areas in Singapore which have all the ingredients for success, as well as the demographic and their tastes and preferences for different cuisines. This way, Smart City Kitchens’ dark kitchens offer a more targeted and efficient way of expanding and dipping your toes in new markets.
6. The magical combination of low risk but high reward
Working with a CloudKitchens® operator like Smart City Kitchens, you’re able to do much more with far less money. Opening a traditional restaurant requires a huge investment – there’s no way around it. After committing to a location, you won’t want to pack up and go to a new neighbourhood if you’ve spent money on renovations, new equipment, and the lot. With dark kitchens, you don’t have to commit to long-term leases, instead you get to try out new areas at a fraction of the cost before deciding to put down roots.
7. Piggy-back off the success of third-party delivery platforms
With the high penetration rate of third-party delivery platforms, F&B owners can rely on the existing network and customer base that they already have. Partnering with these thriving businesses allows you to capitalise on their success to make them your own. By cutting down on a brick-and-mortar location’s inefficiencies, dark kitchens help restaurants jump aboard the delivery economy and get their food in front of more hungry customers with less effort.
Want to get your dark kitchen started?
With the food delivery industry showing no signs of slowing down, are you up to seizing this opportunity for your F&B business? Get in touch with the team at Smart City Kitchens for a tailored consultation for how to go about adopting this business model today.
