The Rise of Dark Stores and Dark Kitchens

The terms ‘dark stores’ and ‘dark kitchens’ may be new concepts to some. However, there are some rapidly expanding household names operating dark stores and dark kitchens around the UK, and it is unlikely that the concepts will have gone unnoticed by keen property investors looking for new opportunities.

What are dark stores and dark kitchens?

Dark kitchens are locations where kitchen staff can set up to provide delivery-only takeaway meals from menus of popular restaurant chains, rather than the meals coming directly from the restaurant itself. Dark kitchens rely on dark stores, which are inaccessible to the public, to source their ingredients. Dark stores provide competition to your usual supermarket delivery services in that they promise delivery within as little as ten minutes of receiving an online order for groceries. As dark stores are inaccessible to the public, it means that they can be squeezed into smaller spaces, and this is where the opportunity lies for property investors to purchase or repurpose previously unpopular space with a view to letting or selling that space to a dark store provider. However, investors will need to think carefully about a variety of factors, including:

• The covenant strength of the dark store entity given that they are still in their infancy.
• The suitability of the space the landlord is offering and whether, for example, it can cope with the level of bike/vehicle traffic necessary to re-stock and deliver goods, how the locals will react and the capability of bringing the premises up to food hygiene standards.
• Whether planning permission is required for change of use.

Opportunity for property investors?

Dark stores could be a new and interesting market for property investors to explore, and it will be interesting to see how dark stores and dark kitchens further expand over the coming years. While operators of dark kitchens do miss out on walk-in sales and the high markups of drinks purchases from dine-in customers, many predict dark kitchens will grow in popularity as consumers demand variation in their ‘new normal’. Adaptation is needed to survive and thrive in the ever-changing world of hospitality, and for some in the hospitality sector, the dark kitchen will be a feasible way of operating without any of the high overheads.

Here to help

If you have any more questions or would like more information regarding dark stores and dark kitchens, please contact our Hospitality and Leisure Team below.