US DARK KITCHENS/GHOST KITCHENS/CLOUD KITCHENS MARKET SIZE AND SHARE ANALYSIS - GROWTH TRENDS AND FORECASTS (2023 - 2030)

The US Dark Kitchens/Ghost Kitchens/Cloud Kitchens market size was valued at US$ 3.54 billion in 2023 and is expected to reach US$ 104.3 billion by 2030, grow at a compound annual growth rate (CAGR) of 62.1% from 2023 to 2030. Dark kitchens, also known as ghost kitchens or cloud kitchens, are delivery-only kitchens with no dine-in facility that prepare food specifically for online food delivery platforms. The growth of online food delivery, rising demand for convenience, and cost savings for restaurants are key factors driving the market growth.

Analyst Viewpoint:

The US Dark Kitchens/Ghost Kitchens/Cloud Kitchens market has experienced significant growth over the past year and has potential for further expansion. Key drivers of growth include the rise of delivery and take-out only restaurants, along with the preference of many restauranteurs to focus solely on delivery. The low overhead costs associated with operating dark kitchens without a traditional dining area also supports growth. However, high buildout and equipment costs required to convert spaces into professional production sites present a near-term restraint.

Additionally, consumer awareness of dark kitchens remains relatively low compared to familiar restaurant models, which could hamper explosive growth. The market is still in its early stages, with many operators experimenting with the concept. As more successful ghost kitchen brands emerge and marketing efforts increase awareness, growth opportunities will expand.

Currently, major metro areas like New York, Los Angeles, Chicago, and Miami have the most robust dark kitchen markets due to high delivery demand in dense populations. However, smaller cities and suburban areas also show promise as delivery usage spreads nationally. Pioneering operators are establishing regions' first cloud kitchen locations in these newer markets.

US Dark Kitchens/Ghost Kitchens/Cloud Kitchens Market Drivers:

• Rising demand for food delivery services: The demand for online food delivery has been increasing rapidly in the US over the past few years. Factors such as busy work schedules, convenience, live tracking of orders, and discounts offered by food delivery platforms like UberEats, Grubhub, and Doordash have led many consumers to order food online. This presents a major growth opportunity for dark kitchens that can cater to the rising food delivery orders efficiently. Dark kitchens only focus on preparing food for delivery, optimizing operations and costs. Their delivery-only model allows them to fulfill higher volumes of online orders.
• Cost optimization and higher margins for restaurants: Operating a traditional dine-in restaurant with high real estate costs and expenses on wait staff and décor can be challenging in terms of profit margins. Dark kitchens eliminate many of these costs by eliminating dine-in facilities and tailoring operations exclusively for food delivery. Their asset-light model and focus on efficient production allows restaurants to obtain higher margins, even with lower price points. Dark kitchens also allow restaurants to optimize labor costs and expand easily to multiple locations as they don't rely much on any particular site's foot traffic or branding. These benefits are compelling more restaurant brands to adopt the dark kitchen model.
• Real estate and rent savings: Dark kitchens require significantly lower real estate space compared to traditional restaurants as they do not have seating arrangements and do not rely on street visibility or store frontage to attract customers. This allows them to operate from low-cost areas such as run-down buildings, basements or warehouses that do not have the expensive real estate costs associated with popular commercial areas. Their rentals costs are around 30-40% lower than traditional restaurant locations. The real estate flexibility and cost savings are encouraging the growth of dark kitchens.
• Strong growth of virtual restaurant brands: Dark kitchens have given rise to a new digital-first restaurant model - virtual restaurant brands that exist only on delivery apps without physical locations. Restaurateurs can develop delivery-only virtual brands customized to fill specific cuisine niches and consumer demands. These virtual brands are low risk, have greater flexibility, and benefit from the optimized production and lower overhead costs of dark kitchens. Large operators like Brinker are rapidly scaling their virtual brands. The growth potential of virtual brands tailored specifically for delivery is expected to drive dark kitchen expansion.

US Dark Kitchens/Ghost Kitchens/Cloud Kitchens Market Opportunities:

• Expansion into suburban and residential areas: While dark kitchen locations have been concentrated in urban downtowns so far, there is ample opportunity for expansion into suburban neighborhoods and residential areas. Large suburban populations that don't have easy access to wider restaurant choices can be targeted by delivery-focused dark kitchen models. This can fill the gap in cuisine options available and greatly expand the addressable market for dark kitchens beyond just downtown metro areas.
• Partnerships with restaurants for hybrid models: Traditional restaurants struggling with high real estate costs can adopt hybrid models by partnering with dark kitchens for more profitable delivery operations. Under these partnerships, the restaurant can focus on the dine-in experience at their prime location while outsourcing delivery orders to a low-cost dark kitchen operation in a secondary location. This allows them to differentiate the dine-in and delivery value propositions. Partnerships between traditional restaurants and delivery-focused dark kitchens can drive growth for both models.
• Scaling specialized cuisine through virtual restaurant brands: Dark kitchen's delivery-only model is ideal for entrepreneurial chefs to launch specialized virtual restaurant brands targeted at specific cuisine niches and demographic segments. Scaling niche cuisines like Hawaiian poke bowls or vegan comfort food via physical restaurant locations may have limited appeal - but dark kitchen's virtual restaurant model allows easy entry and rapid scaling at lower risk and cost. Unique virtual brands can stand out among the competition on delivery apps and gain loyal followings.
• Cloud kitchen franchising for proven restaurant models: The franchising potential of the cloud kitchen model is immense - allowing proven dine-in restaurant brands to provide franchising opportunities optimized for delivery sales. McDonald's, Applebee's and Arby's are some brands experimenting with delivery-focused franchises enabled by cloud kitchens and virtual brands. Franchising their operations know-how can help expand dark kitchen presence rapidly.

US Dark Kitchens/Ghost Kitchens/Cloud Kitchens Market Trends:

• Adoption of advanced technologies to optimize operations: Dark kitchens are increasingly adopting advanced technologies powered by AI and IoT to enhance productivity and gain competitive advantage. These include automated inventory management, cloud-based POS systems, predictive ordering software, intelligent menu optimization, robotic food prep, and driver tracking tools. Integrated technologies allow dark kitchens to streamline production planning based on insights derived from demand patterns and food preparation time data.
• Focus on data analytics and digital optimization: With their digital-first model, data generation and analytics are crucial for dark kitchens to interpret consumer behavior, streamline logistics, implement dynamic menu pricing and continuously optimize performance. Dark kitchen operators are utilizing data from online orders, social media trends and CRM tools to develop targeted digital marketing and cross-promotion strategies. Data-driven insights help enable customization and personalization for virtual restaurant brands.
• Introduction of new kitchen operating models: The dark kitchen marketplace is constantly evolving, with new variations of the delivery-only kitchen model emerging to meet changing needs. These include mobile kitchens popping up temporarily at events, drone delivery hub kitchens in localized neighborhoods, and modular container kitchens that offer portability. Dark kitchen operators are introducing innovation in kitchen formats and leveraging different technologies to provide greater flexibility.
• Sustainability through renewable energy and waste reduction: Sustainability is a growing priority, with dark kitchen operators implementing eco-friendly practices such as energy sourcing from solar panels, water conservation, recyclable packaging and food waste reduction. Smaller kitchen sizes allow more targeted ingredient orders and lower energy usage. Sustainable features can help enhance brand goodwill and align with consumer demand for ethical deliveries.

US Dark Kitchens/Ghost Kitchens/Cloud Kitchens Market Restraints:

• Regulations around licensing and zoning: Dark kitchens represent a new non-traditional food business model. Many cities have tighter regulations when it comes to licensing commercial kitchens in areas zoned for residential or industrial use. Getting appropriate permits and clearance for establishing delivery-only kitchens in certain locations poses challenges currently. Updated policies and zoning laws catering to dark kitchens are needed by regulators.
• Higher upfront investment requirements: While dark kitchens enjoy lower operating expenses, their setup requires significant upfront investment. The costs for kitchen equipment, technology integrations, developing virtual brands and riders are high initially. Also, many real estate landlords are still hesitant about renting properties to delivery-only kitchens. The high capex and hesitancy around new models creates adoption barriers.
• Potential for food quality and safety issues: Maintaining food quality and safety standards can be more challenging for delivery-focused kitchens handling large order volumes. Without in-house dining, there is higher reliance on robust packaging. High production throughput raises the risks of shortcuts being taken and hygiene compliance suffering. Lack of dine-in customers also reduces direct feedback on food quality. Dark kitchens need strict protocols to avoid food safety and quality issues.

Recent Developments

New product launches

• In September 30, 2020, Ghost kitchen provider Zuul launched a new service that brought orders from its restaurants to office buildings and apartment complexes in a single scheduled delivery.
• In February 15, 2023, Chipotle Mexican Grill to launch a new brand called Farmesa Fresh Eatery in a Santa Monica ghost kitchen.
• In October 06, 2023, Karma Kitchen, the Crosstree Real Estate Partners backed dark kitchen operator, has announced the launch of its latest site, a 20,000 sq ft location in Lower Sydenham, South East London.
• In January 2021, Zuul Kitchens launched a new ghost kitchen site in New York City, featuring eight virtual restaurant concepts. The opening expanded Zuul's ghost kitchen footprint in the major metro area.

Acquisition and partnerships

• In October 12, 2021, Ghost kitchen provider Kitchen United has acquired software and ghost kitchen developer Zuul. The agreement marks Kitchen United’s first acquisition and strengthens its position in the market as consumer demand for food off-premise continues to grow.
• In January 27, 2021, Ghost kitchen provider C3 announced their partnership with Graduate Hotels to launch ‘Graduate Food Hall’ – a hybrid digital kitchen concept featuring dine-in options at hotels as well as delivery and takeaway options.
• In March 2021, Uber Eats acquired Drizly for $1.1 billion to integrate alcohol delivery into its food delivery platform. The acquisition expanded Uber Eats' offerings.

Figure 1. US Dark Kitchens/Ghost Kitchens/Cloud Kitchens Market Share (%), By Order Source, 2023

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Top companies in US Dark Kitchens/Ghost Kitchens/Cloud Kitchens Market

• Kitchen United
• Zuul Kitchens
• Kitopi
• REEF Technology
• CloudKitchens
• Karma Kitchen
• Virtual Kitchen Co.
• DoorDash
• Uber Eats
• GrubHub

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Ghost Kitchen Market

Definition: Dark kitchens, also known as ghost kitchens or cloud kitchens, refer to commercial kitchens built for the purpose of food preparation and delivery only. They have no dine-in facility and are optimized for online ordering and meal delivery services. By eliminating the costs associated with restaurant seating and wait staff, dark kitchens allow food businesses to operate at higher margins.