
Dark Stores and Cloud Kitchens, Eyeing Franchising
Delivery is changing the face of entire sectors, and franchising is no exception to this change: dark stores and cloud kitchens, which I will detail in this article, are opening up new opportunities for the most attentive and curious entrepreneurs.
Dark Stores to Compete with Amazon
Delivery is changing the face of entire sectors, and franchising is no exception to this change: dark stores and cloud kitchens, which I will detail in this article, are opening up new opportunities for the most attentive and curious entrepreneurs.
Dark Stores to Compete with Amazon
The challenge that delivery has thrown to franchisors is to shorten the time from online purchase to delivery as much as possible. We have officially entered the era of “quick commerce,” which means reaching consumers as quickly as possible even an hour after online purchase.
How is this possible? A path already undertaken by several players in the delivery world (see Glovo, Delivery Hero, etc.) is to use dark stores, which are simply stores that serve as merchandise storage places, in simple terms, warehouses, scattered in different parts of the city to get as close as possible to consumers. To achieve this, the major delivery players I mentioned have entered into agreements with real estate companies. An example is Glovo’s agreement with Stoneweg, a real estate group that acquires shops, many of which unfortunately failed due to Covid-19, to convert them into dark stores. Another global player in delivery, the German company Delivery Hero, also uses dark stores. Its Dmarts, an acronym for delivery-only local warehouses, allow the brand to deliver products in some cities in just under 20 minutes.
After all, the problem of converting commercial premises on the market is one of the major concerns in real estate today: according to Istat data (as of December 2020), there are 17,000 businesses closed due to Covid that will not reopen, of which 85% are micro-enterprises (sports or entertainment activities, hotel and accommodation services, restaurants, and retail trade).
This phenomenon, which is not only Italian, as you can imagine, has also prompted some entrepreneurs to dedicate themselves to the dark store business: such as the Turkish company Getir, which exclusively provides spaces to third parties in its own shops. For franchisors, there are many opportunities: create dark store brands as Getir has done, forge partnerships with real estate companies like Glovo, or make agreements with still-operating stores, such as pharmacies or electronics stores, to store their merchandise.
For franchisors, there are many opportunities: focus on powerful digital strategies and then network warehouses as Getir has done, surpassing the logic of set up and expensive visible locations.
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Kitchen Co-Working
Another trend that franchisors and aspiring wings must pay attention to, especially those operating in the food sector, relates to cloud kitchens. What are they essentially? You have to imagine them as coworking spaces, where instead of sharing office space, kitchens are shared.
One of the pioneers of cloud kitchens is Travis Kalanick, a name you’ve probably already heard associated with Uber, his first creation. The brand he invested part of his fortune ($130 million) in is called CloudKitchens.
After all, Kalanick had the foresight to venture among the first in a market that, according to data released by Pr Newswire, is expected to reach a value of $71.4 billion by 2027, compared to $43 billion in 2019.
Even in Italy, we have examples of entrepreneurs who have been able to ride the trend, such as the Brand Kuiri. The company’s idea is to bring together gastronomic varieties, providing kitchens, technologies, and services, to be rented for medium or long periods. The advantages are evident, one of which is the ability to start a food start-up with almost nonexistent investment.
Franchise chains are also trying to replicate the cloud kitchen model internally. Leading the way is the famous Domino’s chain, which is revolutionizing its business to respond to the pandemic crisis: smaller pizzerias, with less space for eating on-site, and a choice of locations that does not fall on expensive pedestrian streets, but on the best roads to facilitate delivery.