The dark kitchen market - France (2024)

1.2 The global market

The global market for dark kitchens is growing by leaps and bounds. Already a common practice in pioneering countries such as China, the use of dark kitchens exploded during the Covid-** crisis. According to Prnewswire, this market will reach a value of $**.* billion worldwide in ****, meaning it will have almost doubled in * years.

Global dark kitchen market size World, ****-****, billions of dollars Source: ****

The profitability of dark kitchens is one of the main factors expected to drive growth in this market. Their rate of return is estimated at between *% and **%. Real estate has always been one of the biggest expenses for traditional restaurants. Dark kitchens reduce this expense, as they can operate in less prestigious locations and save on rental costs resulting from the surface area needed to attract customers. Dark kitchens also rely heavily on standardized products, further reducing costs. But we mustn't forget platform commission, which accounts for a substantial proportion of the total, between **% and **% per order.

Production can be streamlined in dark kitchens by focusing on limited menus and products, as would be the case in industrial processes. We are also experimenting with robots and machines that can further automate operations.

1.3 The domestic market

The dark kitchens market has experienced an unexpected boom thanks to the Covid-** crisis. Indeed, the closure of restaurants due to various periods of confinement has made meal delivery one of only two ways for the French to enjoy dishes normally eaten in their favorite restaurants. As we'll see in the section on market structure, a dark kitchen is far less expensive to run than a conventional restaurant, making this model a way of eliminating fixed costs that become deadweight during periods of confinement.

To estimate the size of the dark kitchen market, we'll use the home-delivery market as a base. In ****, according to a study by panellist IRI, meal delivery generated **.* billion euros in sales and increased more than threefold compared with ****. [***]

Size of the home meal delivery market France, ****-****, € billion Source: ****

To estimate, the market size of dark kitchens in France, let's therefore try to deduce its market share within the more global meal delivery market.

According to Le Figaro, in December ****, **,*** restaurants were present on the leading Uber Eats platform, including *,*** dark kitchens. Let's assume that Uber Eats is representative of the rest of the market. We come to the conclusion that, in terms of number of ...

1.4 Interview with François Charpy, founder of Food, Strategy & Performance

Marine: Welcome to the Niche, the podcast that analyzes the niche market with the entrepreneurs who are shaking things up. I'm Marine and I work at Businesscoot, the start-up that's dusting off market research. Before you start, subscribe to our podcast on Spotify and Apple Podcast. And now for today's niche: the dark kitchen market. So, dark kitchens are restaurants with no room, no physical interaction with customers that focus on delivery via the aggregators we know and Uber Eats or Deliveroo, or else have a dedicated fleet. And to decipher this dark kitchen market, I welcome François Charpy, founder of Food, Strategy & Performance. Hello François,

François : Hello Marine.

Marine: I'm absolutely delighted to welcome you on this podcast to decipher this very atypical and very interesting dark kitchen market. To begin with, could you briefly introduce your company?

François: Oh yes, Food, Strategy & Performance is a strategy and performance improvement consultancy dedicated to food retail and the food and beverage sector, with two main activities. The first is all aspects of growth strategy, i.e. expansion, new business, new formats, new concepts, overhaul of business models or business pivots. The second is performance improvement, whether in ...

2.1 Typical profile of home delivery customers

Breakdown of home meal delivery customers by age France, ****, %, %, %, %, %, %, %, %, %, %, %, % Source: Harris Interactive The main customers for home meal delivery are **-** year olds, with **% of this age group ordering online. The **-** age group follows closely behind, with **% placing meal orders online.

Breakdown of home meal delivery customers by place of residence France, ****, % of total Source: ****

Unsurprisingly, there are more home-delivery customers in the Paris metropolitan area(***), thanks to a wider range of services than in rural areas or smaller towns.

Breakdown of home meal delivery customers by gender France, ****, % of total Source: ****

There is little difference between the number of male and female customers, although women order slightly more than men. With **% of women regular customers versus **% of French men.

Preferred delivery location of the French France, ****, % of total Source: ****

The French also seem to be keen on delivery, whether at home or at the office, with **% of respondents ordering at the office and at home.

In ****, the cities with the highest use of home meal delivery apps are Paris, Lyon and Toulouse in third place.

Furthermore, standard of living seems to have little influence on consumption levels, with **% of users belonging to modest classes and **% to affluent classes, according ...

2.2 French consumer habits regarding home delivery

Frequency of home-delivered meal purchases France, ****, %, % Source: ****

An analysis of the frequency of home-delivered meal purchases in France in **** reveals that almost half of respondents(***).

Average amounts spent on home meal delivery, by type of income France, ****, in € Source: ****

People on low incomes spend an average of €** per month on this service, while those on medium and high incomes spend €** and €*** per month respectively. This notable difference likely reflects socio-economic disparities in consumer habits, where people with higher incomes tend to have larger budgets for convenience services such as home meal delivery.

On average, the French have a budget of around ** euros to order home-delivered meals.

Average monthly amount for home meal delivery by age France, ****, € Source : Harris Interactive The **** data reveal some interesting trends in the average amount spent monthly on home meal delivery, differentiated by age group in France. Individuals under ** spend an average of €** per month on this service, while those aged ** to ** spend the most, with an average of €** per month. By contrast, those aged ** and over have a slightly lower average monthly budget, at €**.

Meal type by evening of the week France, ****, % of total Source: ****

The **** data reveal marked differences in the food preferences of the ...

2.3 Rising demand since inflation

Growth in use of home-delivered meals since inflation France, ****, %, %, %, %, %, %, %, %, %, %, %, % Source: ****

Overall, analysis of the data reveals a trend in which a higher proportion of respondents reported an increase in their use of home-delivered meal servicesthan those who reported a decrease. Indeed, the figures show that **% of respondents mentioned a moderate increase in their use of these services, and *% of respondents reported a significant decrease in their usage. This means that **% of respondents increased their use of home meal delivery services even in inflationary times. While fewer people decreased their use, with a total of **% of respondents.

2.4 How the French perceive the working conditions of home delivery drivers

Agreement with various statements about the working conditions of home delivery drivers France, ****, %, %, %, %, %, %, %, %, %, %, %, % Source: ****

A significant proportion of respondents, **% and **% respectively, totally or somewhat agree with the statement that delivery drivers are poorly paid. Similarly, a high proportion of **% and **% of respondents consider the job to be stressful and difficult. On the other hand, a smaller, albeit notable, proportion agreed that the job is dangerous, with **% and **% of respondents answering "yes, completely" or "yes, rather" respectively. These data underline the importance of meal delivery companies taking these concerns into account when managing the working conditions of their delivery drivers, to ensure a satisfactory and ethical working experience.

Willingness to pay more for home delivery for different reasons France, ****, % (***) Source : Ifop The **** data reveal positive attitudes among the French towards an increase in the cost of home delivery, under certain conditions. A significant proportion of respondents, at **% and **% respectively, say they would certainly or probably be willing to pay more if it would improve delivery personnel's working conditions or increase their pay. What's more, a majority of **% of respondents are probably willing to pay more if the delivery driver uses an environmentally-friendly mode of transport. These results underline a growing concern for ...

3.1 Dark kitchens market organization

The dark kitchens market is organized in a simple way: virtual restaurants (***) take orders via their website or mobile app.

3.2 Home delivery distribution channels

According to the Snacking barometer, **% of French people who have meals delivered do so via platforms. The rest do so either by phone or directly on restaurant websites. This proportion has risen sharply, from just **% in ****. The leaders are Uber Eats, Deliveroo and Just Eat. Uber Eats largely dominates the market, but Deliveroo has established itself as its main competitor, and together these platforms handle almost **% of orders.

Uber Eats and Deliveroo are also the delivery platforms most appreciated by the French:

French people's favorite home meal delivery companies France, March ****, in Source: ****

3.3 Lower investments and favorable cost structures

The cost structures of dark kitchens are radically different from those of a classic restaurant. With fewer staff (***), dark kitchens have much lower fixed costs. Let's take a look at Starbucks' cost breakdown for a coffee costing £*.*. We should also bear in mind that Starbucks probably spends much less on staff than conventional restaurants, since they have no cooks or waiters who come to the table.

Breakdown of costs for a coffee costing £*.* at Starbucks United Kingdom, ****, £ cents Source: ****

Premises rent and staff salaries account for £*.* of the £*.* charged to the customer, or **% of the selling price. These are the two highest cost items, and precisely the ones that are reduced in dark kitchens. The model is therefore far more profitable than that of a conventional restaurant.

Initial investments are also much lower. According to Toute la Franchise, creating a restaurant from scratch (***), founder of Taster, a company with several virtual restaurants, a dark kitchen would cost just €**,*** in initial investment.

3.4 Two different models starting to take hold in the provinces

In France today, there are two kinds of dark kitchens, operating on very different models.

The first is the more classic: the restaurant prepares its dishes in a ghost kitchen, shared or not, and uses delivery platforms to access its clientele. Companies managing virtual restaurant brands often operate under a franchise format, selling licenses to other restaurants who simply prepare the dishes offered in their kitchens. Within this model, click & collect is becoming increasingly popular.

The second is the model followed by the first players in the dark-kitchen segment: independence. The current leader is Frichti. These restaurants operate with one or more central kitchens, often on the outskirts of towns, and inland centers where delivery drivers come to stock up.

It's difficult to know the exact breakdown between franchises and independents throughout France. However, we do have figures for the *,*** dark kitchens on Uber Eats:

Distribution of dark kitchens by type France, ****, % (***) Source: ****

Relatively recent, dark kitchens are mainly present in Paris and the Île-de-France region:

Geographical distribution of dark kitchens France, ****, % of dark kitchens on Uber Eats Source: ****

N.B.: "Other major cities" include Marseille, Lille, Lyon, Bordeaux, Toulouse and Rennes

3.5 Fundamental trends that could call into question certain operating mechanisms

The delivery model based on self-employed delivery drivers, with virtually no guarantees and no safety net, is becoming increasingly problematic. According to a survey conducted by Ouest France in Nantes, here are the main problems caused by this delivery format:

Registration is time-consuming and requires investment: delivery drivers must obtain autoentrepreneur status and purchase their own equipment Delivery drivers are paid less than the minimum wage There are migrant exploitation networks, which operate on an account rental model The work is so unprofitable that many delivery drivers have switched to scooters, exacerbating traffic problems in some cities

All these problems have given rise to protests that have attracted the interest of the general public. As a result, a number of ethical platforms have sprung up, offering better working conditions and permanent contracts to delivery drivers.

Moralscore, an application that rates companies on moral and ethical criteria, has established the following ratings for the main platforms:

Source: ****

4.1 Market leaders and new entrants

Three leaders stand out in the dark kitchens market: Taster, Not so Dark and Devor. With several virtual restaurant brands to choose from, they offer other restaurants the chance to become franchisees and cook their own dishes, supplying them with everything they need. Here are the brands offered by these startups:

Taster: Stacksando: Japanese-inspired cuisine featuring "katsu" sandwiches (***) and other typically Japanese products A Burgers: gourmet vegan burgers Mission Saïgon: authentic Vietnamese cuisine Out Fry: Korean fried chicken Bian Dang: Taiwanese street food

Not so Dark : Como Kitchen: Mediterranean cuisine *am Fried Chicken: fried chicken Coquillettes Oui Maman: French recipes based on coquillettes Vegedal Gaïa

Devor : Saint burger: gourmet burgers Holy Chick: fried chicken Fat fat poutine: Quebec specialty of fries topped with meat sauce and cheese Squeeze: "smash burgers": the steak is smashed on the griddle to create a caramelized crust Mama tacos: French tacos with a twist Tealer Munchies: Devor has teamed up with Tealer, a clothing brand, to offer gourmet dishes, some of which contain CBD

There is a clear desire to differentiate themselves from the competition by positioning themselves in "gourmet" or "authentic" segments, even though most of the offerings of these brands are not ...

4.2 A dynamic sector that attracts investment

According to LSA Conso, foodtech is driving up investment in startups, accounting for a total of ***.* million euros in France in the *rd half of **** (***). The sector's high potential is attracting investors, who see a low-cost, highly profitable business model. Furthermore, in **** and ****, several market leaders have also raised substantial funds:

In February ****, Not so Dark raised ** million euros in Series A (***) to create ** new dark kitchens, ** new brands and recruit *,*** employees with the aim of tackling other European markets In April ****, Taster raised ** million euros in Series B (***)

Investments in the sector don't stop there: Kitch'n Box, a company selling management solutions for dark kitchens, successfully raised * million euros in June ****.

In September ****, Not So Dark raised ** million euros around a concept of virtual restaurant brands (***). [***]

In September ****, Frichti, in receivership, was acquired by La Belle Vie. In order to cut costs, La Belle Vie made the decision to refocus Frichti's activities on the Paris region, meaning that Frichti regulars outside Paris will now have to find other solutions. Paul Lê confirmed this strategy when he said: "We're going to concentrate on the Île-de-France region and of course, unfortunately, close the provinces", although he hinted that they might return to ...

4.3 Franchising: a turnkey model to supplement restaurant revenues

Taster, like Not so Dark, is increasingly turning to the franchise model. By selling licenses to classic restaurant players, they completely eliminate the need for real estate and reduce their fixed costs. In an interview with the Néorestauration website, Anton Soulier (***) outlines the apparent advantages of becoming a franchisee:

"The whole idea of the license is to give our partners access to a profitable model, through the reputation of our brands, access to our technologies, but also to the benefits of our expertise.the whole idea of the license is to give our partners access to a profitable model, through the reputation of our brands and access to our technologies, as well as to advantageous supply conditions for raw materials and packaging, via our central purchasing unit. For an independent restaurateur, it's very difficult to stand out from the thousands of other restaurants available on the platforms. The commissions paid to these platforms can amount to as much as **% of sales, to which must be added marketing costs and high raw material costs.added to this are marketing costs and high material costs, with packaging costs of * to *%, on top of the **% material costs, and an additional cost of ...

5.1 Current regulation of delivery platforms

Regulations on platforms

The Loi d'orientation des mobilités (***).

In particular, this law intends to impose the following changes:

"Platforms [***] shall communicate to workers, prior to each service, the distance covered by that service and the guaranteed minimum price they will benefit from, less commission fees". No more accounts suspended for inactivity: "Workers choose their working hours and periods of inactivity, and can disconnect during their working hours. Platforms cannot terminate the contract when a worker exercises this right". The possibility for platforms to propose a social charter: "The platform may establish a charter determining [***] its rights and obligations as well as those of the workers with whom it has a relationship". A plan to relax and facilitate the administrative and financial conditions for access to scooter delivery, which is currently strict and regulated.

In addition, platforms must comply with the law on meal delivery and health regulations on food transport, detailed in this press release from the French Ministry of Agriculture.

Regulations governing delivery drivers

Self-employed couriers working for the platforms are generally not allowed to work and deliver food with a motorized vehicle, hence the fact that delivery platforms have chosen to work with bike couriers, enabling them ...

5.2 Law urges meal delivery companies to reduce disposable packaging

The future anti-waste law for a circular economy contains a large number of measures aimed directly at plastics. The text begins with two objectives that directly concern plastics. Firstly, France must aim for ***% recycled plastic by ****. Secondly, the law stipulates that "France aims to end the marketing of single-use plastic packaging by ****". To this end, the government is drawing up a national strategy for the reduction, reuse and recycling of disposable plastic packaging.

This strategy should also involve extended producer responsibility (***) channels, notably through eco-modulation. Another article of the bill stipulates that, from **** onwards, the penalty applicable to non-recyclable plastic packaging will be set by decree, according to a progressive trajectory. In the same spirit, another provision stipulates that targets for reducing the amount of single-use plastic packaging placed on the market will be included in the specifications of the eco-organizations concerned.

from **** onwards, straws, disposable glass lids, plates with plastic film, cutlery, expanded polystyrene containers for on-the-spot or on-the-go consumption and expanded polystyrene bottles for beverages will all be banned. In general, all products made from oxodegradable plastic will be banned by ****. [***]

Meal delivery players, virtual restaurant platforms, start-ups specializing in reusable packaging and NGOs were received in June **** at ...

5.3 Regulations specific to dark kitchens

Compulsory hygiene training

Operators are required to enroll in mandatory hygiene training under article L. ***-* of the French Rural and Maritime Fishing Code. At least one person in the establishment must also undergo special training in food hygiene, Decree no. ****-*** of June **, ****.

Declaration to the DDPP

All operators of establishments producing, handling or storing food of animal origin intended for human consumption must declare their establishment to the DDPP (***). The establishments concerned may be subject to two distinct regimes:

Establishments selling to other professionals are subject to the approval system: they may not open until they have been approved by the DDPP, notably by presenting a PMS (***), unless they can justify an "exemption from approval", obtained under special conditions. For professionals selling to final consumers, the declaration system applies, as stipulated in article R***-* of the French Rural and Maritime Fishing Code.

Dark kitchens are subject to this prior declaration if they sell to end consumers (***).

In the case of dark kitchens selling to other professionals, the approval system should apply, unless they can justify an exemption from approval (***).

Clarification of dark-kitchen regulations

The government wants to put an end to the legal uncertainty surrounding dark kitchens. Regulations ...

6.1 Segmentation

• Uber Eats France
• Deliveroo
• Glovo
• Just Eat
• Frichti (La Belle Vie)
• Foodcheri
• Nestor
• Taster
• Dévor
• Not so Dark
• Clone - Not So Dark
• Flink