Food delivery and the rise of ghost kitchens

Saturday July 09 2022

Claire Luvai, a chef with DeeDee’s Kitchen located in Nairobi on July 7, 2022. PHOTO | JEFF ANGOTE | NMG


Online platforms, especially online retail sector which is fueled by changing tastes and availability of a variety of products, has grown exponentially. The food delivery sector in particular has grown and expanded so fast, that it has spawned a whole new business model bringing together established restaurants and fast food outlets and delivery service providers through tech builders who provide an online platform .

And this is where Uber Eats Kenya found itself this June, as it marked four years in the country, and facing the rise and growth of ‘’ghost kitchens,’’ as the food delivery space expands, forcing it to experiment with incorporating such kitchens as partners in their business plan.

A ''ghost kitchen'' is a professional food preparation or cooking facility set up to supply delivery-only meals and they are also known as dark kitchen or a cloud or virtual kitchen.

“Virtual or dark kitchens are rising in popularity globally, and many consumers are enjoying their services because they tend to offer new and more varieties of food that established restaurants or fastfood outlets. They are basically e-restaurants or kitchens designed for the sole purpose of churning out food for delivery. They don't tend to have a shopfront or dining-in restaurant version,” said Kui Mbugua, the general manager of Uber Eats Kenya. They are just kitchens.


Caren Malesi of Uber Eats delivers food using his bicycle on July 8, 2022. PHOTO | JEFF ANGOTE | NMG

Fancy names asides, the concept of ‘’ghost’’ or ‘’dark’’ kitchens have been satiating the working class across East Africa for a long time. The menu varies from provider to provider.


In Kenya they are simply ‘’hot lunch delivery’’ people who cook at ‘’unknown’’ kitchens, pack and deliver or vend from office to office, to workers in shopping complexes, construction sites and even schools, basically through word of mouth. Today, the mobile phone has made this easier and better because clients just need to call ahead with orders.

In Uganda, the same concept exists, across the economic spectrum. In Tanzania, the ‘’mama ntilie’’ concept operates the same way, with ready made food either delivered or served in off-street corridors and pavements. There are no established dining spaces.

But the coming of online platforms and mobile phones that enable their wide use, this old food delivery concept took on a commercial trajectory with companies such as Uber Eats, Jumia Foods, Bolt Foods and other smaller firms, taking it to a new level by partnering with big brand and established restaurants and fastfood outlets to deliver their food more efficiently through online platforms. The concept is the same but technology is the king here.


Ken Leserion of Jumia Foods makes delivers in Nairobi on July 8, 2022. PHOTO | JEFF ANGOTE | NMG

But the rise of dark kitchens is eating into these heavily commercialised food delivery business. The food offered by dark kitchens bear no brands, and is delivered at a less commercial rate because the platform used is less formal and simpler.

Ghost kitchens also point to the economic situations. They provide cheaper food at a less cost by minimising on operations by not having physical dining spaces, just kitchens. Also the fact that they don’t rely on any third party providers gives them an edge on easily reaching their clientele, since the service is direct.

And as Ms Mbugua says, “They generally have very small start-up and expansion costs, and can test and experiment with their menus easily,” meaning they present good competition for established big time delivery companies like Uber Eats, Jumia Foods, and Bolt Foods that collaborate with known food merchants.


Nelson Kinyua of Bolt Food making a delivery in Nairobi on July 8, 2022. PHOTO | JEFF ANGOTE | NMG

She said because of this, Uber Eats has dabbled in the dark kitchen offerings with some of its restaurant partners.

“Existing merchants on our platform sometimes have dark kitchens as well, which they utilise to experiment with different menu items and cuisines, which are not, maybe naturally affiliated with their existing brand and then they're able to leverage on our platform to get feedback and to optimise the products market fit,” she said.

She said such experiments had helped their merchants continue as delivery-only dark kitchens or use what they have learned to set up dine-in services.

“By working with such partners, we've been able to help them identify selection gaps in the different cities we operate in and they then launch data-driven virtual kitchens which sort of help with their core business, if their core business is dine-in clientele, to help those grow. Or if they are delivery-only then they're able to be very nimble and minimal with the operational costs and see better profit margins.”

But Kenya is a vibrant market with a lot of potential, so competition posed by ghost kitchens is not a big issue. “We'll just continue to bring in our best practice, leveraging our global scale, technology and the relationships that we've built in the market, with our partners, consumers and delivery riders," she said.


Mercy Muhati operates a small food court at Bihi Towers in Nairobi on July 8, 2022. PHOTO | JEFF ANGOTE | NMG

Nevertheless, however vibrant the market, unless one’s business plan takes into consideration the local food ecosystem in its totality, the food delivery business can also be a tough one. For example, the food tech start-up KUNE that operated a cloud kitchen in Nairobi recently folded for what the company founder and CEO Robin Reecht officially said was failure to raise funds to keep up operations, while blaming the “economic downturn and investment markets tightening up.’’

KUNE wanted to be a cloud kitchen that provides quality and cheap mass food, and also establish its own online delivery platform. It didn’t deliver on any of them despite burning through $1 million seed funding.

The restaurant and general hot food sector in Kenya has always been diverse with niche sectors. Across all urban areas in Kenya there are the regular ‘’chips and chicken’’ fastfood outlets. This was dominated by the Kenchic brand for decades, but later independent operators flooded in and expanded the fastfood segment, eventually attracting international brands such as Pizza Inn, Debonairs, Burger Hut, Dominoes, KFC etc. These are some of the brands now served by tech-driven food delivery companies.

Then there are the licensed kiosk food providers, with established on site kitchens and dining areas, offering a wide but set menu. The food here tends to be home-made quality, served in generous portions (inflation permitting) and always fresh. These establishments, always off the main streets, are unpretentious in ambience but big on quality. They tend to serve a huge market across all economic classes. They hardly delivered in the beginning, but today, they serve both in-dining and call-in deliveries thanks to online platforms where they advertise themselves like any other business. These operations always seem informal but they adhere to all official health and business requirements.

The real informal food providers operating out of dark kitchens are the ones who vend food in offices and shopping centres to small business people.

So the advent of big delivery companies relying on technology did not come in to disrupt the food delivery sector per se, but serve a particular segment of clientele. The companies just enhanced what established restaurants were already doing but they now bring the same food to more people easily and faster.

And the proof lies in the realisation by companies like Uber Eats, which had to expand its business streams to include groceries, alcohol, beauty and wellness deliveries. And in 2021 it expanded even more into include deliveries for pharmacies, supermarkets, flower shops, gas shops and water delivery.

Generally, the entire delivery business is growing, “We’ve seen growth and not just of our business but of the industry as a whole,” said Ms Mbugua. “The whole delivery market is really a sunrise industry. We've barely even scratched the surface of its potential, and not just in Kenya, but across the continent.”