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Dark Kitchens in UAE – The bright future of food services

Published in Nov, 2020

Executive Summary

Pre-COVID context on the dark kitchens market in UAE and the developments post COVID

The food services industry in UAE had been growing on the back of rising disposable income among the working population supplemented by a continuous increase in the region’s tourism. The estimated $35Bn food and beverages market of the country was growing roughly 6.5% year on year pre-COVID and the food services sector constituted roughly 45% of it by 2019. From the supply end, online food delivery held an 8.3% penetration with the tech-enabled dark kitchens being the fastest-growing segment, almost doubling in size for the last two years.

Post the pandemic, the overall food services sector suffered considerably and is expected to register a loss in earnings of almost 40% by year-end compared to the previous year. However, the disruption has led to a net positive impact on the online channels of food delivery. While on one end the dine-ins lost around 80% of their sales post the implementation of lockdowns, online food delivery dealt with an ever-increasing number of orders as consumers grappled with the craving for food from their favorite restaurants. Dark kitchens showed the fastest recovery with increasing attention from the restaurant owners who shifted their immediate focus towards online and were looking for order fulfillment at a lower cost, a crucial need for sustenance post the restrictions of dine-in operations.

Multiple business models currently exist in the dark kitchen space in UAE – virtual brands, virtual restaurants, satellite kitchens/kitchen-as-a-service, and integrated. Each model varies in terms of asset ownership, primary target segment (types of brands and restaurants they cater to), and the operational value chain they command.

COVID has led to a new normal creating lasting changes in the supply side partnerships as well as business operations. The changing consumer sentiments reflect a heightened need for hygiene and quality of packaging, however, sentiments like delivery speed and variety of food are expected to gain prominence in the long run. 

The landscape for dark kitchens is becoming increasingly competitive with more than 380 brands and over 70 kitchens present in the region. No one model can be viewed as a dominant model as each of them have their own sets of value propositions and challenges. Apart from the adoption by the restaurants, the sustainability of these dark kitchen models depends on the right investments and business capabilities. Going forwards the competition is expected to further intensify as the overall sector deals with the aftermath of COVID.

We have formed the report basis our existing RedSeer IP on the food-tech sector in the MEA region, consumer research conducted at key intervals to observe the changing sentiments, expert inputs and the study of leading dark kitchen players in the market including – SWHK, Kaykroo, Rebel Foods, Kitopi, Food To Go, Deliveroo Editions, Krush Brands, etc. 

This report includes the Pre-COVID context on the dark kitchens market in UAE and the developments post COVID along with segregation of business models and long term implications that establish the use case for dark kitchens. 

This report will help the reader answer the following questions:

  1. What were the market landscape for dark kitchens and food services in general before COVID and its key growth drivers?
  2. What has been the impact of COVID on the online food delivery market and the changing trends in the supply side that will form the new normal?
  3. How is the consumer sentiment changing towards consumption of food and its implications for online food delivery?
  4. How will the food services market recover post-COVID and its impact on online food delivery and dark kitchens segment in the long run?
  5. What are the opportunities and challenges for each of the dark kitchens business models – Satellite Kitchens, Kitchen-as-a-service, Virtual Brands, Virtual Restaurants, and Integrated models?
  • See: Inside the Report

    1. The Market Scenario of Food Services in UAE
    1.1. UAE’s digital economy and online food delivery userbase
    1.2. UAE Food Market Spend Funnel (Pre-COVID)
    1.3. Food Services Market Size, Penetration and Key Growth Drivers (Pre-COVID)
    1.4. Online Food Delivery Market Size, Penetration and Key Growth Drivers (Pre-COVID)
    1.5. Dark Kitchens Market Size, Penetration and Key Growth Drivers (Pre-COVID)


    2. Developments post COVID and rise of online
    2.1. Overall Food Services Consumption - 2019 vs Pre-COVID 2020E vs Post-COVID 2020F
    2.2. Strategies adopted by brick-and-mortar restaurants to overcome COVID-related challenges
    2.3. COVID impact on various internet business - UAE
    2.4. Consumer Preference for Ordering Food Online
    2.5. Food Services and Online Food Delivery Market Size, Penetration and Recovery (Post-COVID)
    2.6. Dark Kitchens Market Size, Penetration, Key Growth Drivers and Recovery (Post-COVID)
    2.7. Strategies adopted by online food delivery and dark kitchen players to overcome COVID-related challenges
    2.8. YoY forecast for dark kitchens market size and penetration in online food delivery

    3. Dark Kitchens business models operating in UAE
    3.1. Business Models operating in the Dark Kitchen space
    3.2. Dark Kitchen Business Models by online food delivery value chain
    3.3. Dark Kitchen Business Models by asset ownership, restaurant type, and brand ownership

    4. The way forward for online food delivery and dark kitchens in UAE
    4.1. Long term developments in the food services market post-COVID
    4.2. Change in parameters of restaurant selection for consumers and expected shift in the number of orders and average order value
    4.3. Takeaways for restaurants engaging in online food orders
    4.4. Benefits of Dark Kitchens – Supply Side
    4.5. Forecast till 2023 – Food services market, Online food delivery, and dark kitchens

    5. Sustainability of dark kitchen models
    5.1. Winning parameters and challenges of each of dark kitchen’s business models
    5.2. Dark kitchens model comparison basis investments, capabilities, and profitability
    5.3. Expert inputs and Takeaways for restaurants engaging in online food orders
    5.4. Ancilliary opportunities and enablers for dark kitchens

    6. Dark kitchen players in UAE
    6.1. SWHK, Kaykroo, Rebel Foods, Kitopi, Food To Go, Deliveroo Editions, and Krush Brands
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