From delivery concepts to the meteoric rise in healthy living brands, here are the food and beverage trends that will shape franchising over the next year.
2020 may be the most disruptive year for many of us, however, a crisis can rejuvenate the way we operate and help us to rethink and revolutionize our practices. This has included an accelerated focus on and adoption of new technologies, such as kitchen robotics and drones, but also cloud kitchens. However, in the current climate, the success of a franchise business also depends on future-proof franchising models. Models that are and will be adaptable enough to meet the needs and requirements of future lockdowns and restrictions.
This year, Camile launched a lower-cost franchise model targeting venues such as hotels, pubs and restaurants that were forced to close due to lockdown measures, but which have professional cooking facilities that could be converted into cloud or dark kitchens for home delivery, even while they remain closed. The new franchise program enabled hotel, restaurant and pub owners to maximize their kitchen space and bring new options to market, increasing revenue almost immediately with easy-to-prepare items designed for delivery.
Driven by the pandemic, cloud or dark kitchens have been shaking up the entire restaurant industry. This kind of approach is attractive as it lowers so many overheads and helps deliver a concept that is high profit and comparatively low risk. More and more existing restaurants and QSR chains are now venturing into cloud kitchens because of its operational efficiency and low start- up costs. So, what’s it all about? Let’s first set the scene.
The U.K’s food delivery scene
The total foodservice delivery market was worth around £8.5bn in 2019, largely thanks to the rise of online delivery concepts. Although phone orders still account for a large share, deliveries ordered online or via an app have increased dramatically. Revenue in the online food delivery segment is projected to reach £4,649m by the end of 2020. Revenue is expected to show an annual growth rate (CAGR 2020-2024) of 6.5 per cent, resulting in a projected market volume of £5,974m by 2024. The market’s largest segment is restaurant-to-consumer delivery with a projected market volume of £3,195m by year end.
“Driven by the pandemic, cloud or dark kitchens have been shaking up the entire restaurant industry”
With the rise of food-tech start-ups and such high internet penetration across the entire U.K. (by 2025, a penetration of 97.5 per cent of the total population is forecasted), the online food delivery market shows no signs of slowing down. The booming online food delivery market is yet another growth deterrent of the dark kitchen industry, which is one of the biggest reasons why big brands are going forward with the concept of a dark kitchen.
Which type of franchise?
Food franchise opportunities are widely available in the U.K. and there are a myriad of options, from fast food, to healthy options, sandwich shops, smoothie and juice bars – the list is endless.
In the U.K., the demand for healthier delivery food options however is definitely on the rise. Healthy living will be a huge megatrend in 2021. Spending so much time in lockdown with a focus on creature comforts has led to reports of rising obesity. Once restrictions are lessened with the vaccine roll-out, the need to get back in shape will drive consumers to healthier alternatives.
Dark or cloud kitchen model: is this viable for someone who wishes to venture into food franchising?
Generally speaking, the operational cost of a restaurant or pub is very high because of various factors such as start-up costs, real estate or rental fees, interior design, IT, inventory, manpower, salaries, material cost, and other miscellaneous expenses. In a dark or cloud kitchen many of these expenses get cut down. They don’t require investment in real-estate and interior costs.
Moreover, according to a recent poll, permanent closures continue to increase across all industries, with the restaurant industry now reflecting the highest total business closures. Seven out of 10 U.K. pubs and restaurants fear they will become financially unviable and forced to close next year as a result of damaging COVID-19 restrictions. The main trade bodies representing the sector – the British Beer and Pub Association, the British Institute of Innkeeping, and UK Hospitality – said the new findings revealed that 72 per cent of members expected to operate at a loss and to be unable to survive because of the collapse in trade.
“Healthy living will be a huge megatrend in 2021”
Furthermore, despite delivery costs, a dark or cloud kitchen is still a more affordable model than a brick-and-mortar restaurant where infrastructure and operational costs do not allow you to make high margins. If you have higher margins, you have the ability to offer more competitive prices in terms of food quality and service. Further, overheads are less as dark or cloud kitchens do not have to be in a prime location, as customers will never visit the venue.
Finally, another benefit of operating a dark or cloud kitchen is the opportunity for automation. These days, everything can be automated, from pre-preparation activities to packaging. Dark or cloud kitchens are also exploring more technologies to allow them to automate the entire operation. I would highly recommend anyone who considers buying a franchise to take some time to do the research and figure out what kind of franchise you would like to own. There are plenty of affordable options that you can start with, but if you need assistance, hiring a specialist might help you to whittle down your options while also directing you to options you may not have considered.
Brody Sweeney is the founder and CEO of Camile Thai Kitchen, the U.K.‘s fastest-growing Thai food chain.