The lockdown delivery bonanza has resulted in disused railway arches and industrial units becoming home to some of the UK’s fastest-growing startups as “dark” stores and kitchens spread across the country.

Now awash with venture capital but deprived of stay-at-home restrictions, the pioneers of “quick commerce” are aiming to change the way we shop and eat for good.

Dark stores and kitchens do not serve customers in person, meaning operators can make savings on staff, rent and operational costs.

“We’re essentially a team of chefs in the kitchen,” says Jonny Boud, founder of Kitchen Ventures. “We don’t have managers or front of house and bar staff.”

He says the beauty of dark kitchens is the ability to service customers who want different cuisines, “so out of one kitchen, we can cook multiple things”.

Deliveroo's dark kitchens under a railway line in Blackwall, east London, in the shadow of Canary Wharf's office towers

Credit: Martin Godwin/ Guardian/ eyevine

Boud says this makes them attractive to young entrepreneurs “looking to get into the game without having to go through the lengthy and expensive process of taking an actual bricks-and-mortar location.”

He has first-hand experience of the more traditional process through running Rum Kitchen, a Caribbean restaurant chain, and the Italian restaurant Passo, which he describes as “a lot of fun, but also time consuming and heavily capital intensive”.

Adding to the affordability of dark kitchens is the lower rent they demand, with no client face-time meaning “it doesn’t matter whether you’re on the high street or two streets down”.

Boud says this makes the concept very scalable: “You’re not always fighting for prime locations in order to expand your business”. Kitchen Ventures plans to expand to four new destinations by the end of the year, including Brighton and Birmingham.

Choosing the right spot is also vital for on-demand grocery delivery firms, whose business model depends on being able to transport goods from a dark store to customers’ homes in minutes.

Dark stores need to be tailored not just to a country or city, but to a “particular neighbourhood”, says Turancan Salur, general manager of Getir UK, “because the weather, demographics, logistics and demands of each one is quite different”.

The need to be so close to customers has brought such spaces to disused car parks, railway arches and other less desirable properties.

Salur says this is “breathing life back into buildings that were lying around unused” and in turn “creating income for landlords who weren’t able to make use of those properties beforehand.”

Paul Arenson, chief executive of property firm Stenprop, says it has had strong demand from operators for its industrial sites. “We’ve let a dark kitchen in Bristol, and three in Glasgow to a meal prep company.”

Other landlords have reported bidding wars erupting between dark store and kitchen operators for vacant sites in densely populated areas.

It is dark stores themselves that distinguish “pure play” operators such as Getir, Gorillas and Weezy from “aggregators” like Deliveroo.

“We have a fulfilment centre which is purely used to fulfil our orders,” says Alec Dent, co-founder of Weezy. “That means we organise it as a warehouse and know exactly what stock we have and exactly where each item is located. So the pick-and-pack process is much faster.”

Laws requiring people to remain at home would appear to be a godsend for such delivery firms, so would it be logical to expect the end of lockdowns to cause a slowdown in demand?

‘No’, says Boud, who noted Kitchen Ventures has recorded a slight increase in sales since all restrictions were eased.

Salur agrees: “We’ve seen no drop off – there’s just been growth on top of growth. This was something that people were going to demand and get used to anyway. It’s just that the pandemic made it more attractive for people to try these kinds of services.”

Berlin-based Gorillas also plans to expand beyond its six UK locations that include smaller centres such as Cambridge and Reading.

Berlin-founded Gorillas has achieved a $1bn “unicorn” valuation

Credit: TOBIAS SCHWARZ/AFP via Getty Images

However, while promotional offers promising to effectively give away groceries to new customers have caught the eye, they have also led to questions about the profitability of such firms.

“For me personally it’s pretty important to make a profit,” says Boud. “Otherwise it’s hard to get your head around what you’re doing. I come from a traditional bricks and mortar restaurant background where if you’re not making a profit, you’re kind of dead.”

He is quite dubious about “crazy growth without any realistic plans of profitability”.

Some apply this label to Getir. Having only launched in London in January, it plans to expand to 15 cities by the year end and already has a valuation of $7.5bn – more than both Deliveroo and Marks & Spencer.

However, Salur remains bullish about Getir’s position: “We’ve been doing this for six years and it’s in the past six months that this has become the hottest area in tech.”

Speed is everything for food delivery firms like Getir, with many aiming for delivery times of just 10 minutes

Credit: Getir

He points to Turkey, where Getir launched in 2015, as an example of where mature dark stores are profitable, and argues the UK is set to follow the same trajectory.

Simon Mayhew, head of online retail insight at market research firm IGD, says the UK market is “definitely overheated” and expects imminent consolidation as there are “way too many players”.

Yet he remains confident that dark store firms can make money by being “clever” with their product range, often “premium branded products which have a high average item price”. Once consolidation takes place, those left standing are likely to charge for delivery while spending less on marketing and discount offers.

Property agents in the sector believe companies that fail to dominate will still be highly valuable due to their strong supply chains, and could be taken over by other logistics providers.

Challenges remain. The need to deliver at speed and curate a selection of products limits the size of each individual dark store, potentially providing a way for local corner shops to compete without the luxury of millions of pounds of venture capital backing.

Mayhew says corner shops should focus on product range and customer service to ensure they don’t get swept away in the dark store revolution. He argues, however, that there will always be people who “don’t need products within an hour” and “don’t want to pay delivery charges”.

One dark store operator even goes so far as to describe the spaces as a “continuation of the corner shop style industry”, with customers knowing their regular riders by name.

Whether shops in railway arches and kitchens in industrial units come to be considered part of the local community remains to be seen, but it seems dark stores and kitchens are here to stay – regardless of lockdown.