It's kitchens only as the restaurant industry seeks to shake off property-driven expansions

Clockjack Chicken's co-founders Jerry Goldberh and Fraser Duncan
Clockjack Chicken has been among those leading the charge on delivery-only restaurants Credit: Rii Schroer

Innovative young restaurant brands are shunning the conventional and costly growth strategy of multiple bricks-and-mortar sites in favour delivery-only kitchens and pop-up stands.

The move is aimed at harnessing the rapidly growing trend of food-on-the-go and delivery meals and could signal the burgeoning of what is being dubbed the "restaurant-less restaurant".

It is also a business-savvy way of swerving some of the increasingly punitive costs associated with a large physical estates and often leads to capital expenditure being more rapidly recouped.

Clockjack Chicken was an early adopter of launching a delivery-only site. Co-founder Jerry Goldberg said he saw the food delivery market start to take off in 2013 and was one of the first restaurants to sign up to Deliveroo, dealing with orders from its Soho restaurant.

But Mr Goldberg and his team soon realised the pressure the Soho restaurant’s kitchen staff were under dealing with in-house and takeaway orders as well as the negative effect on ambience a flurry of delivery drivers trapsing through the restaurant was having on diners.

“When we started investigating this and found out more we decided it was attractive,” he said. “The property costs for a kitchen are significantly lower than a restaurant as you don’t have to have a prime location for a delivery site.”

Mr Goldberg said the rent on the basement kitchen the business has had near London’s Monument since June 2016 is a quarter of that of his Soho restaurant in spite of it being the same size.

“The revenue potential was higher than Soho too because the restaurant is limited to 50 covers but the kitchen-only site could do twice or three times the revenue if the demand was there,” he added.

Mr Goldberg said it would be difficult to open even one small restaurant for less than £500,000 whereas a delivery kitchen could be leased and fitted for around £100,000.

Farmstand is another brand at the vanguard of this business model with only one of its 12 stands being a regular restaurant.

The company signed a lease last year for a 2,000 square foot kitchen in Deptford which acts as the cooking hub from which all of its food is made and then sent to its desired locations.

Farmstand's food is prepared at its kitchen-only site in Deptford and then sent to its stands

Founder Steven Novick said much of his company’s growth had come from having stands located within third-party premises. This includes a stand once a week at JP Morgan’s Canary Wharf offices and by the end of the month a mini-stand in each of upmarket organic food store Planet Organic’s seven locations in London.

The Deptford kitchen also deals with any orders the company receives through online delivery company Deliveroo and Seamless, which deals with corporate food orders.

“I hope we see more of this,” Mr Novick said. “It is a capital-light and efficient model. I would like to see more brands doing it - being copied is the highest form of flattery.

“With business rates going up it can be expensive for businesses to operate and you can get a lot of independents going out of business.”

Mr Novick has also struck an agreement with PerformancePro gym in London’s Soho and expects to have a pop-up stand in JP Morgan’s Victoria Embankment office soon.

Meatliquor has taken up a delivery-only site owned by Deliveroo

He said such stands moved into profit - on an operating profit level - within 45 days and even the Covent Garden restaurant was earnings positive in its first three months, partly because the Deptford kitchen meant a smaller space was needed and so rent costs are less than they might have been with an on-site kitchen.

The popularity of delivered food to homes and offices has caught many people’s attention but Clockjack’s Mr Goldberg said the vast majority of restaurants were still working out how to capitalise from it.

“The supply side, that being restaurants, has not caught up with what delivery customers want,” he said.

Clockjack Chicken adapted its menu to make it more delivery friendly, meaning it is not as simple as just deciding to deliver you dishes if you’re a restaurateur.

Delivery-only restaurants have not been lost on one of food delivery’s giants, either. Deliveroo recently launched Roobox, a kitchen-only concept which allows restaurants it works with to take up a site to help them better deal with takeaway orders or test a concept in a less capital-intensive way.

One chain to sign up to this recently was burger and chicken eatery Meatliquor, taking advantage of Deliveroo’s Roobox in Blackwall to help it better serve Canary Wharf’s thousands of office workers keen for hot food delivered to their desks and meetings.

Peter Martin, vice-president of CGA Peach, a specialist data and insight business covering the eating and drinking market, said growth via pop-up stands and serving the delivery market were front of mind among the 250 food industry senior executives recently polled at an event his company hosted.

“The industry as a whole sees it as a big opportunity,” he said. “It fits in with people’s changing lifestyle and so I think there’s more to come here.”

Mr Martin cited the rise of pop-up restaurant locations, including Dinerama in London’s Shoreditch, which hosts nine young food and drink brands at any one time, as an example of the importance of flexible, temporary sites for young brands.

Dinerama in London's Shoreditch is a home for pop-up stands

“You could argue Dinerama is the biggest pub in London and it is being used by people to build a business,”  he said.

He added even Transport for London saw the attraction of offering pop-up spaces to young restaurant brands having recently leased out its retail space in Old Street station to such businesses.

While the delivery market is an attractive one, Bob Silk, part of the hospitality and leisure team at Barclays, said established brands with bricks-and-mortar sites needed to be wary about how they deal serving the take-away market.

“For some it will work but for others there is a concern it could cannibalise sales because while delivery orders rise, on-site dining declines, and the former does not make quite as high a contribution towards a company’s fixed costs,” he said. The reason for this is, usually, the commission taken by delivery companies such as Deliveroo and Just Eat on takeaway orders made through their sites.

“But there will be new entrants to the delivery market and as it becomes more competitive for the likes of Deliveroo, it will be better for the average restaurant operator,” Mr Silk said.

On delivery-only sites, Mr Silk acknowledged a scheme such as Roobox could be useful for a brand looking to expand to new towns and cities as it enables a company to test its concept in a capital light way.

He added pop-ups were a proven route so establishing a presence and could be a springboard to having a prominent takeaway business or a retail presence. He cited the likes of Vietnamese chain Pho and Pizza Pilgrims, which started out in a van and now boasts six London sites.

Clockjack’s Mr Goldberg said he intended to have more delivery-only sites to keep up with demand.

“The rules have not been written - they are being written as we speak but customers are saying they want delivered restaurant food,” he said.

“People are working out how to satisfy that demand and we have taken the bull by the horns. We are trying to be at the front of this as it is not a fad, it’s a long-term trend.”