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Online Takeaway from Covid-19 Pandemic

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Online food sales and retail is expected to grow by more than $2 billion over 2020, feeding Australia’s appetite for meal and grocery delivery during the Covid-19 pandemic.

As more people begin to stay or work in isolation due to lockdowns and office closures, online retail trade is set to increase over 2020.

“The pandemic was driving new consumers to the online shopping experience, which in the future could potentially add to the existing pool of online shoppers as preferences change,” JLL director of research Sass J-Baleh said.

“The share of online retail trade to total retail trade currently stands at 9.4 per cent (or A$31.2 billion).”

A large share of the market was online meal delivery which grew by 76 per cent annually in the past five years, generating a predicted $872 million this year and more than $1 billion in 2021 according to a CBRE report.

In the Australian Online Meal Delivery & Dark Kitchens report this increased demand—pushed higher by Covid-19—turned many hospitality retailers to dark kitchens.

Dark kitchens typically service 20 to 30 restaurant brands and operate out of warehouse spaces in the backstreets of high-density, inner-city areas where meal delivery was in high demand.

However, food delivery services such as Uber Eats and Deliveroo take up to a 35 per cent cut from restaurants, depending on the level set up required by the conglomerates.

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CBRE director of retail leasing Leif Olson said dark kitchens were either provided and managed by the delivery service provider or internally set up and managed by the restaurateurs themselves.

“An increasingly popular strategy for dark kitchen providers is to fit-out an array of 20 foot containers with commercial kitchen equipment,” Olson said.

These spaces also gave hospitality retails the ability to market-test locales before signing up for a bricks and mortar lease.

There were more than 250 dark kitchens globally including two sites in Melbourne and one in Sydney.

A dark kitchen was set up by Deliveroo in Windsor, Victoria in 2017 in an alleyway behind Chapel Street, the site has been used by restaurants such as Kong, Messina and 8Bit.

The site, which includes two full-scale professional kitchens and a large waiting room with phone chargers and an order display screen for delivery riders, was built and fitted out by Deliveroo, then leased free-of-charge to restaurants and other brands.

Baleh said in the short-to-medium term e-commerce would continue to play a supporting role to growth in industrial and logistics real estate.

“Domestically, Australian consumers throughout the past 30 years have been spending a greater share of their retail expenditure within the food category (from an average of 33pc to now around 41pc).

“However, more importantly, if you pull back medium-term demand drivers and look to the long term—by 2050 the world population is forecast to increase by two billion people and most of the new demand will come from the Asia Pacific region for food service,” Baleh said.

“Australia is in a unique position in the long-term to cater for the offshore middle-class population, particularly given that Australia currently exports 65 per cent of all domestically produced food products (importing only 15pc).

“This is going to propel Australia as a more dominant force in the export market, which leads to growth in food logistics.”

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Article originally posted at: https://theurbandeveloper.com/articles/dark-kitchen-takeaway-from-covid-19-pandemic