The expansion problem
Krispy Kreme had rapidly expanded delivery with all major delivery aggregators. First with Uber EATS, then Deliveroo and finally Just EAT. Expanding amongst your own retail stores is the first strategy for growth as you’re adding a profitable sales stream leveraging assets and costs that are already in place.
But when that growth is achieved, what next?
I spent time evaluating the commercial models of dark kitchens and their potential reach. 2 problems presented themselves for a product such as Krispy Kreme. First the reach of cloud kitchens in 2019 didn’t stretch far in any group and everything is concentrated in London. Secondly the commercial model for cloud kitchens is to provide an cheaper alternative to restaurant space and wasn’t advantageous to a boxed, made fresh daily product requiring no further preparation between it’s boxed state and delivering to the customer.
If you have a product that doesn’t need a kitchen between order and delivery then a dark store is the best commercial model available.
I’d be introduced to Parcelly a few years before and liked their model. They are a micro fulfilment business, bringing products closer to the customer and allowing couriers to complete last mile operations as well as providing a network of over 15,000 locations for click and collect services. Their model was perfect for Krispy Kreme we just needed to apply it to FSA rated stores. So between us we created the UK[‘s first and largest dark store network for food products at over 2,500 locations and growing.
So why is it so good?
A dark store has all the benefits of cloud kitchens and then some. You’re able to pin point target the post codes you want to deliver your product to, leveraging that network of over 2,500 FSA rated stores. Where ever the delivery providers are you can have a store. Also the commercial performance leverages that stores labour and lease. The model we have built is that there’s a small set up fee and then as long as your product is putting through high volume you only pay a fixed fee per transaction. You can do the maths. You have logistics cost to the site only, no labour, no lease. If you have a product that can sell well on-demand and it fits this model you seriously need to test it.
This is a real life commercial success story. I know. I built it.
Fudami are on-demand delivery experts with a long history of working in the market from the early days of Deliveroo. The launch PR event on Uber EATS broke the app and they created the dark store food network with Parcelly that grew Krispy Kreme’s channel sales by 1,000% in 2020. As with everyone on this network they are here to help you.