16 February, 2021

The sophisticated supply chain that brings food to our urban tables is something that, until recent times, very few of us have probably ever given proper consideration. As blithely unaware consumers, the source and security of our food supply has been brought to our consciousness in a myriad of ways since the arrival of Covid 19.

This ranged from the unedifying scenes of panic-buying in supermarkets, to the scramble for online grocery slots. Take-away delivery scooters have become a mainstay of our suburban streets.

A single news cycle will include both an expose of inadequate free school meals, and a review of a home meal kit prepared by a Michelin starred chef.

Wherever we sit as individuals on that spectrum, industrial real estate plays a crucial role in the distribution of food in our cities. It plays out in a way that is largely hidden from the public eye.

Food suppliers who are tasked with feeding some 9.3 million metropolitan Londoners, are seeking a foothold in a highly demanded occupier space. Cheek by jowl they compete with a variety of SMEs and Last Mile operators. The marketplace is characterised by a lack of modern stock, and rising rents.

The same way we watch comfort television set in pre-Covid times, there is something reassuring about the availability of home food delivery. For all of the domestic challenges presented by lockdown life, home delivery is definitely one of the upsides.

According to the Mayor of London’s office, Park Royal alone ‘produces and processes over 30% of all the food consumed in London’. It is a synergistic location for food producers and suppliers in what is London’s premier (and highest in terms of occupancy costs) industrial area. It is known as London’s kitchen.

The last 12 months have accelerated consumer take-up and the sector has further diversified. From merely taking delivery of a pizza – to the high-end restaurant meal kit that requires you to finish and plate your own meal. Every innovation in home food delivery requires a real estate solution that needs to be found in our suburbs and industrial estates.

Consider these case studies from the meal delivery sector - from the perspective of both established operators and recent innovators:

Deliveroo

During the first lockdown, take-away food was the most popular non-essential item purchased by British consumers. Deliveroo had the advantage of an existing platform, brand identity, and restaurant partners. Their ‘dark’ kitchen format has generated a great deal of efficiencies. Customer data enables them to identify emerging trends, peak order times and customer ordering habits. They are able to recognise cuisines that are popular within specific catchments or where there is an under provision of a product.

It is a mature format which has been facilitated on the high street, on industrial estates, brownfield land and in flexible shipping container sized dark kitchen pods. Anyone who has ordered a burger only to find that it arrives lukewarm with a side of sweaty fries knows that proximity is everything. The dark kitchens can facilitate a foothold for a new vendor or the testing a new cuisine.

Businesses like Deliveroo will need physical locations to facilitate expansion in this area. But competition for sites in London is fierce. The industrial market is difficult penetrate and last mile logistics operators seek the same proximity to customers.

Take away delivery is a lifeline to people who are self-isolating or sheltering. But it is a model that is not without its detractors. There is consumer reticence about a product perceived to have been produced in undesirable working conditions, on the fringes of an industrial estate. A similar ethical unease is felt about online retail and fast fashion. Suburban Dark kitchens have also attracted criticism from local residents - a reminder of how we might enjoy the value and frictionless convenience of something, but not the reality of the journey it has taken to our homes.

Pasta Evangelists

The chilled, prepared insulated courier delivered meal box is a format exemplified by the likes of Pasta Evangelists. They are a long-term player who have perfected home style pasta which is robust enough to courier and simple to prepare at home. Orders are on a one off or subscription basis and posted to you in a letter box friendly carton, or a wool insulated box. You choose from an ever-changing menu, and a nominated delivery date. Pasta Evangelists are able to reach the whole of the UK – some 75% of their customers are outside London. They were founded six years ago, and well positioned to capture new business from locked-down consumers. While they have a retail presence, they do not have physical restaurants, and from that perspective, are not impacted by lockdown restrictions.

In early 2021, Italy’s largest pasta manufacturer, Barilla, acquired a majority stake in Pasta Evangelists for a sum reported to be in the region of £40 million. Said to give Barilla a foothold in the fresh pasta and home food delivery market, Barilla reported that Pasta Evangelists sales rose more than 300% last year.

Restaurant Delivery Kits

Restaurant Delivery Kits or ‘Make Aways’ are a recent innovation which has proven to be a lifeline to the restaurant sector. Kitchens have continued to operate, develop new products and maintain skilled staff. Customers are happy to support the sector and also try a high-end product at home. There are kits for those seeking total convenience and kits for confident cooks who are not overwhelmed by an array of small packages.

Contrary to the advantage of existing delivery operators, restaurants have had to be agile in the adaptation of their menus for transport and use of packaging and branding to accompany the experience. Entry costs are high. A number of models have evolved, with in-house production and delivery, production and delivery via dark kitchens, or the short-term occupation of vacant kitchen space.

Digital ordering platforms have emerged, hosting a stable of restaurants on the same website, such as Supper, Restokit, and Dishpatch. The number of operators alone would suggest a level of market saturation, but it is the type of product that is ideal for special occasions while the restaurants are shut. Many kit options were already sold out in the lead up to Valentine’s Day.

Are Restaurant kits now a mainstay, or simply an innovation that reflects the times that necessitate it? Some consumers have baulked at the cost of the kits, the fuss involved and the volume of packaging. In Summer 2020, tentatively returning restaurant customers found reconfigured Perspex-screened spaces and a ban on mixing households. It somewhat diminished the experience and encouraged customers to order-in, a situation that could well continue while social distancing is necessary.

In the post-pandemic world when workplaces re-open, we may not see the same daily volume of footfall returning to city centres from Monday to Friday. Restaurant operators will need to find a configuration for their space that serves returning diners, but also facilitates delivery to customers working from home.

Operators that see the delivery box as a longer-term trend have invested in sites away from their main restaurant to deal solely with preparing and distributing kits. The growth of this sector points to an increased demand for space, but most likely flexible space, while operators gauge the lay of the land and the longer-term potential for home dining.