Launching a dark kitchen, also known as a ghost kitchen, is an innovative way to enter the food industry without the overhead of a traditional restaurant.
For chefs and entrepreneurs who are adept at culinary arts and want to capitalize on the burgeoning delivery market, a dark kitchen offers a unique opportunity to focus solely on food production.
In this blog post, we'll navigate you through the crucial stages of starting a dark kitchen, from the seed of an idea to the first order out the door.
How you should prepare to launch a dark kitchen
Market Research and Concept
Choose a concept
Choosing a concept is one of the first steps in opening a dark kitchen because it will determine the type of cuisine you'll offer, the operational model you'll adopt, and the target customer base you'll serve.
This decision will influence your menu design, ingredient sourcing, packaging, delivery logistics, and marketing approach. A well-defined concept can help your dark kitchen stand out in a crowded delivery market and attract a loyal customer following.
Think of your concept as the theme of your culinary story, setting the stage for the dishes you create and the experience you deliver to your customers, even if they never step foot in your kitchen.
To assist you in making an informed choice, we have compiled a summary of the most popular concepts for dark kitchens in the table below.
| Concept | Description | Audience |
|---|---|---|
| Health-Focused Cuisine | Offers nutritious and balanced meals, often with options for specific diets like keto, paleo, or vegan. | Health-conscious individuals, fitness enthusiasts. |
| Comfort Food | Provides hearty and familiar dishes that evoke a sense of home and satisfaction. | Those seeking nostalgic, indulgent meals. |
| Street Food Fusion | Combines elements from various street food traditions to create innovative and accessible dishes. | Adventurous eaters, millennials seeking new experiences. |
| Gourmet Burgers | Focuses on premium, artisanal burgers with unique toppings and high-quality ingredients. | Burger aficionados, diners looking for an upscale twist on a classic. |
| Plant-Based Cuisine | Specializes in vegetarian and vegan dishes that are both delicious and sustainable. | Vegans, vegetarians, and flexitarians. |
| Global Flavors | Offers a menu inspired by international cuisines, providing a culinary tour around the world. | Cultural enthusiasts, expatriates, foodies seeking diversity. |
| Meal Prep and Kits | Provides pre-portioned meals or meal kits designed for quick assembly and cooking at home. | Busy professionals, health-conscious meal planners. |
| Family-Style Meals | Offers larger portions designed to be shared, perfect for family dinners or group gatherings. | Families, groups looking for convenient sharing options. |
| Dessert and Sweets | Specializes in a variety of desserts, from baked goods to ice cream and confectionery. | Dessert lovers, those with a sweet tooth. |
| Specialty Cuisine | Focuses on a specific type of cuisine, such as sushi, barbecue, or Mediterranean dishes. | Enthusiasts of particular culinary traditions, diners seeking authentic experiences. |
Pick an audience
When launching a dark kitchen, understanding your target audience is crucial for determining your culinary concept and menu offerings.
For instance, if you aim to cater to busy professionals, your dark kitchen might focus on healthy, high-quality meals that can be quickly delivered to their workplace or home. You would likely prioritize a location with access to business districts and residential areas with a high concentration of working professionals.
Conversely, if your target audience is college students, you might offer more affordable, comfort food options that are perfect for late-night study sessions or group orders. In this case, being close to university campuses and student housing would be beneficial.
Choosing your audience first is essential because it shapes every aspect of your dark kitchen - from the food you serve to your packaging and delivery methods. It's similar to selecting a present; you consider the recipient's preferences before deciding on the gift to ensure they'll appreciate it.
Additionally, knowing your audience enables you to communicate with them more effectively. If you're aware of who you're trying to reach, you can tailor your marketing strategies to connect with them where they're most likely to engage, such as social media platforms popular among your target demographic.
In our business plan for a dark kitchen, we've identified various customer segments that could be pertinent to your venture.
To help you envision potential audiences for your dark kitchen, we've compiled a few typical examples in the table below.
| Customer Segment | Description | Preferences / Needs |
|---|---|---|
| Busy Professionals | Individuals with limited time for meal prep. | Healthy, gourmet meals that are convenient and quick to deliver. Packaging suitable for transport. |
| College Students | Young adults with budget constraints and irregular schedules. | Affordable, hearty meals, bulk order discounts, and late-night delivery options. |
| Health-Conscious Consumers | People who prioritize nutrition and wellness. | Organic, low-calorie, and dietary-specific meals such as vegan, keto, or gluten-free options. |
| Family Households | Parents and children needing convenient family-sized meals. | Family meal deals, kid-friendly options, and easy online ordering systems. |
| Foodies | Individuals seeking new and diverse culinary experiences. | Unique, chef-driven menus, seasonal ingredients, and limited-time offers to create buzz. |
| Corporate Clients | Businesses looking for catering options for events or meetings. | Customizable catering packages, reliable delivery service, and options to accommodate large groups. |
Get familiar with the industry trends
When launching a dark kitchen, it's crucial to stay abreast of the latest consumer trends to ensure your delivery-only restaurant concept resonates with your target audience.
Consumer preferences are constantly evolving, and by aligning your dark kitchen with these trends, you can attract a diverse clientele looking for the newest dining experiences. Additionally, by offering trending dishes or services, your dark kitchen can differentiate itself from competitors who may be slower to adapt to market changes.
Actually, we update our business plan for a dark kitchen biannually to include the latest emerging trends. We believe this will assist you in creating a more prosperous dark kitchen enterprise.
For instance, there's a surge in demand for plant-based and ethically sourced meals as consumers become more environmentally conscious and interested in animal welfare. Dark kitchens that provide such options can appeal to this growing market segment.
Moreover, we've observed that customers are increasingly seeking personalized meal options, from customizable bowls to build-your-own pizzas, allowing them to tailor their orders to their specific tastes and dietary restrictions.
As sustainability becomes a more pressing concern, practices such as using eco-friendly packaging and reducing food waste are becoming critical to consumers. Dark kitchens that prioritize these practices can enhance their brand image and customer loyalty.
In the digital age, having a strong online presence with high-quality food photography and engaging content can significantly increase your dark kitchen's visibility and appeal to the tech-savvy generation.
We have compiled a list of more trends in the table below.
| Trend | Description |
|---|---|
| Plant-Based Menus | Expanding menu options to include plant-based and vegan dishes to cater to the growing demand for meat alternatives. |
| Customizable Meals | Offering customizable meal options that allow customers to create their own dishes based on their dietary preferences and restrictions. |
| Eco-Friendly Practices | Implementing sustainable practices, such as using biodegradable packaging and reducing food waste, to appeal to environmentally conscious consumers. |
| Online Branding | Developing a strong online presence with engaging content and high-quality food photography to attract customers through digital channels. |
| Global Cuisine | Introducing a variety of international dishes to the menu to satisfy customers' desire for diverse and authentic flavors. |
| Health-Focused Offerings | Creating menus with health-conscious options, including low-calorie, low-carb, and nutrient-dense meals. |
| Meal Kits and DIY Options | Providing meal kits or DIY meal options for customers who enjoy cooking at home but appreciate the convenience of pre-measured ingredients. |
| Technology Integration | Utilizing technology for streamlined ordering, payment, and delivery processes to enhance customer convenience and satisfaction. |
| Local and Seasonal Ingredients | Featuring dishes made with locally sourced and seasonal ingredients to support local producers and offer fresh, high-quality meals. |
| Ghost Brand Diversification | Operating multiple virtual brands from a single dark kitchen to target different market segments and maximize kitchen efficiency. |
However, there are also some declining trends.
As consumers become more health and environmentally conscious, there's a decline in the popularity of meals that are high in processed ingredients and artificial additives.
Additionally, with the rise of food delivery apps, traditional dine-in experiences are becoming less common, impacting the demand for conventional restaurant settings.
Finally, with increasing awareness of sustainability, the use of non-biodegradable packaging and single-use plastics in food delivery is becoming less acceptable to consumers.
Choosing the ideal location
Choosing the optimal location for your dark kitchen is a strategic decision that can significantly impact its operational efficiency and profitability. Here's how to approach this critical task.
Firstly, analyze the local demographics and delivery radius. A dark kitchen thrives on delivery orders, so it's essential to be situated within a densely populated area or near neighborhoods with a high demand for food delivery services. Consider the age, lifestyle, and spending habits of the local population to ensure your menu aligns with their preferences.
Accessibility for delivery drivers is key. Your dark kitchen should be easily reachable by various modes of transportation to ensure quick and efficient food delivery. Proximity to major roads and highways can reduce delivery times and costs.
While competition is less of a concern for dark kitchens compared to traditional restaurants, understanding the local market is still important. Identify gaps in the food delivery market that your kitchen can fill. Offering unique or underserved cuisines can set you apart from the competition.
Rent costs are a significant factor for dark kitchens. Since you don't need a prime retail location with high foot traffic, you can opt for more affordable areas that still meet your delivery logistics needs. Ensure the rent aligns with your projected earnings and delivery volume.
Negotiating lease terms that favor your business model is crucial. This might include flexible lease durations, options for expansion, or favorable rent conditions that account for the initial growth phase of your dark kitchen.
Consider the growth potential of the area. Is the neighborhood experiencing an influx of residents or businesses that could increase demand for food delivery services? Being in a growing area can provide a steady increase in potential customers.
While parking and public transportation are less critical for customer access, they are important for delivery drivers. A location with ample parking and easy access to public transit can help attract and retain delivery personnel.
Utilize market research tools to identify the best areas for your dark kitchen. These tools can help pinpoint neighborhoods with high delivery service usage and the right demographic for your menu offerings.
The choice between an industrial area and a more central urban location depends on your delivery radius and the concentration of potential customers. Industrial areas might offer lower rents and larger spaces, while urban locations can provide quicker access to a larger customer base.
Being situated near business districts or residential complexes can ensure a consistent demand, especially if your dark kitchen offers a variety of cuisines that cater to the tastes of a diverse clientele.
It's essential to understand local zoning laws and health regulations to ensure your dark kitchen complies with all legal requirements. This will help avoid costly delays or modifications to your operations.
Finally, evaluate the long-term viability of the location. Consider upcoming developments that could impact your business, such as new residential projects that could increase demand or infrastructure changes that might affect delivery times.
Startup budget and expenses
Calculate how much you need to start
On average, the initial capital needed to open a dark kitchen can vary significantly, ranging from $20,000 to $80,000 for a basic setup to $100,000 to $300,000 for a more sophisticated operation with advanced technology and multiple cooking stations.
If you want to know the exact budget you will need for your own dark kitchen and also get a full detailed list of expenses, you can use the financial plan we have made, tailored to dark kitchens. This excel file is designed to be very user-friendly and will provide you with an instant and comprehensive analysis of your future project.
The budget can vary the most due to the location of the dark kitchen. While you don't need a prime retail location, the proximity to delivery service areas and the cost of delivery logistics can impact startup expenses.
The size of the dark kitchen also impacts the initial investment. A larger kitchen allows for more orders to be processed simultaneously but also increases rent and requires more equipment and staff, leading to higher operational costs.
The quality of kitchen equipment is another significant factor. Investing in high-quality, commercial-grade equipment can be costly but may improve efficiency and food quality. On the other hand, starting with used or lower-quality equipment can lower initial costs but might result in more frequent repairs or replacements.
If the available capital is limited, it's still possible to open a dark kitchen, but careful planning and smart budgeting are essential. The very minimum budget could be around $20,000 to $40,000 if you opt for a modest space, purchase second-hand equipment, and handle much of the work yourself. This approach requires a focused menu and efficient operations to keep costs down.
To maximize a limited budget, consider the following tips.
| Aspect | Tips |
|---|---|
| Location | Choose a location that balances lower rent with accessibility to high-demand delivery areas. Consider sharing kitchen space with other businesses to reduce costs. |
| Equipment | Buy used or refurbished kitchen equipment from trusted suppliers to save on initial expenses. Prioritize multi-purpose equipment that can handle various tasks. |
| Menu | Develop a concise menu that maximizes the use of common ingredients and simplifies preparation to minimize costs and streamline operations. |
| Staffing and multitasking | Start with a lean team and be prepared to take on multiple roles, from cooking to order management, to save on labor costs. Train staff to be versatile. |
| Marketing | Leverage online marketing, partnerships with delivery apps, and social media to reach your target audience without the need for a large marketing budget. |
Identify all your expenses
The most significant expenses you will encounter when opening a dark kitchen are related to your kitchen setup and operational costs.
Key equipment for a dark kitchen includes commercial ranges, grills, deep fryers, refrigeration units, and cooking utensils. The cost for these can range from $15,000 to $150,000, depending on whether you opt for new or second-hand equipment. High-quality or new equipment will be at the higher end of this spectrum, but you can cut costs by purchasing gently used items. The cooking range and refrigeration are particularly crucial as they are central to food preparation and storage.
Licenses and permits are essential for operating legally. The costs can vary widely by location but generally fall between several hundred to a few thousand dollars. This includes health department permits, food handler's licenses, and potentially more specialized permits depending on your location and the type of food you serve.
Insurance is indispensable to safeguard your business against various risks, including liability, property damage, and employee-related risks. Necessary policies include general liability, property insurance, and workers' compensation if you have staff. Annual premiums can range from $3,000 to $10,000 or more, based on the level of coverage and the scale of your operations.
Marketing and advertising are crucial, even for a dark kitchen that may not rely on walk-in traffic. Budgeting $2,000 to $10,000 for initial marketing efforts is sensible. This could cover digital marketing, partnerships with food delivery platforms, and branding. The amount can vary depending on your market and how aggressively you want to attract customers.
Investing in technology for order management, inventory tracking, and accounting is also important. Costs can range from $1,500 to $15,000, with more sophisticated systems at the higher end. Many software solutions offer subscription-based models with ongoing monthly fees.
Training costs for your kitchen staff are essential to ensure food quality and safety. Allocating $1,000 to $5,000 for initial training and ongoing professional development can help maintain high standards. This also includes any costs for certifications that may be required for your staff.
Supply chain management for ingredients and kitchen essentials is a continuous expense. Initial inventory may cost between $3,000 to $15,000. Establishing good relationships with suppliers and considering bulk purchases can help in cost management.
Lastly, it's wise to have a financial cushion for unexpected expenses. A reserve of at least three to six months' worth of operating expenses is recommended to cover unforeseen issues like equipment breakdowns or fluctuations in cash flow.
Below is a summary table for a quick overview. For a detailed breakdown of expenses, please refer to our financial plan for dark kitchens.
| Expense Category | Importance | Cost Range (USD) | Notes |
|---|---|---|---|
| Equipment | High | $15,000 - $150,000 | Includes ranges, grills, fryers, refrigeration, utensils. Crucial for food prep. |
| Licenses and Permits | High | Hundreds to thousands | Varies by location. Required for legal operation. |
| Insurance | High | $3,000 - $10,000/year | General liability, property, workers' comp. Essential for risk management. |
| Marketing and Advertising | Moderate to High | $2,000 - $10,000 | Crucial for customer acquisition. Includes digital and platform-based marketing. |
| Technology and Software | Moderate | $1,500 - $15,000 | For order management, inventory, accounting. Key for operational efficiency. |
| Staff Training | Moderate | $1,000 - $5,000 | Ensures food quality and safety. May include certification costs. |
| Supply Chain and Inventory | Ongoing Expense | $3,000 - $15,000 | For ingredients and kitchen essentials. Initial setup cost, subject to market prices. |
Business plan and financing
Make a solid business plan
Embarking on the journey of opening a dark kitchen, also known as a ghost kitchen, comes with its own set of unique challenges and opportunities. A business plan is just as essential in this venture as it is in any other.
Why is a business plan so important for a dark kitchen? It acts as a strategic guide for your business, detailing your vision, objectives, and the methods you'll employ to achieve success. It's also a critical tool for securing funding, as it shows potential investors or lenders that you have a well-thought-out approach to making your dark kitchen profitable.
A comprehensive dark kitchen business plan should include several key components: an industry analysis, financial projections, and an operational strategy. The industry analysis will help you understand the food delivery market, identify your target customer base, and analyze competitors. This research should delve into the growing trends in food delivery services, the types of cuisine that are in demand, and the logistics of operating a delivery-only kitchen.
Financial planning is crucial. This section should detail your expected revenue streams, which might include partnerships with delivery apps, direct online orders, and catering services. It should also cover the cost of kitchen equipment, ingredients, packaging, labor, and any other operational expenses. Financial projections, such as profit and loss statements, cash flow analysis, and break-even points, will provide a clear picture of your dark kitchen's financial trajectory. You can find a detailed example in our financial plan for a dark kitchen.
While there are similarities between a dark kitchen and other food service businesses, certain elements will be more pronounced. For instance, a dark kitchen will focus heavily on efficient kitchen design to maximize productivity, food delivery logistics, and digital marketing strategies. Since there's no dine-in option, the location is less about foot traffic and more about accessibility for delivery services and proximity to your target market.
To create a successful dark kitchen business plan, thorough research and realistic financial estimates are vital. Engage with potential customers to gauge their interest in your menu offerings and delivery services. Also, consider how you can scale your operations and adapt your menu to meet changing consumer demands.
For a dark kitchen, building a strong online presence and brand identity is crucial, as your interactions with customers will primarily be virtual. Your marketing strategy should leverage social media, search engine optimization, and partnerships with food delivery platforms to increase visibility and drive sales.
Success in a dark kitchen business doesn't just come from great food; it's also about meticulous planning, understanding your market, managing finances effectively, and executing a seamless operational strategy.
Remember, a business plan is a dynamic document that should evolve with your dark kitchen. Regularly revisiting and updating your plan will help you stay on track and adapt to the ever-changing food delivery landscape.
Get financed
Concerned about the financial hurdles of starting your own dark kitchen? There's no need to fret—there are numerous financing options available to help you get your venture off the ground.
Financing for a dark kitchen can come from a variety of sources, including equity investment from business partners or angel investors, loans from banks or alternative lenders, and even government grants designed to support the food industry or small businesses.
Each financing method comes with its own set of benefits and considerations.
Equity investment means bringing on investors who will provide capital in exchange for a share of ownership in your dark kitchen. This can be a great way to secure a large amount of money without the immediate pressure of repayments. However, it also means you'll be sharing your profits and decision-making power with others.
For a dark kitchen, which often requires less capital for physical space compared to traditional restaurants, equity investment might be used to fund state-of-the-art kitchen equipment, technology for order management, or initial marketing campaigns. Convincing investors to come on board will require a compelling business plan that showcases the scalability and potential profitability of the dark kitchen model.
Debt financing through business loans is another option. This route allows you to maintain full control over your business but requires regular repayments with interest. Loans can be used for a variety of purposes, such as leasing commercial kitchen space, purchasing cooking appliances, or covering initial ingredient costs.
Lenders will typically look for a down payment or collateral, which might range from 15% to 25% of the loan amount. It's crucial to ensure that the loan terms are manageable and that your dark kitchen's projected income can handle the repayments while still allowing for operational costs and growth.
Grants and subsidies, though not as readily available, can provide financial support without the need for repayment. These funds are often earmarked for businesses that meet certain criteria, such as promoting sustainability or economic development in a particular area.
While a dark kitchen might not rely on grants as a primary funding source, they can be a valuable supplement for specific initiatives, like adopting eco-friendly packaging or creating jobs in a local community.
To attract financing, whether from lenders or investors, it's essential to present a detailed business plan that includes thorough market research, a clear concept, financial projections, and a marketing strategy. Your plan should highlight the unique advantages of a dark kitchen, such as lower overhead costs, flexibility, and the ability to quickly adapt to changing food trends.
Investors and lenders will evaluate your dark kitchen based on criteria like your creditworthiness, industry experience, collateral, and the robustness of your business plan. They'll be particularly interested in your financial projections, assessing whether your business can generate sufficient revenue to cover expenses, repay debts, and turn a profit.
Here's a summary table of the various financing options mentioned for opening a dark kitchen, along with their advantages, considerations, and potential uses:
| Financing Option | Advantages | Considerations | Potential Uses |
|---|---|---|---|
| Equity Investment |
|
|
|
| Business Loans |
|
|
|
| Grants/Subsidies |
|
|
|
Legal and administrative setup
Permits and Licenses
Launching a dark kitchen, also known as a ghost kitchen or virtual kitchen, involves a unique set of regulations and requirements tailored to its business model, which focuses on food delivery and takeout rather than dine-in service. Understanding and complying with these regulations is crucial for the smooth operation of your dark kitchen.
The specific permits, licenses, health department regulations, inspection schedules, consequences of non-compliance, and insurance policies you'll need can differ based on your location, but there are common standards that are widely applicable.
Firstly, you must secure the necessary business permits and licenses.
This generally includes a business license from your local municipality, and a sales tax permit if your state imposes sales tax. Since dark kitchens do not have dine-in services, you may not need a traditional food establishment permit, but you will still require a permit that acknowledges your operation as a food preparation and delivery entity.
It's imperative to consult with your local government to determine the exact requirements for your area.
When it comes to health department regulations, dark kitchens must adhere to food safety and sanitation protocols to prevent foodborne illnesses.
This encompasses proper food handling, storage, and preparation methods, maintaining a clean facility, and ongoing employee training in food safety. Health department inspections are carried out to ensure these standards are met. The frequency of inspections can vary, but they are often conducted at least biannually, or more frequently if there have been complaints or past issues. A pre-operational inspection might also be mandated before the dark kitchen begins operations.
Failing to comply with health department regulations can lead to penalties such as fines, or in extreme cases, a temporary or permanent shutdown of the business. Legal action is also a possibility. Therefore, it is vital to take these regulations seriously and ensure your dark kitchen meets all health and safety requirements.
Insurance is another essential component in safeguarding your dark kitchen business. At the very least, you'll need general liability insurance to cover any accidents or injuries that might occur as part of your operations.
Since a dark kitchen relies heavily on delivery, obtaining commercial auto insurance for your delivery vehicles or ensuring that your delivery personnel have appropriate insurance is crucial. Property insurance is important to protect your kitchen equipment and premises from damage or theft. If you employ staff, workers' compensation insurance is typically mandatory by law to cover any work-related injuries or illnesses.
Furthermore, product liability insurance is advisable, as it can protect your business in the event that your food products cause harm to customers.
By carefully navigating these regulations and securing the right insurance, you can establish a compliant and protected dark kitchen business ready to serve the growing market of food delivery and takeout customers.
Business Structure
The three common structures for opening a dark kitchen are LLC (Limited Liability Company), partnership, and sole proprietorship. Each has their unique features and implications for your business.
Please note that we are not legal experts (we specialize in business and financial planning) and that your choice should be based on how much risk you're willing to accept, how you prefer to handle taxes, and your plans for growing and possibly selling your dark kitchen.
In simple terms, a sole proprietorship is simple and straightforward but carries personal liability. A partnership allows for shared responsibility but requires clear agreements to manage risks. An LLC offers a balance of protection and flexibility, making it a strong option for many businesses looking to scale.
Consider your long-term goals, and consult with a financial advisor or attorney to make the best choice for your dark kitchen.
We’ll make it easier for you, here is a summary table.
| Feature | Sole Proprietorship | Partnership | LLC |
|---|---|---|---|
| Formation | Easiest to establish | Simple, requires a partnership agreement | More complex, requires filing Articles of Organization |
| Liability | Unlimited personal liability | Generally personal liability, but varies by partnership type | Limited personal liability |
| Taxes | Pass-through to personal taxes | Pass-through to partners' personal taxes | Flexible; can choose pass-through or corporate taxation |
| Ownership and Control | Single owner, full control | Shared among partners, division based on agreement | Members have control; can be member-managed or manager-managed |
| Raising Capital | Limited to personal funds and loans | Can pool resources from all partners | More options to attract investors; can issue membership interests |
| Expansion and Sale | Directly tied to the owner, more challenging to sell | Dependent on partnership agreement, can be complicated | Ownership is more easily transferable, more appealing to potential buyers |
| Regulatory Requirements | Minimal | Moderate, varies with partnership structure | Higher, includes ongoing compliance and state-specific regulations |
Getting started to launch a dark kitchen
Offer development
Design and lay out
Designing and laying out your dark kitchen for operational efficiency and an optimal delivery experience requires meticulous planning and strategic execution.
Let's explore how you can accomplish this, focusing on workflow optimization, balancing equipment needs with budget, and ensuring health and safety.
Firstly, optimizing workflow is crucial.
Your dark kitchen's design should facilitate a seamless flow from the receiving area for ingredients to the storage, preparation, cooking stations, and finally to the packaging and dispatch area. This flow should be logical, minimizing cross-traffic and ensuring a smooth transition from one task to the next. Position your most frequently used equipment in a central location to reduce movement and increase efficiency for your staff.
This setup not only maximizes productivity but also helps to minimize the time it takes to prepare and dispatch orders, which is critical in a delivery-focused business.
Regarding the design to facilitate this workflow, consider the compactness and ergonomics of the space.
Efficient use of vertical space, clear signage, and a strategic arrangement of the kitchen will promote easy movement and reduce fatigue. The preparation area should be clearly delineated from the cooking and packaging zones to prevent bottlenecks and enhance safety. If your dark kitchen caters to multiple cuisines or brands, consider segmenting the kitchen into different sections to streamline operations.
Balancing the need for high-quality equipment with budget constraints is a challenge many face.
Start by prioritizing essential equipment that directly impacts the efficiency of your food production, such as commercial ranges, grills, and high-speed ovens. These are worth investing in because they are the heart of your dark kitchen's operations. For other items, consider leasing equipment or buying gently used or refurbished items from reputable suppliers to save money without significantly compromising on performance.
Additionally, plan for equipment that offers versatility and efficiency, like multi-purpose cookers or advanced food processors, to get the most value for your investment.
Health and safety in the dark kitchen layout are non-negotiable. Your design must include zones designated for different tasks to prevent cross-contamination. For example, separate areas for raw material handling, food preparation, cooking, and packaging ensure that each step of the process is contained and controlled. Install handwashing stations at key points, especially near the food preparation and dispatch areas, to promote regular hand hygiene among staff.
Specific protocols for food handling, storage, and preparation are crucial for safety and compliance. Implement a system that ensures all ingredients are stored at the correct temperatures and conditions, with raw materials kept separate from ready-to-eat products.
Train your staff thoroughly in food safety practices, emphasizing the importance of handwashing, wearing gloves when appropriate, and avoiding cross-contamination between raw and cooked foods.
Regularly review and update these protocols to comply with local health regulations and best practices, and to ensure the safety and satisfaction of your customers.
Craft your offer
Your menu and the efficiency of your operations will be the cornerstone of your dark kitchen's success (or the reason for its struggles).
To begin, understand the dining habits and preferences of your target market through methods like online surveys, social media engagement, and data analysis of current food delivery trends. Also, take a look at what other successful dark kitchens are doing to attract customers.
With a solid grasp of your target market's desires, you can start to develop a menu that is not only appealing but also optimized for delivery. Remember, your food needs to travel well and still arrive in excellent condition.
Using locally sourced and seasonal ingredients can be a great strategy for a dark kitchen as well. This practice supports local suppliers, reduces your environmental impact, and ensures that your food is fresh and of the highest quality. Forge relationships with local vendors to know what will be available when, allowing you to plan your menu around the freshest ingredients. Seasonal menus can also generate excitement and anticipation among your customers, who will look forward to new and returning dishes.
To differentiate your dark kitchen in a crowded market, focus on creating unique and high-quality dishes.
This could mean developing exclusive recipes that are only available through your service, or offering cuisine that caters to niche markets, such as keto, paleo, or plant-based diets. Sharing the story of your dishes, like the source of your ingredients or the inspiration for your recipes, can also add a layer of interest and authenticity.
Maintaining consistency and excellence in your food is crucial, which involves setting strict standards and workflows.
Implement detailed preparation guidelines, invest in training for your kitchen staff, and conduct regular quality assessments. Consistency is vital for customer trust, as they will come to expect the same high quality with every order. Use top-notch ingredients and equipment, and continuously refine your dishes until they meet your high standards.
Additionally, leveraging customer feedback is vital for the ongoing enhancement of your dark kitchen's menu. Establish feedback mechanisms, such as online reviews, direct customer surveys, and social media interactions, to gauge what your customers enjoy and identify areas for improvement.
Be receptive to constructive criticism and ready to adapt based on customer insights. This not only aids in perfecting your menu but also demonstrates to your customers that their opinions are valued, encouraging loyalty and repeat patronage.
Determinate the right pricing
When launching a dark kitchen, it's crucial to establish a pricing strategy that balances profitability with customer satisfaction. Here's a step-by-step guide to setting your prices effectively.
Firstly, you must understand your operational costs, which include ingredients, labor, utilities, packaging, and delivery expenses. This will ensure that your prices not only cover these costs but also contribute to your dark kitchen's profitability.
Next, analyze the competition and the market to gauge the going rates for similar delivery-only food services. While you don't need to mirror these prices, this research provides a reference point for your own pricing.
Knowing your target audience's price sensitivity is essential. Gather feedback through customer interactions, surveys, or by experimenting with different price points. Monitor how changes in pricing affect order volume to find the sweet spot that keeps customers ordering without feeling overcharged.
Psychological pricing can also be a powerful tool. For instance, setting a price of $9.99 instead of $10 can make a meal seem more affordable, even if the difference is slight. This tactic can be particularly effective for popular menu items or combo deals.
However, you should use psychological pricing sparingly to maintain the perceived value of your offerings.
Perceived value is just as important for a dark kitchen as it is for a traditional eatery. This can be enhanced by the quality of your food, the efficiency of your delivery service, and your brand's reputation. Premium ingredients, reliable delivery, and strong branding can justify higher prices because customers feel they are receiving better value for their money.
Consider implementing dynamic pricing strategies, such as offering discounts during typically slow periods or charging more during peak hours. For example, you might offer a lunchtime special to boost midday orders or increase prices slightly on Friday nights when demand is higher.
When introducing new menu items, consider using introductory pricing, such as limited-time discounts or meal combos, to entice customers to try them. Once these items gain popularity, you can reassess their prices based on their cost and popularity.
For orders placed online, take into account the different cost structures compared to traditional dining. You may need to factor in delivery fees, which could be included in the price or listed separately. Offering online-only specials can also drive traffic to your digital ordering platforms.
Finally, be cautious with discounting. While promotions can increase order volume and attract new customers, too much discounting can harm your brand's image and lead to a perception of lower quality. Use discounts strategically, perhaps to move excess inventory or to celebrate a special occasion, without setting a precedent for constant price reductions.
By carefully considering these factors, you can set a pricing strategy for your dark kitchen that encourages customer loyalty, covers costs, and ensures a healthy bottom line.
Manage relationships with your suppliers
Poor relationships with suppliers could jeopardize your dark kitchen operation in no time.
On the contrary, nurturing strong partnerships with suppliers will ensure a consistent supply of top-notch ingredients, which is crucial for a dark kitchen that relies on delivery and takeout services.
Engage in regular communication, make prompt payments, and show genuine appreciation for their products and services to build loyalty and dependability. Be clear about your expectations and requirements, and if possible, visit their facilities. This will give you insight into their production and logistical challenges, which can help you collaborate more effectively.
Consider negotiating long-term contracts for essential ingredients to lock in favorable prices and secure your supply chain. However, it's also wise to have a roster of alternative suppliers to protect against potential shortages or disruptions.
For a dark kitchen, efficient inventory management is critical, especially for perishable items. Employing the First-In, First-Out (FIFO) method ensures that the oldest stock is used first, minimizing waste. Keep a close eye on inventory levels to tailor your orders to current demand, preventing excess stock and reducing spoilage. A just-in-time (JIT) inventory system can also be beneficial, where ingredients are ordered just as they are needed, but this requires accurate demand forecasting.
Technology can greatly enhance inventory management and cut down on waste in a dark kitchen.
Using an inventory management system that syncs with your point-of-sale (POS) system allows for real-time monitoring of stock and sales data. This tech can aid in more precise demand predictions, streamline the ordering process, and highlight trends that can guide menu development and marketing efforts.
Moreover, digital tools can improve communication with suppliers, leading to more effective order adjustments and cooperation.
As you scale your dark kitchen, you'll face challenges such as ensuring consistency in your dishes, managing rising costs, and maintaining quality control. Tackle these issues by standardizing recipes and procedures, providing comprehensive staff training, and investing in equipment that boosts efficiency without sacrificing the quality of your offerings.
Scaling up also means purchasing more ingredients, so negotiate with suppliers for volume discounts without compromising on the quality of your ingredients. As production ramps up, quality control becomes increasingly important, necessitating strict adherence to standards and more frequent checks.
Effective cost control measures are vital and involve examining every aspect of sourcing and utilizing ingredients and supplies for your dark kitchen. Regularly reassess and negotiate with suppliers to ensure you're receiving the best value without sacrificing quality.
Also, explore alternative ingredients that may offer cost benefits or are more affordable seasonally. Employ technology to track and analyze expenses, waste, and inventory levels to pinpoint opportunities for improvement. Reducing waste not only lowers costs but also supports sustainable practices, which can attract eco-conscious customers.
Hire the right people
When launching a dark kitchen, also known as a ghost kitchen, you should focus on a lean operation, especially if you're working with a limited budget. A dark kitchen primarily serves delivery or takeout customers and does not have a dine-in space, which means your staffing needs will be different from a traditional restaurant or bakery.
At the core, your dark kitchen will require a team that can handle food preparation, order management, and overall operations.
For food preparation, you'll need experienced cooks and chefs who can efficiently prepare dishes that maintain quality during delivery. A head chef or kitchen manager is crucial to oversee the kitchen staff, manage the menu, and ensure consistency and quality in every order.
For order management, you'll need staff who can handle order intake from various online platforms, coordinate with delivery services, and ensure that orders are correctly packaged and sent out in a timely manner. This role is vital for maintaining customer satisfaction and streamlining the delivery process.
An operations manager is also essential to oversee the entire operation, manage staff, and handle administrative duties such as inventory management, ordering supplies, and ensuring compliance with health and safety regulations.
Initially, you may not need roles such as marketing specialists or dedicated customer service representatives, as these can be outsourced or handled by existing staff members.
When hiring, prioritize candidates with experience in high-volume kitchens, a passion for cooking, and the ability to work quickly and efficiently. For kitchen staff, look for formal culinary training and experience in a similar setting. For order management, seek individuals with strong organizational skills and familiarity with online ordering systems. Operations managers should have experience in food service management, a strong understanding of business operations, and leadership qualities.
Consider practical assessments during the hiring process, such as cooking trials for chefs or scenario-based tasks for order management staff, to ensure they can meet the demands of a fast-paced delivery kitchen.
Look for candidates who are adaptable and thrive in a dynamic environment, as the dark kitchen model often requires quick thinking and flexibility.
Finding the right candidates can be a challenge. Utilize culinary schools, professional networks, and social media platforms to reach potential hires. Networking within the food service community and attending industry job fairs can also be beneficial. Offering internships or part-time positions can help you connect with emerging talent.
Here is a summary table of the different job positions for your dark kitchen, and the average gross salary in USD.
| Job Position | Profile and Skills | Average Monthly Gross Salary (USD) |
|---|---|---|
| Line Cook | Experience in food preparation, knowledge of cooking techniques, ability to work under pressure | 2,800 |
| Head Chef/Kitchen Manager | Leadership in kitchen management, menu development, inventory control, quality assurance | 4,500 |
| Order Manager | Organizational skills, proficiency with online ordering systems, attention to detail | 2,200 |
| Operations Manager | Leadership and operational management skills, knowledge of food service regulations, business acumen | 4,800 |
| Prep Cook | Knowledge of ingredient preparation, efficiency, and ability to follow recipes | 2,400 |
| Dishwasher/Utility Worker | Knowledge of sanitation protocols, physical stamina, teamwork | 1,700 |
Running the operations of your dark kitchen project
Daily operations
Running a dark kitchen, also known as a ghost kitchen, can be a complex operation, but with the right systems and processes in place, it can run like a well-oiled machine.
Firstly, a robust Point of Sale (POS) system tailored for dark kitchens is essential. This system should integrate seamlessly with online ordering platforms since dark kitchens primarily serve delivery and takeout customers.
Choose a POS that can handle multiple delivery service integrations, manage orders efficiently, and maintain a database of customer preferences and order history. Real-time sales tracking through this system can help you adjust your menu and operations on the fly to meet demand.
For inventory management, you need a system that can keep up with the fast pace of a dark kitchen. It should track your ingredients and supplies in real-time, with alerts for low stock levels and analytics for inventory trends. This precision helps in reducing waste and ensuring you have the right ingredients when you need them, based on sales data and predictive analytics.
Advanced inventory systems may also include vendor management features, allowing you to streamline your ordering process and maintain a centralized record of supplier interactions.
Supplier relationships are just as important for a dark kitchen as they are for any food service business. Establish clear communication channels and set expectations for delivery schedules, product quality, and payment terms. Cultivate good relationships to potentially secure better pricing or terms, and always have alternative suppliers as a contingency plan.
Employee satisfaction in a dark kitchen is crucial for maintaining high-quality food and service. Provide regular training, set clear goals and expectations, and offer constructive feedback. Recognize and reward dedication and achievements, and ensure that work schedules respect your team's work-life balance.
Even though customers may not visit your dark kitchen, their experience with your food and delivery service is paramount. Train your delivery staff to be prompt, courteous, and handle orders with care. Packaging should maintain food quality and temperature, and branding should be consistent and appealing.
Customer service policies for a dark kitchen should include a satisfaction guarantee, transparent refund policies, and a system for collecting and responding to customer feedback. Make it simple for customers to reach out through your website, app, or social media channels.
Address customer feedback and complaints with empathy and efficiency. Listen to their concerns, apologize if necessary, and offer solutions such as refunds, replacements, or discounts on future orders. Use negative feedback as a chance to refine your menu, delivery, or customer service, potentially converting dissatisfied customers into loyal patrons.
By implementing these strategies, your dark kitchen can achieve operational excellence, leading to satisfied customers and a thriving business.
Revenues and Margins
Know how much you can make
Understanding the financial workings of a dark kitchen is crucial for its success.
We have an in-depth article on the profitability of dark kitchens that provides extensive details. Below, we'll summarize some key points.
One important metric for dark kitchens is the average order value (AOV).
The AOV is the average amount a customer spends per order. This figure can vary greatly depending on the cuisine offered, pricing strategy, and customer demographics.
For example, a dark kitchen specializing in gourmet meals may have an AOV of between $40 and $60, reflecting the premium nature of the food.
A dark kitchen that operates multiple brands under one roof might see a lower AOV per brand but could benefit from a higher cumulative AOV, possibly between $20 and $40 per brand.
Dark kitchens focusing on fast food or quick-service items might have a smaller AOV, perhaps between $15 and $25, due to the lower cost of items and a focus on volume sales.
Revenue for dark kitchens can also vary widely. With a well-optimized operation and strong online presence, monthly revenues can range from $10,000 to over $50,000, leading to annual revenues of $120,000 to $600,000 or more.
Startup dark kitchens may initially see lower revenues as they establish their presence and customer base, potentially earning less than $10,000 per month in the beginning.
However, established dark kitchens with a solid reputation and customer loyalty can achieve higher and more consistent revenues over time.
Dark kitchens that effectively utilize data analytics and customer feedback to refine their menus and operations can potentially exceed $500,000 in annual revenue.
you should note that dark kitchens have multiple revenue streams beyond just selling meals. Here's a table outlining various potential revenue streams for a dark kitchen.
| Revenue Stream | Description |
|---|---|
| Direct Meal Sales | Main source of income from the sale of meals prepared for delivery or pickup. |
| Multiple Cuisine Brands | Operating different virtual restaurant brands from the same kitchen to diversify offerings and attract a wider customer base. |
| Meal Subscriptions | Offering weekly or monthly meal plans for regular customers, providing a steady income stream. |
| Corporate Catering | Providing meal packages for businesses and events, which can be a significant source of bulk orders. |
| Partnerships with Food Delivery Platforms | Collaborating with platforms like Uber Eats, DoorDash, or Grubhub to reach more customers. |
| Online Cooking Classes | Hosting virtual classes to teach cooking techniques or showcase how to prepare signature dishes. |
| Branded Merchandise | Selling kitchen-related products or branded apparel online or through delivery platforms. |
| Food Product Sales | Creating and selling packaged food products, such as sauces or spice blends, used in the kitchen's dishes. |
| Exclusive Online Events | Hosting virtual dining experiences or tastings for a fee, possibly with a celebrity chef or influencer. |
| Loyalty and Referral Programs | Encouraging repeat business and customer referrals through rewards and discounts. |
| Consulting Services | Offering expertise on setting up and running a dark kitchen to other entrepreneurs. |
| Franchising the Concept | Expanding the business model to other operators who want to open their own dark kitchen under the established brand. |
| Advertising and Sponsorships | Generating revenue by featuring brands or products in the kitchen's digital content or packaging. |
These revenue streams can help diversify a dark kitchen's income and provide stability beyond the core business of selling meals.
Understand your margins
As with any food service business, understanding the financial health of a dark kitchen is crucial for its success. Revenue is just the starting point; it's the margins that truly tell the story of profitability.
Let's delve into the gross and net margins, which are key indicators of a dark kitchen's financial performance.
To calculate your own margins and get a precise figure for your potential profit, you can adjust the assumptions in our financial model designed for a dark kitchen.
The typical range of gross margins for dark kitchens can vary, but they generally fall between 60% to 80%. This is due to the lower overhead costs compared to traditional restaurants.
Gross margin is calculated by subtracting the cost of goods sold (COGS), which includes the direct costs associated with the production of the meals sold, such as ingredients and direct labor, from the revenue generated from the sales of those meals. This figure is then divided by the revenue and multiplied by 100 to get a percentage.
Net margins consider not only COGS but also all other expenses a dark kitchen incurs, such as rent for the kitchen space, utilities, administrative expenses, marketing, and taxes. Net margin is the figure obtained by subtracting all operating expenses from the gross profit.
Net margins offer a more complete understanding of a dark kitchen's profitability and are typically lower than gross margins. On average, they might range from 10% to 15%, reflecting the profitability after all costs are considered.
Different types of dark kitchens—such as independent, chain-affiliated, or virtual brands—can have varying profit margins due to differences in their business models, scale of operations, and target markets. Below is a table to illustrate these differences.
| Dark Kitchen Type | Price Point | Production Costs | Economies of Scale | Potential Margins |
|---|---|---|---|---|
| Independent | Varies | Higher | Lower | Depends on efficiency and market positioning |
| Chain-Affiliated | Competitive | Lower | Higher | Increased due to brand recognition and scale |
| Virtual Brands | Competitive to Premium | Varies | Varies | High if operations are lean and marketing is effective |
Margins in a dark kitchen are influenced by factors such as menu complexity, pricing strategy, and operational efficiency.
A streamlined menu can reduce costs and waste, but it must also meet customer demand to ensure sales volume. Pricing strategy is critical; prices must be set to cover costs and yield a profit while remaining attractive to customers. Operational efficiency can lead to cost savings, especially in a model that typically benefits from lower overhead costs.
Ongoing expenses that impact dark kitchen margins include ingredient costs, labor, rent for kitchen space, utilities, and marketing. Ingredient costs can be volatile, affecting gross margins. Labor remains a significant expense, and rent can be a considerable cost depending on location. Utilities and marketing are also important factors to consider.
Dark kitchens focusing on niche markets, such as vegan or ethnic cuisines, may experience different margin dynamics compared to those with a more general offering.
While niche dark kitchens can command higher prices, they may also encounter higher production costs and a potentially smaller customer base, which can affect overall margins.
External factors such as economic conditions, consumer trends, and competition also play a role in the profitability of dark kitchens. Adapting to these factors and evolving the business model accordingly is essential for maintaining healthy margins.
Dark kitchens can tackle the challenge of maintaining margins by optimizing their menu, managing costs effectively, leveraging technology for efficiency, and continuously analyzing their financial performance. Regular financial tracking and analysis, including gross and net margins, is crucial (and you can do it all with our financial model specifically for dark kitchens).
Implement a strong marketing strategy
Marketing for a dark kitchen, also known as a ghost kitchen, doesn't have to be an intricate maze. We understand that you'll be focused on perfecting your delivery-only culinary creations and managing operations, so we'll keep our advice straightforward and practical, much like the marketing strategy we've detailed in our business plan for a dark kitchen.
Branding is just as essential for a dark kitchen as it is for any other food service business.
Your brand is the identity of your dark kitchen. It's not only your name or logo but the overall impression you leave on your customers. It should reflect the uniqueness of your cuisine, the efficiency of your service, and the values you uphold, such as high-quality ingredients or innovative dishes. A strong brand will differentiate you in the competitive delivery market and help cultivate a dedicated following.
When developing your marketing plan, begin by pinpointing your target audience. Who are they? What do they crave? Are they busy professionals seeking quick gourmet meals, families looking for variety, or health-conscious individuals desiring nutritious options? Knowing your audience informs your branding and how you connect with customers.
For promotion, digital marketing is a must for dark kitchens. Platforms like Instagram, Twitter, and Facebook are ideal for reaching out to potential customers. Use mouth-watering images and engaging stories to showcase your dishes.
Offer sneak peeks into your kitchen operations to create transparency and trust. Highlight the skill and care that go into preparing each order.
Encourage customer feedback and share positive reviews to build credibility. Educational content, like the origins of certain dishes or the benefits of your ingredients, can also engage your audience and position your dark kitchen as a knowledgeable leader in the food industry.
Effective content strategies for dark kitchens include highlighting the convenience and quality of your service, promoting limited-time offers, and emphasizing any unique or signature dishes. Collaborating with food bloggers or local influencers can also increase your visibility.
Not every marketing tactic will suit your dark kitchen. For instance, if your service area is concentrated in urban neighborhoods, targeting rural areas won't be efficient. Similarly, if you specialize in plant-based meals, focusing on meat-heavy dishes in your promotions won't align with your brand.
Even with a modest budget, there are clever ways to attract new customers.
Consider partnering with food delivery apps to reach a wider audience quickly. Offering exclusive deals through these platforms can drive initial trials.
Sampling might be tricky for a delivery-only business, but you can offer first-time order discounts or special promotions to entice trial.
Collaborating with local businesses or offices can help you tap into established customer bases.
Implementing a referral program can incentivize word-of-mouth marketing. Simple referral codes or discounts for both the referrer and the new customer can be highly effective.
Lastly, don't overlook the power of a loyalty program. Digital rewards for repeat orders can foster customer retention and increase the lifetime value of each patron.
Grow and expand
We want your dark kitchen to thrive in the competitive food delivery market. The insights provided here are designed to help you scale and expand your operations effectively.
Imagine your dark kitchen is already performing well, with a strong customer base and a profitable menu that's in high demand. Now is the time to consider strategies for growth and expansion.
There's always potential for greater success, and we're here to show you the path to reach it.
Also, please note that we have a 3-year development plan specifically for dark kitchens in our business plan template.
Successful dark kitchen operators often possess qualities such as agility, a keen sense of market trends, culinary expertise, and a strong focus on customer satisfaction. These attributes are essential as you navigate the complexities of scaling your business.
Before adding new items to your menu, assess the market demand, how well the new offerings will integrate with your existing menu, and the impact on your kitchen operations.
Conducting thorough market research is critical. By understanding customer preferences, tracking food delivery trends, and evaluating the performance of similar offerings in the market, you can make informed decisions that align with your dark kitchen's strengths and customer expectations.
To evaluate the success of your current operations, examine sales data, customer reviews, and the efficiency of your kitchen workflow. If your dark kitchen consistently hits sales targets, garners positive reviews, and operates smoothly, it might be time to think about expansion.
Expanding to new locations should be based on clear evidence of demand, a deep understanding of potential markets, and the financial stability of your existing operation.
Franchising can be a way to grow with less capital risk, tapping into the entrepreneurial drive of franchisees. It requires a recognizable brand, effective operational procedures, and the ability to support your franchisees. Opening company-owned kitchens allows for more control but demands more capital and hands-on management. The choice between these models depends on your business objectives, available resources, and preferred growth strategy.
Utilizing digital channels, such as online ordering platforms and delivery apps, can significantly increase your dark kitchen's reach and sales. An online presence enables you to serve customers beyond your immediate area, meeting the growing need for convenience.
This approach necessitates a grasp of digital marketing, delivery logistics, and ensuring food quality during transportation.
Branding is vital as it sets your dark kitchen apart in a crowded marketplace. A robust, consistent brand identity across all operations and platforms can foster customer loyalty and attract new patrons. Enhance your brand by ensuring every interaction reflects your dark kitchen's values, style, and culinary excellence.
Ensuring consistency across multiple kitchens is a challenge but is crucial for success. This can be managed through comprehensive operational guides, staff training, and quality control measures.
Regular visits and audits, coupled with a strong, cohesive culture, help maintain the high standards that made your original kitchen successful.
Financial indicators that you're ready for expansion include sustained profitability, robust cash flow, and consistently meeting or surpassing sales forecasts over a considerable time.
Having a scalable business model and the operational capacity to support growth are also essential factors.
Forming partnerships with other businesses and participating in local events can expose your dark kitchen to new customers and markets. These collaborations can lead to innovative offerings, community involvement, and increased brand exposure, all contributing to your growth.
Scaling up to meet growing demand requires logistical planning, such as investing in advanced kitchen equipment, optimizing inventory management, and potentially expanding your kitchen space. It's vital to ensure that your supply chain can sustain the increased volume without compromising on quality.
Ultimately, it's crucial that your expansion efforts remain aligned with your dark kitchen's core values and long-term objectives. Growth should not detract from the unique qualities that made your dark kitchen a success.
Regularly revisiting your business plan and core values can help ensure that your growth strategies stay in line with your vision, keeping the essence of your dark kitchen intact as it expands.