The COVID-19 pandemic has driven innovation on a scale rarely seen. The retail and restaurant industries have had to develop and accelerate ideas to keep their businesses open and prepare themselves for the future. These ideas were not concocted overnight; instead they were concepts formed long before we knew what COVID-19 was. The use of dark stores, ghost kitchens, and the expansion of delivery services were all well underway in 2019 and it would have been hard to believe that they could have come this far in just over a year. These fast-tracked ideas have helped businesses in the short term while also developing new strategies that will carry on long after the pandemic.

Dark stores were an emerging concept over the past few years where retail stores would double as distribution centers. Large supermarkets or under-performing retail stores could turn all or part of a location into a mini warehouse for pick-up or online order fulfillment to increase efficiency. When the pandemic caused widespread shutdowns, the demand for these options escalated. Retailers were suddenly left with under-powered delivery systems and stores full of products that had no customers. The dark store became a recipe for success for even the less experimental retailers like Meijer and Macy’s. Dark stores help cut down on costs for both the retailer and consumer, and often lead to faster delivery times due to traditional warehouses being in decentralized locations. It has also opened the door for more grocery delivery options as consumers received delivered directly from their local stores. This advent has not only been helpful in combating the pandemic, it has given grocery chains a way to compete with the expanded food delivery services of Amazon and Walmart which began growing their options last year. The fight for shelf space also becomes less relevant and more opportunities arise for manufacturers who would have struggled to break into the traditional store format.

For restaurants, the dark store concept has taken the form of ghost kitchens. These delivery and pick-up only locations allow restaurants to expand their customer base and create entirely new concepts. Ghost kitchens were already gaining traction in 2019 and would have played a large part in the industry even without the pandemic, but it is unlikely we would have seen the same number of restaurants adopt this idea. Most restaurants were forced to close their dining rooms at some point this year and delivery was one of the few options available to them. Ghost kitchens allowed restaurants to rent out their empty locations to others and even share the same space with other restaurants in commissary kitchens. The contactless nature of ghost kitchens made them a perfect remedy for the challenges of COVID-19. Some restaurants like Dog Haus International LLC and Applebee’s Neighborhood Grill & Bar were able to create entirely unique concepts that don’t have physical locations and grow their brand during a difficult time. Perhaps the best example of this was Chuck E Cheese’s that had their business model rendered moot by the coronavirus and they responded by creating Pasqually’s Pizza to deliver their signature pizzas straight from existing kitchens.

The momentum of dark stores and ghost kitchens has been powered by an increased focus on delivery and diversity within supply chains. We have even seen companies turn to subscription boxes for everything from alcohol to clothes and grocery items. Dark stores provide easier shipping for retailers and faster delivery for customers. Ghost kitchens have allowed customers to try entirely new concepts without exorbitant cost to restaurants. These changes have become even more important as retailers look to retain loyalty as competitors offer similar services that are only a click away. The challenge of the pandemic has caused retailers to meet customers and deliver the products where they want them. This new relationship was already on the horizon with behemoths like Amazon and Walmart and 2020 has provided the chance for other retailers to level the playing field.