Dive Brief:

• DoorDash launched a new program Monday, called "Reopen for Delivery," that selects local merchants who closed during the COVID-19 crisis and helps re-establish them as delivery-only concepts. The program’s first partnership is with Chicago-based Krazy Hog BBQ, which closed in March after statewide dining room closures went into place in Illinois.
• DoorDash is working with virtual kitchen operator Á La Couch to make Krazy Hog a delivery-only operation in Á La Couch’s Chicago facility. Krazy Hog’s employees will stay on board to cook while Á La Couch staff will prepare and assemble the orders and DoorDash facilitates the last-mile delivery logistics, according to a press release emailed to Restaurant Dive.
• DoorDash will also provide operational and marketing support, as well as consult on small business issues. The Reopen for Delivery program is part of DoorDash’s Main Street Strong initiative, announced in May to provide the restaurant industry with services to "accelerate their businesses into the new normal."

Dive Insight:

Krazy Hog is planning to eventually add a new southside Chicago brick-and-mortar location alongside its new delivery-only kitchen. In a press release emailed to Restaurant Dive, owners Dana and Victor Cooksey said the virtual location will enable Krazy Hog to "focus on bringing back the neighborhood restaurant how we want to." The ability to establish a brand in a new market before opening a brick-and-mortar restaurant is one of the advantages of operating a virtual kitchen.

But that’s not the only advantage, and many restaurants big and small have turned to the dark kitchen model to survive the COVID-19 crisis, either to create an entirely new revenue stream, regain lost revenues, or to simply cut back on occupancy and labor costs by shedding a physical location. The number of eateries using dark kitchens has grown from 15% pre-pandemic to 51% in May, according to Technomic.

But it's not an easy transition. Restaurant operators are having to catch up to the fast-growing delivery space as consumers who are anxious about or unable to dine out rely more on the channel. The NPD Group found, for example, that delivery orders in March alone increased by almost 70% while overall traffic dropped by 22%, and sales have surged at DoorDash, Grubhub and Uber Eats. According to DoorDash data, restaurants that partner with the largest delivery provider by market share have been six times more likely to remain open during the COVID-19 pandemic than those that do not. Indeed, 81% of operators have said third-party delivery has helped them prevent layoffs during the early months of the pandemic.

The appeal of the delivery channel, and the dark kitchens that help fulfill those delivery orders, isn’t likely to fade in a post-pandemic world. For now, however, it’s a new model for most operators to navigate. That said, Tom Pickett, chief revenue officer at DoorDash, said in an emailed statement that the Reopen program is a way to help restaurants adapt to this new normal: "… We want to help merchants who have shuttered operations to strategically reopen while adapting to the realities of operating a restaurant in today’s environment."

Notably, DoorDash is also working with a California-based delivery-only restaurant, Burma Bites, to build a brick-and-mortar store. This marks the delivery company’s first time partnering with a restaurant to create a physical facility, suggesting it is confident that the brick-and-mortar model isn't going away despite the "new normal."