Mon, 19th Aug 2019
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CODE Special
Delivering a new era for restaurants

 

 

Food delivery services are hardly novel. We’ve long been able to order a Domino’s - hand over the cash to a helmet-wearing motorcyclist before gorging ourselves silly over three episodes of a box set. The next step came with the likes of Deliveroo, which connected existing restaurants and homebound customers via an army of delivery cyclists. It represented somewhat of a revolution in food delivery, as takeaways were no longer limited to the traditionally poor quality options on offer.

 

Restaurant-quality food became available at home from both recognisable independents and chains unable to run their own delivery services, in turn enabling them to profit from a new revenue stream. The office worker chained to his desk and unable to get out for lunch was henceforth a likelier customer.

 

As a result, the market has expanded at a rapid rate. A recent FT article cited market research by Euromonitor that found that the home delivery and takeaway food sector has outpaced the growth of restaurants in every year since 2009. Having seen Deliveroo most recently valued at an estimated $600m, tech giants like Uber and Amazon have entered the fray for the hearts and stomachs of all, the former via seemingly never-ending promotion codes due to its existing size and war-chests. Outside of this ‘mass market’, there are also startups pursuing more niche offerings. Feast caters specifically to late-night owls, linking up with restaurants able to satisfy craving from 10pm-5am in certain areas of London. Supper provides a higher-end option – their roster includes the Michelin-starred Tamarind, and they promise to deliver Londoners ‘exceptional food’ via custom-made, thermally lined food boxes and Japanese scooters.

 

All of this begs the question: where will it end? Or, conversely, has the market reached saturation point? Statistics show that investment in the sector has actually peaked. This is not to say existing services are going to shrink: demand is far too strong for that. The aforementioned FT article cited Martin Mignot, a partner at a firm called Index Ventures, that has invested in both Deliveroo and Just Eat. He believes the outcome will likely be fewer, dominant companies that do extremely well. Market entrants may well struggle to get a foothold, and the likes of Feast and Supper may even see their niches encroached upon by their larger competitors.

 

Even more recently, a new wave of food delivery has begun to emerge - that of the high quality, ‘virtual restaurant’. The concept is making waves in US cities like New York and San Francisco, and involves the creation of kitchen hubs where food is prepared for delivery alone. Silicon Valley investors are throwing their weight behind it: Munchery, a San Francisco-based start up providing gourmet, ready-to-heat meals, has already raised £117m to date.

 

The trend is being partly driven by what some restaurateurs deem to be the unprofitability of the bricks and- mortar sites, with Momofuku’s David Chang arguably at its forefront. With ever-rising real estate prices (something that will resonate with London residents and business owners alike) and staffing costs, site profits can be slender to say. Sometimes prone to hyperbole, Chang has called it “legitimately one of the dumbest businesses you could possibly get into”. His virtual restaurant concept, named Ando, focuses upon dishes that are built to travel well - their version of a Philly Cheesesteak uses chickpea hozon rather than excessive amounts of cheese to avoid customers receiving a sodden sandwich upon arrival.

 

David Chang (Image credit: Gabriele Stabile).

 

Although the concept is better developed across the pond, it is starting to emerge here too. Deliveroo has begun investing in its own kitchen hub spaces. Dubbed RooBoxes, these off-site kitchens aim to provide customers with delivery options that were previously out of reach due to the lack of restaurant in their local area. Deliveroo makes the upfront site investment (without the need to pay for a site big enough to house customers) and recoups some of it via a revenue cut from the restaurant brands that move in. The current plan is for sites to house one brand each, and one recent sign-up includes Motu, from JKS Restaurants. Situated in Battersea, the Motu RooBox is an apt encapsulation of the evolution of food delivery. It means locals will have access to acclaimed Indian food that is designed to travel well and quickly due to a hyper-local source - a dream for any takeaway enthusiast.

 

All of this will undoubtedly mean consequences for the restaurant industry. UK restaurateurs may well begin to diversify and create delivery only services as their US counterparts have done, but the likelihood of this being at the expense of the former is unlikely. As we all know there are ultimately aspects of the restaurant experience that can never be recreated at home.

 

Food delivery is circumscribed by the very fact it has to travel, as the example of Ando’s Cheesesteak illustrates. Meanwhile luxury services like Supper might deliver Michelin-starred food, but hardly the experience. As Marina O’Loughlin put it after trying the service, “much of what you’re paying for at this level isn’t just what you’re putting down your neck, but service and ambience”. Even Chang, with the high profile, delivery-only service, has said “I’m committed, more than ever, to improving my brick-and-mortar restaurants. I believe in that dining experience; it’s why I exist and it’s not going to go away.”

 

The ever-evolving restaurant delivery scene hardly heralds the restaurant apocalypse. It is certainly changing the game, but in a largely positive way by enabling more people to access good food at home, as well as creating new revenue streams for restaurants.

 

 

Mikey Williams

@LondonFixr

 

 

This article was first published in Issue 9 of CODE Quarterly.




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