Deliveroo Cranks Up ‘Dark Kitchens’ Scheme, Asking Restaurants for Exclusive Spin-Offs

Restaurant delivery giant Deliveroo is encouraging existing restaurateurs and food buiness operators to open new so-called “virtual brands” — as extensions of their existing kitchens. It especially wants to spawn multiple brands from people operating from its Deliveroo-only Editions “dark kitchens.”

An example of a company setting one up is Texas Joe, which is known for its platters of smoked meat. It has created Queso Dillo as a new virtual brand, selling Mexican tortilla wraps from the same site in Deliveroo’s Whitechapel Editions site.

The pitch to restaurants is they can make more money while using existing staff, equipment and ingredients to serve a different part of the market: either with a twist on the type of cuisine or target (new) diners at a different time of the day.

A spokesperson from Deliveroo cited a number of sushi operators, including Moshimo in Brighton, as having diversified, in this case, with a Hawaiian-inspired poke “virtual brand.” The Chickpea in Swiss Cottage, which had initially just offered a dinner service, is one of many to have conceived a sandwich or wrap-style “virtual brand” for the lunchtime trade. Several others have created vegan spin offs.

Deliveroo claims it has 15 virtual brands running out of its Editions sites in the UK, with another 10 expected to launch in the summer. Several others run “virtual brands” out of their own restaurant kitchens. Deliveroo CEO Will Shu extolled the benefits for “restaurant finances.”

Virtual restaurants mean more great food for our customers. By creating new brands out of existing kitchens, restaurants can really boost their business and try new ideas without the need for expensive new premises.

At Deliveroo we are using our knowledge, data and insight to help restaurants launch new brands in Deliveroo Editions and from their high street kitchens. We work with chefs every step of the way to make virtual restaurants a success from concept to delivery. The end result is great for restaurants and is helping to increase customer choice across the UK.

The development of the Editions project has been earmarked as a priority for the food delivery company. It is seen as a key weapon for Deliveroo to out-muscle rivals such as Uber Eats with exclusive food, while also creating a supply of delivery options in areas where decent numbers of relatively affluent people reside but are — according to its own research data — poorly served with restaurants on high streets.

Critics see the Deliveroo-only and Deliveroo-controlled sites as a stepping stone to a bigger masterplan to control how people in cities eat. Eater recently revealed an investor deck which as well as showing plans for automated food production and delivery, clearly illustrated Deliveroo’s future vision: where it saw people ordering from its platform habitually, only eating in restaurants for “special occasions,” and where cooking was only practised “as a hobby.”

And yet, Deliveroo fell way short of its target of opening 200 kitchens in 30 sites in the UK by the end of last year. Over three months into 2018, it is still struggling to reach that goal. It currently has roughly 74 kitchens in just 12 sites in London, with others in Leeds, Newcastle, Reading and Brighton. It has now reset the 30 site target to “early 2019.”

Local councils have responded to complaints from locals around the noise generated by the delivery riders’ scooters. Deliveroo’s Camberwell dark kitchen located in a residential part in south London has caused particular consternation, prompting other councils to take a cautious view to Deliveroo’s proposals.

The most notable “virtual brand” success story on Deliveroo so far has been Motu — the delivery-only brand from JKS, the company behind Indian restaurants Trishna, Gymkhana, Hoppers and soon-to-open Brigadiers. Motu, meaning “fat man” in Hindi, has been a hit on since it launched in October 2016 with its first site in Battersea. It has since added Canary Wharf, Swiss Cottage and Islington. (It no longer operates out of Camberwell.)

Eater understands Motu currently sells between 400 to 500 orders per week per site, priced at roughly £30 a time. It clocks up roughly £54,000 a week in sales from the four sites, currently pegging it as a £3 million-a-year business in revenue. It is now poised to expand beyond Editions and onto high streets with a plan to open a raft of sit-down Motu restaurants.

Following the strong start, there’s a strong desire among the JKS founders to take more control over Motu’s expansion and reduce its reliance on Deliveroo. The stuttering roll out of Deliveroo’s Editions sites is part of the rationale to open several Motu restaurants on high streets across “zone 2 or 3 residential parts of London; places like Ealing, Clapham, Putney, Queen’s Park,” according to JKS co-founder Jyotin Sethi.

More broadly, Deliveroo Editions (like many aspects of the Deliveroo business) continue to generate mixed feelings and considerable discussion among restaurants. Several operators in London have said the growth of food delivery over the last 12 months in particular has been explosive.

This latest development follows the details of the pitch to investors revealed in Eater. It outlined its longer term plans of using robotics to make and deliver its own food, and consequently substantially reduce its costs and cut prices to customers.

Nevertheless, enthusiasts for Deliveroo see it as a much-needed lifeline at a time when restaurant trading conditions have been exceptionally tough. There is also growing recognition of the widespread consumer demand for delivery and the need for restaurants to adapt to the phenomenon.

• All of Eater London’s Restaurant delivery coverage [ELDN]