Deliveroo has set up a new £5 million ‘innovation fund’ which it says it will use to invest in “the UK restaurant sector, new chefs and new restaurant concepts”. It will also begin working with celebrity chefs, but has not yet said who. The company has also moved to expand its Editions portfolio — its “dark kitchens” portfolio — in which restaurants on the platform prepare food for delivery only.
The company recognises that “the eat-at-home market is growing” and sees itself in a position to “help high street operators tap into this area of growing consumer demand.” Especially as the conventional route to market is becoming increasingly expensive, competitive and risky. Deliveroo continues to stress that its delivery-only kitchens are “helping restaurant partners expand their customer base and increase their revenues,” which is why it says it is expanding to “give even more operators the chance to bring new, exciting foods to new areas.”
The latest round of growth for Deliveroo is now going even further, directly investing in restaurants to help them expand, investing in chefs to help them set-up for the first time, and developing new concepts for consumers. Following on from the news that head office staff will receive stock options while riders continue without contracts, and the news that the delivery giant wants to make its own food, this evolution could be seen as a pushback against restaurants that have concerns over the model. Deliveroo frequently focuses on revenue in its announcements on how it helps restaurants, but never on margin or profit: commissions erode the latter, and so genuine investment could be seen as a conciliatory move.
About Deliveroo’s “innovation fund”:
This new fund will be led from a team in London who previously ran the New York company Maple, which was acquired by Deliveroo last year.
The “innovation fund” has identified three priorities:
- Invest in existing restaurants. The fund will invest in restaurants the company thinks have significant growth potential and will help them to expand in the UK and potentially internationally. Deliveroo will help existing favourites develop new concepts, sometimes under new brands, expanding their cuisine offering. Key point: Deliveroo takes a stake in restaurant businesses. The “new brands,” too, are noteworthy, for Deliveroo has been unclear on whether these will be owned outright by the delivery company.
- Incubating new brands “to ensure consumers have supreme selection.” The fund will invest in developing new “concepts” from scratch, which will be operated out of the delivery-only Editions kitchens. Deliveroo will hire new chefs to open delivery-only kitchens in areas where Deliveroo has identified a “local demand for specific cuisines.” Here, again, Deliveroo plays director in these businesses, using its customer data to introduce ideas it expects to thrive. It is a potent combination of data analytics and the Editions model, and looks to be a step towards making their own food.
- Supporting up-and-coming talent and working with celebrity chefs. Deliveroo’s fund will invest in up-and-coming chefs, investing in embryonic food outlets to help them to grow through delivery-only outlets. Deliveroo will also work with celebrity chefs to produce delivery-only concepts. The company will also attempt to bring “international favourites” to the British market, enabling them to trail the British market without having to invest in the way a restaurant business ordinarily would. There is a scenario where Deliveroo could co-opt not just a lot of the most promising talent in the industry, but also become one of the biggest restaurant investors in the UK. The company is pitching itself in the following terms: ‘restaurant businesses need us.’
Deliveroo Editions expansion:
As well as these new innovations in Editions sites, Deliveroo will also expand its delivery-only “dark kitchens” programme.
- Deliveroo has added 51 new Editions super kitchens in 2017 in the UK, which took the programme to 74 kitchens in total. Deliveroo now works with nearly 40 restaurant partners in delivery-only kitchens in the UK in total.
- Deliveroo currently has 14 currently operating sites in the UK and will open more this year. A site has just opened in Battersea; one in Bermondsey is imminent. Outside of London, Cambridge, Nottingham and Manchester are planned.
- Deliveroo expects that locations of delivery-only sites will move as Editions expands, as the company continually seeks to serve the maximum number of customers.
Deliveroo Editions is now global:
- The programme is expanding around the world. New sites recently opening in Singapore, Dubai and Melbourne, which joined a site in Hong Kong. This year Deliveroo will open delivery-only kitchens in Madrid, Paris, Sydney and Amsterdam.
- By the end of the year Deliveroo will have five Editions sites in Europe with a total of 35 kitchens; and 11 sites in APAC with a total of 80 kitchens.
- By the end of the year, Deliveroo projects 130 Editions kitchens in the UK and 250 globally.
Caleb Merkl, VP special projects at Deliveroo, said in a statement:
“Deliveroo is excited to be setting up this fund to invest in UK restaurants. We are committed to supporting the sector and enabling restaurants to offer consumers as many new and exciting food options as possible.
“At a time when there are so many barriers for chefs wanting to turn their dream into reality, Deliveroo will use our expertise to help restaurants to expand and help budding chefs to have their first shot. For consumers this is nothing but good news, with more amazing, restaurant-quality food available more of the time.”