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Food Delivery Juggernaut Will ‘Help’ Restaurants by Monopolising Supply Chains

Deliveroo’s ‘procurement’ service claims to give restaurants access to ‘“better” ingredients and kit

Restaurant delivery service Deliveroo claims to help restaurants by buying their ingredients for them Photo by Matthew Horwood/Getty Images

Restaurant delivery platform Deliveroo has introduced supply chains to its list of add-ons, launching a service in which restaurants can buy ingredients and kit through “discount deals,” increasing restaurants’ dependency on the platform.

The delivery company claims that “the scheme saves restaurants money on their ingredients from vegetables to meat, as well as on cleaning supplies and packaging products. These savings are helping restaurants to boost their profits and will help smaller restaurants to expand, bringing diversity to the high street at a time when many are facing economic challenges.”

The economics are straightforward: Deliveroo, a large company, has the ability to leverage purchasing power at scale; smaller restaurants can purportedly benefit from having that power passed on; Deliveroo gets another income source. The flipside is homogenisation, and while Deliveroo claims to be supporting suppliers by giving them access to an extant pool of restaurants, there is necessarily going to be loss on price and decreased competition for this to work on Deliveroo’s end, as well as the introduction of a middle man to the supply chain that doesn’t necessarily benefit those on either end. Restaurants, of course, are not obliged to sign up; there is no information on which suppliers are signed up, nor on the claim that this will mean restaurants have “better quality ingredients,” which is dependent on what is being used in the first place.

Ajay Lakhwani, VP of new business at Deliveroo, said:

Food Procurement is an exciting new service for restaurants, which will cut costs while raising the quality of ingredients. By using our size and scale to negotiate great prices we can both simplify the procurement process and help independents and chains can make big savings. Restaurants and their suppliers are the winners. And of course this is great news for customers, as restaurants cook with better quality ingredients.

This could be particularly beneficial for the company in its plans to expand restaurant delivery into smaller U.K. towns, where supplier pools are likely to be smaller; it would also likely leverage Amazon’s recent investment in Deliveroo, although that remains under scrutiny by the Competition and Markets Authority. Are Deliveroo-backed warehouses on the way? Time will tell.