Sitting in the reception of Deliveroo’s headquarters in the City of London recently, most people signing in seemed to be starting their first day at the food delivery company.
This is not particularly unusual for rapidly expanding businesses of this ilk, but what made it interesting was these new starters were all heading to work in Deliveroo’s new Editions division.
This is the delivery-only kitchen sector of the business, which used to be casually called “Roobox” until it was renamed something that sounds a little smarter following Deliveroo’s realisation the concept could be a game changer.
It seems the company’s investors also recognised the same potential in this fledgling part of the business, and it was noticeable in the statement accompanying its recent $385m fund-raise that Editions was top of the page and is clearly a big focus.
Personally, I’ve had a bit of a downer on home food delivery because I’ve heard far too many stories of how it can cause bottlenecks front-of-house in busy restaurants and clogs kitchens with orders that are often generating little margin even if genuinely good incremental business. Also, don’t forget every order heading out to someone’s home doesn’t have the valuable alcohol component that would be accrued from typical restaurant sales.
Companies in this highly competitive field will take part in an ongoing fight to be top food-delivery dog, with the challenge to ultimately make delivering food to the home economically viable for both delivery provider and foodservice company.
Regarding Editions, we are talking about a very different beast to bog-standard delivery from restaurants. Through data accumulated by Deliveroo it is possible to recognise areas that are underserved by certain cuisines. Brands can then be approached to use the Deliveroo-owned kitchens that are set up in the relevant locations to serve specific markets.
The sites are set up on land that might have been a car park, for instance, and are relatively easy to come by – even in built-up London. They typically house between six and ten different kitchens in shipping containers. Among brands on board so far are MeatLiquor, Gourmet Burger Kitchen, Busaba Eathai and Mother Clucker.
For a brand to occupy one of these kitchens, it clearly requires significantly less capital than taking a lease on a high street site. It also takes a mere eight to 12 weeks to bring a brand to a new area. And if things don’t work out, it’s not half as difficult for a food operator to extricate itself from the arrangement.
The other smart aspect of Editions is it will genuinely drive incremental business because the restaurant brand will have no actual outlet in that particular area. What the concept also overcomes is the margin that pressure brands have been facing with home delivery. The desire to charge a higher price is a tempting but not particularly appealing proposition for all stakeholders as it leaves the customer feeling disappointed or even cheated.
With Editions, the food can be promoted differently and therefore command a different price to one charged in the regular restaurant. This could involve offering variants of the restaurant dishes that hit the home delivery price-point by having juicier margins. Most interesting is the opportunity to create sub-brands specifically for Editions.
This has been the approach taken by the extremely successful JKS Restaurants. It has created Motu, its delivery-only Indian Kitchen brand, which will be launched on two Editions sites in north London – one of them rather conveniently down the road from me. It will effectively offer a Gymkhana-lite menu (I hope).
The Editions concept has been such a success since its launch in April it has continued to expand, with the plan to have a network of up to 200 kitchens spread across 30 sites in the UK, while an international roll-out is also on the cards to the 12 countries in which Deliveroo operates its standard delivery service. Now let me take a look at that Motu menu.
Glynn Davis is a leading commentator on retail trends