As Deliveroo Gets Amazon Cash, Is Delivery A Solution To Restaurant Staffing Problems? by Forbes – Entrepreneurs

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Motor scooters with boxes for Deliveroo wait for food orders in London. Photographer: Simon Dawson/Bloomberg

© 2016 Bloomberg Finance LP

Deliveroo doesn’t have a presence yet in the United States, but if you live in London, you bump into the food delivery company all the time.

Their drivers zoom around on motorbikes and scooters, dropping off breakfast, lunch, dinner and snacks to homes and offices around the city.

Now, you can expect to see more Deliveroo drivers across England, Scotland and Wales, as well as as cities across Europe, thanks to a big investment by Amazon.

The technology giant is among those injecting $575 million into Deliveroo, founded in 2012. The company has raised a total of $1.5 billion in venture capital since it went into business.

The investment comes as Amazon decided to close its own food delivery business, which hadn’t made much headway against competitors like GrubHub, Door Dash and Uber Eats.

But, many analysts believe Amazon has another strategy for the food delivery business, and Deliveroo may just be the answer.

On Wednesday, Chief Executive Officer Will Shu told a Bloomberg technology conference that Deliveroo wants to reach half of the U.K.’s population by the end of this year, up from about 33 percent now.

That’s going to mean expanding into some smaller markets where food delivery is less common than in big cities.

And, Shu said Deliveroo would continue to expand in the other 13 global markets where it has operations, including France, Italy, Spain and Dubai. The company’s Italian business is currently its fastest-growing, he told Bloomberg.

Deliveroo’s expansion comes at a time when the restaurant industry has been wrestling with a nagging shortage of staff, both in kitchens and in dining rooms.

Restaurants owners everywhere have complained about the difficulties in finding people to work, from James Beard Award winners to the smallest family owned places.

The staff shortages have caused restaurants to curtail menus, cut service hours and even, in the most extreme cases, close their doors.

But Deliveroo and other restaurant delivery services may be able to address that, by shifting more of the industry’s focus away from brick and mortar places, and toward those that only operate out of commercial kitchens.

In England, these are known as “dark kitchens,” and they’re also called “ghost kitchens” elsewhere.

Deliveroo offers participants a concept called “Editions.” These are hubs where Deliveroo invites restaurant owners and chefs to develop dishes for delivery only.

It chooses the locations based on areas where customers are most likely to be interested in food from places that don’t have brick and mortar outlets.

In London, the food was available first in the Camberwell, Battersea, Dulwich and Canary Wharf areas.

The concept has required constant tinkering. As Deliveroo says on its web site, “Deliveroo Editions are alive and constantly innovating, made up of hundreds of people looking at everything from the packaging your meal arrives in, to the entire way a kitchen is built and run for delivery.”

In the United States, ghost kitchens are receiving increasing attention from restaurant owners and investors.

I first wrote about delivery-only restaurants in 2017, when they began to arrive in Chicago after making their debut in New York City.

Since then, consumers’ interest in getting food delivered to them has grown, thanks in large part to the participation of fast food brands in the delivery game.

QSR Magazine says ghost restaurants allow potential restaurant players to get rid of a physical location, salaries, overhead and reduce complexity.

“A long while ago, this statement sounded delusional. But today, technology has made it a sweet truth to believe in,” the magazine says.

While the concept is especially appealing to start ups, some major brand names are looking at the idea as well.

QSR thinks Starbucks, which has been delving into better-quality cuisine at its Reserve brand, may someday get into the food delivery business.

And companies such as Chik-fil-A are testing out a delivery model where the vast majority of a restaurant’s kitchen is devoted to food that is eaten somewhere else.

Meanwhile, if Deliveroo’s CEO is to be believed, delivery drivers, who have voiced complaints about their pay and working conditions, themselves might become obsolete.

Shu told Bloomberg he could see Deliveroo orders being dropped off by Amazon’s fleet of delivery drones one day.

June 13, 2019 at 01:05PM
Forbes – Entrepreneurs