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It’s no surprise that one of the major drivers for the online food delivery market is convenience and easy accessibility. With millennials being the largest consumer segment of this market, consumers have gotten accustomed to food delivery apps that provide a wide variety of restaurants, offers, reviews and quick food delivery.
The global online on-demand food delivery services market with sales expecting to reach $220 Billion by 2020 (nearly 40% of total restaurant sales) as a result of it.
Food delivery brands that are trying to stick out, are rushing to incorporate new ways to improve their overall delivery efficiency with the latest tech to improve customer experience.
1) Pop-Up’s & Dark Kitchens – Improving Operational Efficiency
Launching a restaurant in a new location often poses many challenges, the primary being whether or not a steady supply of customers will be present.
Pop up kitchens, although not a new concept, is now a trending strategy used by restaurant owners to sample a new audience segment with the aid of the local delivery service partner.
Caviar, a food delivery startup saw a 25% increase in orders coming from new customers when they tried a pop-up restaurant in New York City with San-Francisco based Souvla.
Similarly, Honey Butter Fried Chicken’s delivery popup in Oakland saw 23% of orders were coming from new customers.
When Caviar rented its space for HBFC for a weekend in the East Bay, the restaurant saw a 200% increase in deliveries through Caviar, as compared to its Chicago location over the same weekend.
“It’s a strategy designed to play to the delivery company’s strengths…..people seem to value exclusive content” – Gokul Rajaram, Caviar’s Lead at the Square
Delivery-only places with no storefront or “dark kitchens” is being fast adopted as a cost-effective and operationally efficient business strategy for restaurant owners.
UK-based delivery start-up Deliveroo has experimented over a year with setting up shipping container kitchens or Rooboxes inside parking lots and under freeways to make delivery more convenient.
Will Shu, CEO of Deliveroo and early leader in dark kitchen experimentation, claims that the concept was “the biggest development in the market” since his own company formed.
Currently, Deliveroo has over 106 different Roombox kitchens operational across countries like UAE, UK, Italy Honk Kong, Netherlands, and Austrailia.
By removing the cost of consumer-facing elements required in brick-and-mortar parent restaurants such as chairs, tables, air-conditioning and maintaining kitchens purely to serve the growing food delivery markets – Dark kitchens aim to improve operational efficiency and growth of restaurants tenfold.
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2) Virtual Kitchens – Why lease at all?
Leading the charge for this concept, Uber Eats has been running virtual kitchens featuring new restaurants and dishes only available in the app.
Instead of opening a new physical space, Uber Eats has been working with restaurant partners from the kitchen space they already use.
“There’s essentially no upfront investment unless they need to purchase new ingredients …It’s Incredibly low-risk” Elyse Propis, Uber Eats program manager
Uber’s delivery business, Uber Eats, has been running what it calls “virtual restaurants.”
These aren’t imaginary kitchens, but new restaurant brands that exist only in Uber’s app.
Using a data-driven approach, Uber tracks what food items are entered into the search bar and accordingly decides what they should offer next in terms of new ingredients, dishes or a virtual restaurant itself.
Few virtual restaurants make similar food at a lower price point by switching up ingredients. Others opt for experimenting with an entirely new cuisine, like a pizza restaurant in Chicago making fried chicken wings.
“I think it goes back to us viewing our business as ‘How do we use the data that we have to allow our restaurateurs to utilize the spare kitchen capacity that they already have?’” Jason Droege, the head of UberEverything.
With no lease to take on and cost savings, the virtual kitchen concept is becoming a popular business strategy for major food delivery brands.
As another plus point, this business strategy allows food delivery brands to direct resources and focus more on product development and data analysis rather than getting into the leasing business.
3) Subscription Box Models – Customer Retention Solution
Brands like Blue Apron, HelloFresh are quite popular with consumers for their meals on demand and subscription box business models, however, food delivery brands like Uber Eats, Amazon and Deliveroo are also quickly adopting the subscription box business model due to its proven customer retention strategy.
Uber Eats, which posted a potential 3Bn dollar revenue in sales for 2017, has started to experiment in their own subscription service in UK.
“A subscription service could mean access to exclusive offers, menus, and complimentary delivery” said Toussaint Wattinne,UberEats UK country manager
Wattine further emphasized that Uber Eats’s ultimate goal is to boost customer loyalty and retention.
‘Deliveroo Plus’ a feature of Deliveroo is currently on trial in the UK. Deliveroo plus is available only to existing customers with a delivery fee waiver in favor of the subscription service.
Gobble, another subscription box meal delivery brand, sports a 6-month dollar retention rate estimated to be 40% higher than Blue Aprons. This led to a number of favorable media mentions and a large Series B funding.
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4) Food Delivery Robots – Adding a dash of futurism
TopChef has partnered with Postmates to launch their first food delivery robot to promote the 15’th season premiere of the show, but this isn’t just a fad that’s passing away, food delivery robots may clearly be the future of food delivery.
While UPS, Google, and Amazon are busy focusing on airborne delivery methods, the use ground-based delivery robots in an urban environment are more practical.
Cutting emission and the entire delivery guy quotient off the delivery equations, food delivery robots are now a highly invested option for last mile delivery of packages, food, drinks etc
Starship technologies have deployed dozens of delivery robots in the UK as a partnership project with Just Eat, Metro group, London food startup Pronto.co.uk and German package delivery firm Hermes. Focusing on delivering packages, groceries, and food to consumers within a three-mile radius.
Customers will be provided with a security code to enter into the robot when it arrives, releasing their meal at the touch of a button with Just Eat.
In Australia, where there is large geographic area combined with a dispersed population, to address the needs of quick package deliveries and same day deliveries like their US and European consumer counterparts seem to enjoy, delivery robots are now being tested out.
Domino’s is trialing “Dru” to address the needs of quick package deliveries like their US and European counterparts
The DRU is currently in the trial stage but is capable of delivering piping hot food and ice cold drinks to the customer’s doorstep.
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