Deliveroo is rapidly expanding its delivery-only kitchen concept in Australia as it looks to grow its share of the online food delivery market through data and efficiency.
The company on Wednesday announced the launch of a new Editions site in Collingwood, Melbourne, that is five times the size of the site it launched in Windsor last year.
Editions are Deliveroo’s delivery-only kitchen concept aimed at enabling restaurants to expand their reach without needing to make the same investment, or take the same risks, that opening a new restaurant typically entails, such as renting premises on a high street, paying wait staff, installing fitouts and driving foot traffic.
The new Editions site in Collingwood has space for 25 restaurants to cook their dishes in nine purpose-built kitchens and reach approximately 280,000 new customers in Melbourne’s inner east.
Participating restaurants at launch include the Sydney-based poke chain, Fishbowl, which is entering the Melbourne market through Editions, and the Melbourne burger chain Royal Stacks, which is launching Strange Bird, its ‘virtual’ fried chicken brand, through Editions.
Deliveroo country manager Levi Aron said the company is using its wealth of data on customer ordering behaviour to understand which restaurants are best suited to expansion through Editions.
“We leverage our data to understand which cuisines, hero brands and cult brands we should be bringing in…stuff that wasn’t there before,” Aron told IR.
“We’re able to model how many orders will be generated on a weekly basis and extrapolate further to growth in the year ahead.”
That data is an important part of Deliveroo’s pitch to restaurants, as competitors like Menulog and UberEats, which is now the biggest player in the online food delivery space in Australia, ramp up their own offerings in the market.
Essentially, Deliveroo is promising to add a new revenue stream for restaurants that operate out of its delivery-only kitchens. The extra income would theoretically come from new customers, rather than improved margins, since Deliveroo charges a higher commission on Editions orders to cover the cost of its own investment in the facilities.
But still, Aron said that restaurants will come out ahead.
“We believe that after a couple of months, if not from the get-go, they would see a return [on investment,” Aron said.
At the moment, Deliveroo is the only food delivery platform in Australia operating delivery-only – or ‘dark’ – kitchens. But according to a recent report in the Australian Financial Review, UberEats’ local management believes that dark kitchens are the next major development in the evolution of online food.
Aron told IR that Deliveroo has the benefit of having a two-year head start on the delivery-only kitchen concept and has embedded learnings from previous sites as it continues to roll out new spaces in Australia and around the world.
“We are also actively exploring opportunities to continue to expand Editions, with more sites on the way across Australia,” he said.
Author: Heather McIlvaine
This article first appeared on inside Retail, a sibling publication to inside Franchise Business.