Deliveroo this week launched Food Procurement, a platform on which the third-party delivery service’s partner restaurants can purchase ingredients and supplies at discounted prices. It’s part of what appears to be the company’s aim to become a one-stop-shop for restaurants, where Deliveroo would provide not just drivers to shuttle food orders to customers, but also vital pieces of restaurants’ infrastructure, from internet to real estate to equipment.
With the Food Procurement platform, Deliveroo buys ingredients on behalf of the restaurants, leveraging its scale and purchasing power to negotiate better deals with suppliers. Deliveroo then negotiates its own contracts with the restaurants, who get a better rate on ingredients and items like cleaning supplies and packaging products.
As Ajay Lakhwani, VP of new business at Deliveroo, said in a statement, “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.” Deliveroo has been piloting the platform for the last year and says it can save restaurants up to 20 percent of their total ingredients bill.
While partner restaurants are not obligated to sign up for the Food Procurement platform, several hundred already have.
Amid Brexit concerns, food prices in the UK are soaring currently, which makes Deliveroo’s platform an attractive prospect, especially for mom-and-pop restaurants with tighter margins who don’t have the purchasing power to sway suppliers into cheaper ingredient prices.
The platform also underscores Deliveroo’s aforementioned aim to be more than just a delivery partner to restaurants. The company has struck numerous partnerships with third parties to offer discounts to restaurants on everything from print services and energy costs to wifi and waste management.
While those perks will inevitably save restaurants on costs, they also shift more power into the hands of Deliveroo. Such a shift definitely has its ups and downs for both sides. It’s also probably something we’ll see more of in future. As I wrote in March, when rumors of Uber-operated ghost kitchens surfaced, “it’s not hard to imagine a third-party delivery service taking over more of the operations up and down the operational stack.”
The launch of Deliveroo’s procurement platform comes right on the heels of news that that the service’s recent investment from Amazon is now being scrutinized by the UK government’s Competition and Markets Authority (CMA). The Food Procurement platform doesn’t appear to be affected by this scrutiny at the moment.