One of the reasons Amazon had to exit the U.K. restaurant delivery market after just two years was Deliveroo. By creating virtual kitchens for restaurants and locking those restaurants into exclusive agreements, Deliveroo was able to build a moat around its business so deep that even Amazon gave up going against them in the U.K. And if a mega-giant like Amazon can’t compete in restaurant delivery, what chance do smaller players have?
It’s a question Berlin-based Keatz may have at least one answer to. Keatz owns and operates a number of virtual, delivery-only restaurant chains in Europe. They don’t, however, build out full-scale kitchen operations at each of its locations. Instead, the company uses a central kitchen to pre-cook the food, which is then frozen and shipped to smaller Keatz “assembly kitchens” in the markets where it operates.
These assembly kitchens are smaller than 200 square meters (~2,100 sq. ft.), which makes them relatively inexpensive to set up and operate in various European cities. Each location then, can also be standardized with the same equipment, because they are all just reheating the food, so those is no need for specialized equipment in various markets.
This hub-and-spoke approach to meal creation also allows Keatz to easily swap new brand concepts in and out at each location. Let’s say Thai food is no longer making money in a particular market. They can close that virtual restaurant down, ship frozen Chinese Food to that location instead, use all the same re-heating equipment and voila! There’s a brand new virtual restaurant. Each location can hold up to 10 virtual restaurants.
Once an assembly kitchen is up and running, Keatz relies on in-app promotion in existing delivery services like Deliveroo, Delivery Hero or Uber Eats. Keatz currently doesn’t advertise their virtual restaurants in the real world, but Joaquín Mencía, CCO for Keatz, told me that is something they are exploring as they continue to expand.
Founded two years ago, Keatz now serves areas in Berlin, Frankfurt, Barcelona and Amsterdam. Mencía said the company is looking to open three more facilities in Europe before the end of the year. Keatz is looking to expand aggressively in 2019 and raised €7.4 million (~$8.38M USD) to fuel that growth.
Keatz’s advantage will be the control it has over its own supply chain, as it will have deep insight into the meals it’s selling and can create new concepts relatively quickly without having to go through the logistics of bringing on a third party restaurant as a partner (or building out a kitchen specific to that restaurant’s needs).
I obviously don’t live in Europe, but I wonder how a continent so steeped in culinary tradition will take to frozen restaurant foods. People ordering restaurant meals for delivery probably aren’t as concerned with tradition and won’t care if the food has been previously frozen, as long as it tastes good.