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Daily news and analysis about the food tech revolution

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Takeaway.com and Just Eat’s $7.6B Merger Approved

The U.K,’s Competition Markets and Authority (CMA) has approved Takeaway.com’s £6.2 billion ($7.6 billion USD) takeover of British food delivery service Just Eat. The merged company also announced it had raised €700 million ($756 million) in new outside funding in the form of new shares and convertible bonds.

The deal was originally announced in July of 2019. A bidding war with tech investment firm Prosus followed shortly thereafter, which Takeaway.com won — only to have the CMA open an investigation into the deal to see if it would “result in a substantial lessening of competition” in the U.K. food delivery market. 

Takeaway.com previously operated in the U.K., but exited that market in 2016. The CMA’s investigation concerned whether the Dutch company would have re-entered the U.K. market of its own accord without the Just Eat deal. 

“In this case, we carefully considered whether Takeaway.com could have re-entered the U.K. market in future, giving people more choice,” the CMA’s mergers director Colin Raftery said in a statement. “It was important we investigated this properly, but after gathering additional evidence which indicates this deal will not reduce competition, it is also the right decision to now clear the merger.”

The approval comes just days after the CMA provisionally approved Amazon’s investment in delivery service Deliveroo, which has been under investigation for similar reasons. In the case of this deal, the approval seems more tied to the COVID-19 pandemic than anything else, with the CMA concluding that the virus is having significant enough impact on Deliveroo’s business to endanger the third-party delivery company. 

Coronavirus doesn’t appear to be the driving force behind the Just Eat-Takeaway.com deal, which was never as dangerously on the rocks as Amazon’s anyway. According to CNBC, the new funding will be used to in part pay down debts as well as pursue “strategic opportunities.”

Amazon Gets Approval for Its Deliveroo Investment Thanks to the Pandemic

The UK’s Competition and Markets Authority (CMA) provisionally approved Amazon’s investment in Deliveroo over the weekend after Deliveroo warned its business could collapse without the funds. The third-party delivery service cited the COVID-19 pandemic, which has forced many restaurants worldwide to close, as the reason for “significant decline in revenues,” according to a statement from the CMA.

Deliveroo announced a $575 million Series G funding round in May of 2019 — of which Amazon was set to be the largest investor. In July of that year, the CMA put Amazon’s involvement under scrutiny, saying there were “reasonable grounds” the two companies would “cease to be distinct” with the investment.

As I wrote in December, when the investigation entered Phase 2:

As regulators have stressed, the Deliveroo investment would give Amazon a path back into the market and immediate access to Deliveroo’s existing customer base. That in turn would undercut competition from other food delivery services in the UK such as Uber Eats and Just Eat. 

The ongoing pandemic coupled with the restaurant industry fallout has changed that. Many of the restaurants Deliveroo previously worked with have closed. That includes major QSR chains like McDonald’s and Burger King, have stopped all operations including delivery and takeout, in the UK.

In its announcement, the CMA said “it has become clear that the coronavirus pandemic is having a significant negative impact on Deliveroo’s business” and has “provisionally concluded that Deliveroo’s exit from the market would be inevitable without access to significant additional funding, which the CMA considers that only Amazon would be willing and able to provide at this time.”

The CMA is currently taking views on its findings until May 11 2020, and has until June 11 2020 to make a final decision. 

Deliveroo Introduces Dynamic Pricing for Delivery Fees — Much to the Dismay of Monthly Subscribers

Deliveroo will change its delivery fee model to be more dynamic, according to an article on Restaurant Dive. Beginning in February, the UK-based food delivery service will introduce a pricing model where delivery fees are based on a customer’s distance to the restaurant. A Deliveroo spokesperson said this sliding-scale model will make delivery fees lower for the majority of Deliveroo customers.

There is, however, a catch. Along with this new pricing model, Deliveroo also said it would charge a 49p (~0.64 USD) service fee for every customer, including those signed up to Deliveroo Plus, the company’s subscription service. 

Not surprisingly, Deliveroo Plus subscribers are none too pleased with the change. 

These users already pay a little over $15 (USD) per month to access the subscription service, which offers free unlimited delivery to its members. But most people willing to pay for a subscription are probably ordering restaurant delivery multiple times per month, and in some cases per week. In other words, that new mandatory fee, though less than $1, can add up pretty quickly, especially when it’s piled on top of the subscription fee itself.

In fact, the announced changes to the pricing structure have many of those who signed up for the subscription service up in arms and ready to boycott Deliveroo, as a recent article in The Daily Mail highlighted. “Signed up to plus on earlier this month. Cancelled it just now because of their new jazz fees,” one person tweeted. Another wrote via Twitter, “Your decision to put a minimum order on Deliveroo plus is appalling. As a single man, recently widowed, I liked the fact I didn’t have to over order. Will probably go elsewhere now and cancel my subscription.”

Subscription models aside, however, the move towards a more dynamic pay structure could benefit other Deliveroo users as well as drivers, to whom the company says it is offering “a different fee for every order and a fairer system, paying more for orders that take [drivers] further.”

Week in Restaurants: Kitopi Brings Ghost Kitchens Stateside, The Amazon-Deliveroo Deal Is on the Rocks

If you’re currently hiding from your in-laws, stuck at the airport on your way home, or just need a mental break from the holidays, now would be a good time to catch up on all things restaurant tech.

Behold, our the last restaurant tech roundup of 2019, complete with news on ghost kitchens, facial-recognition software, and Amazon’s latest antitrust woes:

Kitopi Kicks Off U.S. Operations With NYC Ghost Kitchen

Dubai-based ghost kitchen provider Kitopi has expanded operations to NYC. The startup, which already operates kitchens in London, Dubai, Abu Dhabi, and other cities around the globe, provides kitchen infrastructure to restaurants wanting to use ghost kitchens to fulfill off-premies orders. The company signed a 10-year lease on a space in Brooklyn and has plans for 10 to 15 kitchens to be housed in the facility. Kitopi also plans to open another location, in Manhattan’s West Village neighborhood, in February 2020, and expand further across the U.S. (no specific locations have been named) later in the year.

The Next Phase of the Amazon-Deliveroo Investigation Begins

Amazon’s investment in UK food delivery startup Deliveroo is now in serious jeopardy after the two companies failed to address the concerns from UK antitrust watchdog the Competition and Markets Authority around how the deal would affect competition. Earlier in December, the CMA cited concerns around how the deal could hurt emerging competition in the food delivery market as well as raise prices and lower quality for consumers. The investigation now enters a second phase that will further delay, if not derail, Amazon’s investment and in the process give competitors like Just Eat and Uber Eats a leg up in the meantime.

PopID Is Launching Its Facial-recognition Platform In Dairi-O Kiosks

North Carolina QSR chain Dairi-O, may be older than McDonald’s and far less known, but it’s on the cutting edge as far as implementing restaurant tech is concerned. The chain has teamed up with PopID to launch the latter’s facial-recognition software inside self-service kiosks at Dairi-O restaurants. PopID is owned by Cali Group and already has its technology in place at CaliBurger, Deli Time, and other small-to medium-sized restaurant chains. With the facial-recognition technology, users can access saved favorite meals, re-order, and pay for their food without a phone or credit card. Dairi-O said it plans to install the tech in all of its locations in the first half of 2020, and has expansion plans for the brand itself in the near future.

Amazon Has 5 Days to Save Its Controversial Investment in UK Food Delivery Service Deliveroo

Amazon’s investment in Deliveroo — and its stake in UK restaurant food delivery — remains in doubt after British regulators said this week that the deal could mean higher prices and lower quality services for customers. Amazon and Deliveroo have five days to submit proposals that counter these concerns, which were raised by UK competition watchdog the Competition and Markets Authority (CMA). Failure to do so would mean a an in-depth investigation of the deal that could take six months, according to an article published in The Guardian.

Amazon first announced the investment in Deliveroo in May 2019, when it was meant to be part part of a larger $575 million funding round. Though the investment would form a minority stake, about 16 percent, the CMA flagged it in July, saying it presented “reasonable grounds” to suspect that Amazon and Deliveroo would “cease to be distinct.” Deliveroo was then prohibited from any activity that would lead to Amazon’s integration with the restaurant food delivery service, including changes to senior management or big contracts. 

In a statement released Wednesday, the CMA said the investment could “damage competition in online restaurant food delivery by discouraging Amazon from re-entering the market in the UK.” Amazon previously ran its own restaurant delivery service in the UK but shuttered that business after just two years. As regulators have stressed, the Deliveroo investment would give Amazon a path back into the market and immediate access to Deliveroo’s existing customer base. That in turn would undercut competition from other food delivery services in the UK such as Uber Eats and Just Eat.

“There are relatively few players in these markets, so we’re concerned that Amazon having this kind of influence over Deliveroo could dampen the emerging competition between the two businesses.” Andrea Gomes da Silva, executive director of the CMA, said in the statement.

There is also the concern that the deal would damage competition in the UK grocery delivery sector. Amazon and Deliveroo are both two of the strongest players in this area right now. A major investment like this could reduce the competition.

According to The Guardian article, Amazon could be forced to sell its stake in Deliveroo, as previous companies have had to do in similar cases over the years. 

Spoon Market Map: Ghost Kitchens in 2019

Just half a decade ago, the phrase “ghost kitchen” referred to restaurants that looked legit on Grubhub and Seamless but were actually digital fronts for unregulated kitchens. In other words, chicken tenders from what appeared to be a local restaurant might actually have been cooked in someone’s apartment.

Then the delivery boom went off, thanks largely to the growth of third-party services like Grubhub and DoorDash, and by the many digital channels through which customers could suddenly get food. Order tickets proliferated for restaurants, but so too did the stress around how to fulfill those orders without over-burdening the in-house kitchen staff.

The answer to the problem? Take the restaurant out of the kitchen.

In the last few years, restaurants have been moving many of their operations around delivery and to-go orders to dedicated kitchen spaces outside the main restaurant location. The name “ghost kitchen” has stuck around, but now it’s a health-department-friendly term for these spaces that act as hubs for off-premises orders.

But actually, there are many names nowadays for the concept: ghost kitchen, virtual kitchen, cloud kitchen, the (slightly nauseating) description “kitchen as a service.” All those phrases amount the same thing: a kitchen facility that exists solely for the purpose of helping restaurants cook and fulfill to-go orders and get them into the hands of delivery couriers. There is no dining room or front-of-house staff in a ghost kitchen, the tech-stack is more streamlined than that of a full-service restaurant, and, increasingly, the location is completely separate from a restaurant’s dine-in location(s). Now, too, there are also kitchens on (literal) wheels, which add yet-another piece of mobility to the business model. 

To help you navigate the evolving world of ghost kitchens, we’ve created a market map for your reference. This market map is intended to be a snapshot of the current ghost kitchen landscape in 2019. It’s not comprehensive, and we expect both it and the overall landscape to change drastically over the next 12 months. That means you can expect to see this map updated regularly. As always, we welcome suggestions for additional companies and players in this space.

Have suggestions? Drop us an email.

1. Kitchen Infrastructure Providers

The largest category in ghost kitchens right now, Kitchen Infrastructure Providers can be likened to cloud computing providers: they rent companies the space and tools needed to run a business, either as a flat-fee model for on a pay-as-you-go basis. 

Kitchen United, for example, charges a monthly membership fee that includes rent, equipment, storage, and services like dishwashing. Reef, which originally made a name for itself reinventing the concept of the parking garage, offers these things as well as direct partnerships with major third-party delivery companies like DoorDash and Postmates.   

Normally these facilities are large, warehouse-like buildings that hold multiple “restaurants” under a single roof. For large restaurant operators with multiple chains looking to fulfill extra demand brought on by delivery or test out new concepts without incurring too much risk, these are ideal.

Multi-unit chains can also use these spaces to reach customers in areas where they might not have a brick-and-mortar store. Chick-fil-A is widening its reach in the SF Bay Area by working out of DoorDash’s newly opened facility.

2. Restaurant-operated Kitchens

For some restaurants, running a ghost kitchen operation themselves makes more sense than teaming up with a third-party kitchen provider. This is often the case with smaller, independent restaurants, whose ghost kitchen might consist of nothing more than an area of the restaurant’s existing location(s) dedicated to fulfilling off-premises orders. Or it might apply to multi-unit chains who simply want to expand to new areas and don’t have the capital or inclination to deal with the burden of a full-service restaurant. Colombian chain Muy is one such company, having started as a dine-in restaurant before expanding its ghost kitchens to serve more areas of Latin America.

The most notable of all the companies in this category right now is Starbucks. In addition to building out “to-go” stores that exist solely for the purpose of fulfilling off-premises orders, the company has also partnered with Alibaba to turn parts of the latter’s Hema supermarkets into ghost kitchens in China.

The boundaries around this category are especially fluid. In other words, just because you operate your own ghost kitchen in one part of the country doesn’t mean you can’t team up with a third-party provider in another, as The Halal Guys and Chick-fil-A have done.

3. Virtual Restaurant Providers

This is where the lines really start to blur between restaurant, kitchen provider, and delivery company. Anyone can make a virtual restaurant, and as the category in our map shows, more than just restaurants are trying their hand at food concepts that can only be ordered through digital channels and are prepared in a ghost kitchen. Whole30, for example, is a diet concept better known for its cookbooks than its dealings with the restaurant industry. The folks behind that brand teamed up with Grubhub and restaurant company Lettuce Entertain You to create a virtual restaurant offering meals with Whole30-approved foods. 

On the other hand, a company like Keatz runs a network of virtual restaurants it houses beneath the roof of its own ghost kitchens. Taster, based out of France, creates native restaurant brands for food delivery companies like Uber Eats and Deliveroo. Food is cooked in Taster-run kitchens.

4. Mobile Kitchens

In slightly more its own category, companies like Ono Food Co. and Zume are creating robotic, self-contained kitchens on wheels that offer restaurant experiences that can be tailored to specific neighborhoods in a city and also plug into third-party delivery services.

Restaurants can also partner with these kitchens on wheels to expand their reach into new markets, as &Pizza has done by teaming up with Zume.

What’s Next for Ghost Kitchens

Ghost kitchens will become the norm for multi-unit chains. With off-premises orders expected to drive the majority of restaurant sales growth over the next decade, multi-unit brands (think Panera, Chipotle, etc.) will find ghost kitchens a cost-effective way to meet this demand without overburdening existing restaurants. The majority of them will rent space from kitchen infrastructure providers, as Chick-fil-A is currently doing with DoorDash. 

There will be an explosion of delivery-only brands. Since ghost kitchens provide a cheaper, faster way for food entrepreneurs and small restaurants alike to test-drive new concepts, we will see an influx of delivery- and pickup-only brands come out of these kitchens over the next year. Many will be born inside the walls of facilities like Kitchen United or CloudKitchens. Meanwhile, the number of virtual restaurant networks like that of Keatz will increase. 

Artificial Intelligence will be designed into the kitchen. AI is a really broad term that’s often misused. That fact aside, its presence in the restaurant industry is here to stay, and in ghost kitchens, it will prove itself valuable for everything from tracking ingredients to helping staff curb food waste. On the consumer end, we expect to see the technology more deeply integrated into the apps and websites from which customers order, improving recommendations and upselling opportunities.  

More non-restaurant food brands will launch virtual restaurants. In keeping with a trend recently made popular by Whole30 and Bon Apétit, food brands, diets, celebrity chefs, and other non-restaurant businesses will team up with third parties to launch delivery and pickup concepts. Grubhub and Uber Eats are two such third parties already doing this. Expect many more such partnerships — soon.

Bonus: The tech stack will get pared down. No front of house means no POS, right? Quite possibly. With less (or no) customer-facing technology like digital menu boards, self-order kiosks, and tabletop ordering, much of the restaurant tech on the market today becomes irrelevant in a ghost kitchen setting. As the folks at Reforming Retail noted recently, “under this scenario the POS is just an ordering node in the cloud that outputs your menu to a consumer and sends orders to your kitchen.”

That doesn’t mean restaurant tech is going by the wayside. Some ghost kitchens, like those of Muy, have a walkup option where customers order at kiosks onsite, and there will doubtless be new solutions created that are specifically for the ghost kitchen. But the tools of tomorrow’s ghost kitchen won’t look a thing like today’s bloated restaurant-management tech stack. For everyone involved, that’s a bonus.

Deliveroo Launches Pickup Feature for Restaurant Food

Deliveroo has launched a new pickup feature that lets users place an order then go to the restaurant and get the food themselves, according to The Telegraph. The new service is live at over 700 restaurants in the UK, and Deliveroo says it plans to offer the feature in 10,000 UK restaurants within one year.

As features go, this one is pretty straightforward. Users order from restaurants via the Deliveroo app, then simply choose the “pickup” option to collect the food, rather than having to pay a delivery fee and wait for a driver to deliver the meal.

Deliveroo says it will launch the feature internationally in Hong Kong, Australia, Netherlands, Belgium, and Spain this year.

The move will appeal to those consumers looking to shave bit off the overall cost of lunch or dinner — an enticing option for densely packed urban areas where the a person’s restaurant of choice might be as close as across the street or on the next block. More importantly, offering pickup could help Deliveroo appeal to more restaurants who want to offer off-premises ordering but may not want to fork over the hefty commission fees associated with delivery. To be clear: with pickup orders, restaurants still pay Deliveroo commission, just less so than it would be with delivery.

The additional revenue from a pickup service will help Deliveroo remain competitive, particularly in the wake of its massive investment from Amazon being delayed by the Competition and Markets Authority’s investigation. The CMA has until December 11 to decide whether to take Amazon’s investment into the next phase of investigation.

Meanwhile, the market for food delivery in Europe remains a crowded one. Deliveroo faces competition from Uber Eats, who has a sizable presence on that continent and could further expand its own recently launched pickup feature the company launched last month.

Then there’s Just Eat, an already massive food delivery company that’s currently tied up in a bidding war between Netherlands-based food delivery service Takeaway.com and Naspers spinoff Prosus. It’s looking more and more likely that Takeaway.com will win that fight, which would turn Just Eat-Takeaway.com into one of the largest food delivery services in the world, and certainly in Europe.

Diversifying its offerings to restaurant partners seems to be the tactic Deliveroo is using to stay competitive. In addition to offering a pickup program, the company also this year launched a procurement platform to supply restaurants with discount ingredients, equipment, and other supplies. It also started the Restaurant Rescue Team, which turns struggling restaurant businesses into ghost kitchens in an effort to save them.

Food Delivery Service Just Eat Looks to Be in a $6B Bidding War

Food delivery service Just Eat just found itself at the center of a what could become a massive bidding war for the company.

The service, which is based in London and has operations in multiple countries, confirmed in July a £9 billion ($11.6 billion USD) all-stock deal to merge with Dutch delivery company Takeaway.com, saying the two companies had reached a preliminary agreement. But this week, tech investment firm Prosus, a spinoff of tech conglomerate Naspers, showed up to the party as a seemingly unwelcome third guest. Or as the Financial Times put it, Naspers “has tried to gatecrash a merger of two of Europe’s biggest food delivery groups.”

According to FT and others, Prosus had been in talks with Just Eat previously. After failing to reach an agreement, the former went to directly to Just Eat shareholders with a counter offer of £4.9 billion (roughly $6.3 million USD), in what’s called a hostile bid.

Just Eat rejected the bid, saying in a statement that it “significantly undervalues Just Eat and its attractive assets and prospects both on a standalone basis and as part of the proposed recommended all-share combination with Takeaway.com.”

Prosus offered 710 pence per share in cash for Just Eat. In comparison, Takeaway.com’s original all-stock offer from July valued Just Eat at 731 pence per share, but thanks to Takeaway’s declining stock, that number has dropped all the way down to 595 per share in the last few months.

On the surface, that would make the Prosus offer more attractive — in the short term. But Just Eat has said its decision to stand by the Takeaway deal is based on “compelling strategic rationale.” As Just Eat noted in a press release from July, when it announced the merger, the combined group has “compelling strategic logic and represents an attractive opportunity for both companies to build on the strong individual platforms of Just Eat and Takeaway.com with the potential to deliver substantial benefits to respective shareholders, customers, employees and other stakeholders.”

In other words, combining two companies who already hold a massive global presence on their own in the food delivery sector would create an entity strong enough to stand up to competition. Deliveroo raised a £450 million (~$575M USD) round this year, a sizable chunk of which came from Amazon. Uber Eats also has a massive presence across every livable continent on the globe.

Even so, shareholders still have to approve the deal. According to FT, some have “voiced opposition” to it, including Aberdeen Standard Investments and Eminence Capital, who “dismissed” the deal as grossly undervaluing Just Eat. Shareholders will vote on December 4 whether or not to approve the deal.

Prosus has stakes in multiple food delivery companies, including Swiggy and Delivery Hero, but the company isn’t yet considered a heavyweight in the food delivery sector. Its deal, while financially attractive, would likely lack the synergy Just Eat seems to think is so vital to the Takeaway merger.

At the very least, Takeaway could very well have to raise its offer price in the wake of Prosus’ counter offer, igniting a bidding war that could have a ripple effect across the industry as competition among food delivery companies heats up.

Order-Ahead Food App Ritual Expands to Europe, Hong Kong

Toronto, Canada-based mobile app Ritual, which lets users order ahead for restaurant pickup food, announced this week it is expanding service to Germany, The Netherlands, and Hong Kong.

The new markets are just the latest in what’s been a steady expansion for the company ever since it started rolling out service to the U.S. in 2017. In January, the company expanded to the UK and Australia, and said it expected to triple its restaurant count by the end of 2019.

Like many restaurant-focused mobile apps, Ritual lets users browse participating restaurants, order ahead, leave special instructions (no pickles please!), and pay within the app. On top of those fairly standard offerings, it has a few features that help it stand out from the crowd.

For one, it’s geared towards the lunchtime office crowd in a big way, thanks to a social feature baked into the app called Piggyback. Workers in the same office or location can gather within the app and decide on a restaurant. They can then choose when to order food, place their orders, and designate a person to go and pick the meal up. The app stores past orders, making it easy for teams to reorder entire meals. So if Fried Chicken Friday is a thing for your team and you want to spend less time collecting everyone’s orders, Ritual’s the app for that.

Ritual is also a way for smaller and/or independent restaurants to test off-premises ordering. The app’s pickup-only focus makes it cheaper for restaurants to participate (no drivers to pay), so they can easily gauge how much their customers want off-premises orders and which meals work best in a to-go environment.

So far Ritual has raised a total of $112.9 million, its last round being a $70 million Series C in June 2018. According to the press release, the service is now available in over 50 cities, including its new markets. The addition of Germany, Hong Kong, and The Netherlands also marks the start of the company’s goal to expand to a greater number of non-English-speaking markets in future.

Its push to European countries comes at a time when the food delivery and pickup market on that continent is seeing some serious competition. In July of this year, third-party aggregators Just Eat and Takeaway.com merged to form one of the largest restaurant-delivery services in the world. Both already had a significant presence in Europe prior to the merger. In the same month, Just Eat also acquired UK-based corporate catering marketplace City Pantry, a service that also appeals to the office crowd. And amid much competition, Deliveroo pulled out of Germany in August.

As I mentioned above, though, the simplicity of Ritual’s app could make it appealing to restaurants that can’t or don’t want to fork over fees associated with some of those other apps. The big question around Ritual’s expansion, which is yet to be answered in these new markets, is if a pickup-only app is enough to compete in today’s delivery-crazed food world.

DoorDash Launches Delivery In Melbourne, Its First City Outside North America

As of today, DoorDash is now available in Melbourne, Australia, the first city in which the third-party food delivery service is operating outside of North America.

In a blog post, DoorDash said it has already added “thousands of restaurants” in Melbourne to its platform, including national chains like Nando’s and Betty’s Burgers.

DoorDash joins a competitive food delivery market that includes Uber Eat and Deliveroo, both of which have operated in Australian for years. The latter is even part of Australian airline Quantas’ frequent flyer program. DoorDash will also have to contend with MenuLog a subsidiary of Just Eat, whose recent acquisition of Takeaway.com makes it one of the biggest third-party food delivery companies to contend with outside of the U.S.

As to why DoorDash chose Melbourne as its first overseas market, the company did not say, though Reuters points out that the “city of 4.5 million people has been a popular entry point for global companies in the so-called ‘sharing economy.'”

The Australia expansion comes on the heels of DoorDash’s recent launch in Montreal, Canada, the service’s first non-English-speaking location. Not that the company is slowing down its march across America: Since becoming the first U.S.-based third-party delivery service to operate in all 50 states, DoorDash has been striking deals left and right with major restaurant chains. The company also recently acquired autonomous vehicle startup Scotty Labs and is potentially looking at an IPO.

In August, the company outlined a new policy for its pay structure for drivers, a move largely in response to controversies surrounding the way the service handles worker tips.

In this week’s blog post, DoorDash said it expects to expand “throughout the suburbs of Melbourne, its surrounding regional cities, and Australia broadly” over the rest of 2019 and into 2020.

Deliveroo Shuts Down Service in Germany

In a move that underscores how competitive the food delivery landscape is getting, UK-based service Deliveroo announced it will pull its business out of Germany on August 16, according to TechCrunch.

In an email sent to Deliveroo users, the company noted it was “on a mission to create the very best food delivery service in the world,” adding that “where we cannot do this to the level that we expect and you deserve, we won’t operate.”

As TC notes, Deliveroo had shuttered services in smaller German cities about a year ago to focus on places like Berlin, Munich, and Frankfurt. The total exit from Germany is first time the company has completely shut down service in a country.

The move comes just a couple weeks after Netherlands-based delivery service Takeaway.com acquired UK-based Just Eat for about $10 billion, thus creating one of the world’s largest food-delivery companies with a leading presence in Germany along with Britain, the Netherlands, and Canada. The new company, dubbed Just Eat Takeaway.com, also has operations across Europe as well as Brazil, Mexico, and Australia. In 2018, Delivery Hero sold its German operations to Takeaway.com.

Deliveroo’s news today is no doubt in response to the massive merger, though the company said it didn’t rule out the possibility of returning to Germany at some point in the future. Deliveroo, which raised $575 million in May, said it would refocus its efforts on other markets in Europe and APAC.

The service will operate as normal until August 16, according to the email sent to Deliveroo users.

Deliveroo Rescue Team to Turn Struggling Restaurants Into Delivery-Only Businesses

In a move worthy of reality TV, Deliveroo has launched a “Restaurant Rescue Team” to identify and help struggling restaurants and revive them as delivery-only businesses.

According to a blog post from Deliveroo, the so-called rescue team, set up within Deliveroo’s HQ, will look for restaurants either at risk of closing or already recently closed and offer them a place with Deliveroo Editions, the company’s ghost-kitchen program that houses delivery-only brands and restaurants.

The rescue team will use its “local knowledge and market insights” to identify those restaurants they think will perform well in an area where an Editions kitchen is located. Deliveroo said it will help these restaurants with branding, menu development, and pricing strategies as well as some extra support.

From the blog post:

For a limited period, the restaurants who enter Editions through the Rescue Team will also receive support which is not available to other restaurants on the platform, to help maximise the benefit of moving into a delivery-only kitchen. The selected restaurants will enjoy preferential commission rates, and Deliveroo will cover the costs of rent, equipment, maintenance, utilities, food safety setup and audit costs.

It all sounds a bit like those TV shows where third parties try to save restaurants, bars, and marriages, only this time it’s in real life. Deliveroo said it will first help restaurants in London, then expand to other parts of the UK.

If successful, this ghost-kitchen-as-a-savior model could spark a trend in the industry. Restaurants are going bust at record levels right now as they face increased labor costs, simultaneous labor shortages, and pressure to meet demand for new technologies, including delivery.

Ghost kitchens provide a way for restaurants to cut costs, meet demand for delivery, and even try out new concepts without struggling under the overhead of a full-service business. In this area, Deliveroo faces competition from Uber Eats, who is reported to be doing its own ghost kitchens in Europe.

The “rescue” aspect of Deliveroo’s new intitiative is in keeping with the brand’s self-proclaimed “track record of helping restaurants on the verge of closing.” The company launched a restaurant makeover competition in June to revamp struggling restaurants in the UK.