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Deliveroo quintuples dark kitchen space in fight for online food orders

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.

Deliveroo uses its wealth of data on customer ordering behaviour to understand which restaurant brands, cuisines or prices are missing from a given market and then works with its restaurant partners to fill those gaps by expanding their offering in a less risky way through Editions.

“We’re able to model how many orders will be generated on a weekly basis and extrapolate further to growth in the year ahead,” Deliveroo country manager Levi Aron told IR. 

Levi Aron, Deliveroo Australia country manager

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.

New revenue stream for restaurants

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 come out ahead.

“We believe that after a couple of months, if not from the get-go, they would see a return [on investment],” he said.

According to Deliveroo, some restaurants have reported a more than 400 per cent increase in revenues and increases in delivery efficiency of up to 10 per cent.

The concept is an important part of Deliveroo’s pitch to restaurants, as competition in the online food delivery space heats up.

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.

UberEats, which is now the biggest player in the online food delivery space in Australia, recently launched a major marketing campaign across outdoor and TVCs, featuring well-known figures, such as Rebel Wilson and Lee Lin Chin.

But Aron told IR that Deliveroo has a two-year head start on the dark kitchen concept, having launched its first Editions site in the UK in 2016, and already learned a lot about how to improve the way it works with chefs and restaurants. By the end of this year, the company will have five Editions sites across Europe and 11 in Asia Pacific.

“We are also actively exploring opportunities to continue to expand Editions, with more sites on the way across Australia,” he said.

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