Deliveroo ‘restaurant rescue’ team to support struggling eateries

Deliveroo ‘restaurant rescue’ team to support struggling eateries

Restaurant delivery giant Deliveroo has today announced its latest initiative in London — a new team within its central office tasked with identifying restaurants — at risk of closure or already closed — who are “in need of support” and who will be offered a place in one of Deliveroo’s delivery-only “dark” kitchens.

The premise is a simple one: Deliveroo says it will swallow the costs that compromised the viability of a given restaurant. But concerns relating to real ownership — of product, brand, intellectual property, and data — remain partially unresolved, at least for certain brands, especially in the medium- and long-term.

The “Restaurant Rescue Team” — which sits within the 50-strong central commercial Editions team — will seek stricken or closed businesses who it believes would be able to continue trading with its support. They present their three-point solution thus:

  • Restaurants can access a wider customer base through the Deliveroo platform (which the restaurant does not have ownership over.)
  • The Rescue Team will use local knowledge and market insights to identify restaurants who they think will perform well in an area where an Editions site is based (so it is likely it would move to a completely new location.)
  • Deliveroo will help restaurants with branding, menu development and pricing strategies (therefore raising the question of how true the brand would remain to its original.)

Deliveroo says that for a “limited period,” which a spokesperson did not define and told Eater “will depend on take-up of the programme and how many restaurants [it] find[s] to participate”, the restaurants who enter Editions through the Rescue Team will “receive support which is not available to other restaurants on the platform.”

In practice that means, those selected will enjoy “preferential” (case-by-case) commission rates, but also, more significantly Deliveroo will “cover the costs of rent, equipment, maintenance, utilities, food safety setup, and audit costs.” The spokesperson confirmed that it would cover those costs in their entirety.

It is thought that the long-term goal of Deliveroo’s Editions scheme had been a data acquisition drive, where they could use algorithmic technology to understand what a market wants and when it wants it most. Additionally, the more Deliveroo knows, the more grip it has over its restaurant partners; the baton of creative expertise eventually passing from the producer to the logistics provider.

And yet, when asked if Deliveroo was incentivised to “rescue” restaurants by acquiring an equity share, the spokesperson said “Deliveroo will not expect any equity, no.” The company said the initiative was “part of a wider company push to support independent and local restaurants in the UK.” Adding that it followed what appeared to be little more than a PR exercise when it launched a restaurant makeover scheme in May which saw £25,000 on offer for independents to revamp their premises free of charge.

Deliveroo cites two examples of restaurants in London whom it has rescued: Fadi Chafe’s Waleema — a modern Lebanese restaurant, which was forced to close before entering Deliveroo Editions in November 2017 in Swiss Cottag. Waleema has since expanded to other Editions sites. Chafi endorses the scheme: “Editions minimised risk and provided a smoother entry into the market. Editions saved Waleema at a vital time. This is a great lifeline.”

The other is Chinese restaurant The Good Earth, which traded in West Hampstead for over 20 years but was forced to close. Andrew Kwok, director of Good Earth said that joining Deliveroo Editions in Swiss Cottage, two miles away was “an easy decision.”

“For us as it meant there was little upfront cost without the risk of a high capital expenditure typically required to set up a new business. The closure of our West Hampstead site was not easy but at least now we can be assured of continued employment for a few of our staff.”

Deliveroo did not provide any additional examples, nor its projected numbers for the initiative, but the spokesperson said that “the option will be open to restaurants who are interested. We will work closely with our partners whose business would work well in an Editions site and where we know that there is demand, to ensure the long-term success and future of growth of those businesses.”

Not only is the new initiative timed to coincide with the myriad challenges restaurants face — from rising business rates to increased food and labour costs and increased competition — but also as Deliveroo appears to be trying as many new revenue streams as possible following its investment from Amazon.

Restaurant wholly voluntary entry into the Deliveroo Editions sites appears to have been less successful than the company first forecast. Over the past two years, Deliveroo has significantly modified its nationwide ambitions for its delivery-only kitchens. Now, it hopes that it will find greater success with brands which need them more than the former start-up needs restaurants.

Source: Eater London

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