Reports - The future of on-demand food delivery Restaurants are fighting back, dark kitchens are heating up and - Sifted
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Reports
1 SIFTED REPORTS: FOOD DELIVERY
The future
of on-demand
food delivery
Restaurants are fighting back,
dark kitchens are heating up and
some are giving grocery a go.
Sponsored by
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Contents
3. Introduction
6. Q&A with Uber Eats
8. Dark kitchens are going to be big
17. Brands are going to go it alone
21. On-demand grocery is going to get interesting
27. Food for thought
The food delivery report is brought to you by the Sifted
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journalism to create deeper, longer form analysis of key
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Introduction
€1.6bn
Europe is home to some food delivery giants: Just Eat,
Takeaway.com, Delivery Hero, Deliveroo, Glovo and Wolt
have all slipped into the everyday lives of millions of
customers across the continent — and are bringing in
Over €1.6bn was invested in European
sizeable revenues as a result.
food logistics and delivery businesses in 2019
But it’s easy to forget that many of these companies have
been around for less than a decade — London-based according to Deloitte. Meanwhile, VCs continue to have a
Deliveroo is just six years old and Barcelona-based Glovo healthy appetite for the sector: over €1.6bn was invested
just four and US giant Uber Eats arrived in Europe only in in European food logistics and delivery businesses in 2019,
2016 — and the sector is still young. according to Dealroom data.
There’s still a whole lot of room for growth, plenty of space Just three on-demand food delivery platforms account for
for new contenders and many a hurdle in the way of their the majority of that funding in 2019: Deliveroo (€523m),
ultimate goal: to conquer Europe’s stomachs. Glovo (€319m) and Helsinki-based Wolt (€118m). Meanwhile
several other “hot” sectors are emerging at earlier stages
Revenue for online food delivery in Europe is experiencing
— delivery-only food brands such as Berlin-based Keatz
double-digit growth rates and could reach $25bn by 2023,
European startups in the on-demand food sector
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(€12m) and London-based Taster (€7m) Investors in major European
— and online grocery players, including food delivery companies
Stockholm-based Mathem (€38m),
Mapped by stage first invested in
Moscow-based Instamart.ru (€6.9m)
and Amsterdam-based Crisp (€5m).
All are having to contend with the huge
might of US food delivery player Uber
Eats and the potential merger of two
food delivery veterans: Takeaway.com
and Just Eat. If the merger goes ahead,
it will create a $9bn behemoth with a
footprint in 17 European markets —
albeit without as substantial a logistics
network as some of its younger
competitors.
Source: Dealroom
Outside of Europe, there are plenty of
other food fights going on, between
companies all attracting sizeable
Investment hit an all time high in 2019
cheques from investors. Indonesia’s Funding into food logistics and delivery
Gojek (currently raising a $2bn+
round) and Singapore’s Grab are vying
for the southeast Asian market; in
the US, Postmates raised $225m in
September to keep up with Grubhub,
the leader in the market, and fend
off newer rivals like Doordash, which
raised $600m in May. SoftBank-
backed Rappi, dominant in Latin
America, raised $1bn in April.
Some are so bullish on the sector that
they think that in a few years’ time it
just won’t make sense for some city
dwellers to cook at home; it will be far
cheaper — and tastier — to always
get delivery.
We’re not so sure. ]
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Uber Eats
Founded: 2014
Founders: Travis Kalanick, Garrett
Camp
Team size: 20k+ worldwide
Launch in Europe: 2016
Markets: 40 countries (14 in Europe)
Why interesting: the only global
player, Uber Eats is present in 500+
cities (over 250 across Europe)
Each on-demand food delivery platform is
a hugely complex logistics operation. It’s
hard to get that core proposition running
smoothly, efficiently and cost-effectively; it’s 1 Who’s best positioned to win the dark
not something Europe’s younger players
kitchen game?
have cracked outside of their core cities
yet. The ones that have, Deliveroo and
Dark kitchens are going to continue to attract investment,
Glovo, know they need to do more: both are
attention and controversy; that much is clear from what’s
running “dark kitchens” (delivery-only food
going on in the US and Asia, and from the reception
preparation spaces), Glovo is expanding into
they’ve received in Europe so far. But where is the value?
grocery delivery and Deliveroo is moving into
Will they scale as fast as initially anticipated? And will
supply chain.
customers embrace them?
But they need to be careful. At the same time
as those platforms expand sideways, smaller 2 Brands are going to go it alone. But
startups are focusing on specific verticals: how many?
running rental kitchen spaces; designing
delivery-only food brands; offering on- Restaurants might feel like they’ve done a deal with
demand grocery delivery; building ordering the devil, trading relationships with their customers for
software for restaurants; and running increased revenues. Some are choosing to jump ship and
courier services. run their own delivery operations or ordering systems. But
will they do it in significant numbers?
Where will real value be created? Which
companies are pioneers? Which models will 3 On-demand grocery is the big
fall by the wayside?
experiment. But do customers want it?
We’ve spoken to people in the know at
Uber Eats, Glovo, Deliveroo, Taster, Keatz On-demand takeaway food and on-demand grocery goods
and Karma Kitchen as well as investors at might soon be offered by one and the same provider. But
Felix Capital and EQT Ventures, amongst is this really what customers want? And which brand is
others. We’ve dug into the numbers from best positioned to take advantage of this?
Dealroom and big market reports. And as a
result, we think there are three areas to pay
close attention to over the next year: dark
kitchens; restaurants going it alone; and on- This is what you need to know
demand grocery.
Read on. about the future of the food
delivery sector in Europe.
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Raj Beri
Head of Asia Pacific, Europe, Middle East
I
and Africa at Uber Eats
t’s the largest food delivery app
in the world (outside of China)
and one of Europe’s mightiest
players — available in more than
250 cities on the continent with over
80,000 restaurants onboard. So what’s
Uber Eats’ view on where the sector
is heading? Sifted sat down
with Raj Beri, head of Asia
Pacific, Europe, Middle East
and Africa at Uber Eats, to
find out. The view from the top:
You’ve spoken a lot about
taking a data-driven
approach to food delivery.
But what data are you
desserts, so they’ll spin
on the future of
actually looking at?
out something selling
Our average delivery time cupcakes.
across Europe is under 30
minutes. The reason we can food delivery When we’ve launched
virtual restaurants it’s
do that is because we know
how long it takes for a specific really helped increase
menu item to be prepared: average sales for those
that’s the data driven approach. innovation. So, for example, we work restaurants by up to 50%.
with over 2000 virtual restaurants in
When someone orders food, you want Plenty of your competitors are
EMEA. When our restaurant partners
to dispatch the delivery partner to get running shared kitchen spaces for
are thinking about how to utilise
there right when the food is ready to virtual restaurants. Why hasn’t Uber
their kitchen space to drive more
be delivered. If they get there too early Eats taken this approach?
incremental revenue and profit, they’ll
they’re waiting around, and it’s not the come to us. We’ll provide data to them We believe the best approach is
best experience for them [or the best around popular cuisines or searches in partnering with existing restaurants
way to] maximise their earnings. If their area, where we’re seeing unmet and commercial kitchen owners to
they get there too late, then the food demand, and help them think through launch and have these data-driven
gets cold. The data helps us take input brands that they can launch only for meal options. Where we’ve seen
from restaurant partners on how long delivery and how to best market that. initial success, and where we’ve seen
it takes for dishes to be prepared, but
restaurants really want to work with
then the data also learns what the Sometimes those are extensions to
us, is on these different types of virtual
actual preparation time is as well. So what a restaurant is already offering,
restaurant models. And so that’s really
someone may say, ‘This chicken is and it’s part of their expertise. Then
where our focus is.
going to take 15 minutes’, but in reality, there are pizza places that also want
we know it took 11 minutes on average, to sell chicken wings, so they’ll create a We want to be kind of an operating
and we’re able to dispatch the courier whole new brand that is not associated system for restaurants. Part of that
accordingly. with their pizza brand, that really is doing delivery of meals from their
focuses on chicken. Another example restaurant to the home. But there’s a lot
Data [also] really drives us on could be someone wanting to sell more
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of other ways restaurants want to work platform and order their full grocery There’s a big demand for food delivery
with us — some on virtual restaurants, compliment for the week. in small cities. We’re in over 80 cities in
some on delivery-only kitchens down EMEA where our Uber Rides business
But what we’re actually seeing a lot is not. Most cities in the markets that
the road.
more of is the top up: people opening it we’re in are ultimately going to be
We’ve introduced things like dine in up and ordering things every other day. a good candidate for food delivery;
and pickup as well: there are a lot of The power of it is the ability for orders even if people are not ordering food
restaurants that want help driving to arrive on demand, which is different by app, the behavioural change is
demand in their storefronts. Someone from most typical ways grocery chains not very large for people to go from
driving home from work in the suburbs do their deliveries, which may be ordering food by calling a restaurant to
might want to pick up some food for scheduled for tomorrow or two days switching to an app.
the family on the way — or someone at later. What we’re seeing is more, ‘Hey
work might want to pick up something I’m having dinner tonight, I have this What interesting things can start to
because they want to get out of and I need these other items. Can they happen once all of Uber’s services
the office. We’re seeing really great arrive very quickly for me?’ We’re seeing — Rides, Eats, etc. — get more
traction, not only with customers but that use case across the pilot we’re interconnected?
with restaurants, in just a short time. running now across the world.
We’re probably the only player globally
We’re growing very fast; we’ve grown Would you ever go into wholesaling in the food space that is not just a food
over 25% in just the last two months yourself? If millions of people delivery platform. We have a large
alone in Europe. Overall food delivery is are ordering Coca Colas from rides business, we’ve started adding
still addressing a very small part of the convenience stores via Uber Eats, things like transit and other modes
overall potential market. Close to 70% why wouldn’t you do a direct deal of transport including scooters and
of 18-39 year olds order food delivery with them? bikes. Uber is becoming that operating
once a week, according to Deloitte — system for the city; in hundreds of cities
We do work directly with brands across Europe, you can open up the
but that still represents probably 1% of
like Coke, brands like Unilever, with Uber app and see the Rides, Eats and
the potential food delivery market.
cinemas — so yes, there’s definitely an other options side by side. Globally, we
We want to be part of every eating opportunity there. We’ve seen really have over 95m monthly active platform
occasion — from when someone wakes strong appetite from some of these consumers and right now around 15m
up in the morning to when they go global brands to work with us. use Eats.
to bed at night. Food delivery from
You’re also moving into increasingly Let’s take an example. You wake up
a restaurant is part of that, but it’s
smaller cities. How small can you go? in the morning and you say, ‘Hey, I’m
still maybe 10-15% maximum of how
people consume food. A lot of times people think about food going to pick up my coffee for work.’
delivery as being something that is You order your Uber, you see that it’s
You’re moving into grocery now too. going to get there in seven minutes,
really big in metro areas, but maybe
What kind of grocery goods does it and you have it drop you off near your
not as applicable in smaller cities or
make sense for Uber Eats to deliver coffee, where you placed the Uber Eats
suburbs. But suburban areas or non-
— and is there a limit? order, you go in and you pick that up
metro areas are actually even growing
We are starting to work with grocery faster than metro areas. It’s about three and you walk to work. At lunchtime,
store chains across the world: we’re times over what it was last year, and it you want to have an order for your
working with Coles, with Costcutter in accounts for, in our case, close to 40% office, and someone on your admin
the UK and we’re starting to work with of the volume. team does a group corporate order
convenience stores on our platform as that’s delivered to your office. On the
I expect growth in smaller cities over way home, you say ‘Hey I’m going to
well. Earlier in the year we announced
the next 12-18 months to continue to take an Uber to a transit stop.’ And on
a deal with a player called Cornershop,
outpace larger cities. the way home, you decide to place a
and in 2020 we’ll start to build out even
more grocery technology. We think grocery order that arrives when you get
We’re live in Europe with cities as
grocery will be a large part of what home so your family can cook a meal
small as 10,000 people, so we know
we’re doing. together.
our platform and marketplace works
there. Some of them are a mix between Being integrated into the everyday
We’re seeing that there are a few
our platform connecting to courier life of our customers — there’s a lot of
different kinds of grocery occasions.
partners, as well as restaurants that opportunity there in Europe.
One is the stock up: someone is looking
have their own delivery partners.
for their weekly grocery menu and they
come to some of the partners on our
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Thesis 1:
Running a restaurant is hard. Margins
are tiny, customers are flighty, staff
costs are high, business rates can be a
Dark
killer.
Along came the delivery platforms with
a promise to boost restaurant profits
through online orders. In reality, many
kitchens
restaurants have seen their profits
simply shift from offline to online
orders, with little overall increase in
sales.
are going
Then along came another bright idea:
what if restaurants could stop dealing
with customers, do away with front-of-
house staff and more than halve their
to be big.
rent by opening “dark kitchens”?
The delivery platforms would, of course,
facilitate this: renting kitchen space to
food businesses struggling to make
it work on the high street, to food
entrepreneurs with a big idea and a
need to test it out on real customers
and to restaurants with need of an
overflow prep space to cope with an
influx of online orders.
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Dark kitchen startups operating in Europe
Customers would also have a wider selection of food
a courier ride away, and might just order more often.
Dark kitchen startups around the world
This is now one of the biggest trends — both in €m invested
Europe and globally — reshaping the food delivery
industry. The question is: who’s benefiting from it?
Deliveroo launched the first “Editions” — a pop-up
kitchen in a portacabin — in 2016, Glovo followed
suit with its “Cook Rooms” in 2018, and then in 2019
Uber cofounder Travis Kalanick took a controlling
stake in a US dark kitchen company (aptly named
CloudKitchens) after being ousted from the ride-
hailing giant. Uber itself started working with
French startup Kitchn’ Box in March 2019, to deliver
customers in Paris meals from shared kitchens.
It hasn’t been a smooth ride for dark kitchen
pioneers however: working conditions inside have
been criticised in the press, while many customers
would still prefer to get their takeaway from a kitchen
attached to a restaurant.
Under the “dark kitchen” banner sit a range of
businesses. First the model of Kitchn’ Box, which
leases kitchen space to food businesses. Second,
there are delivery platforms such as Glovo, which Deep dive.
leases kitchen space from the likes of Cooccio (a
kitchen space in Barcelona), and then sub-rents that Let’s look at them each in turn — and see what
to food businesses on its platform. Finally, the coolest the value proposition really is.
kids on the block are the virtual restaurant startups
designing delivery-only food brands — including
Taster, Keatz and Honest Food.
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1.
Kitchen
space rental Kitchen Republic
Founded: 2015, Amsterdam
Founders: Bart-Jan Veldhuizen, Emma
Veerhuis
High street restaurant kitchens are kitchen in east London and has plans
Money raised: €900,000
designed to serve customers sitting to open two more sites this year.
Number of kitchen sites: 2
10 metres away; not a 10 minute bike Karma has around 80 residents, which
What it does: Offers communal and
journey away. are a more eclectic mix than those at
private food production space.
the typical dark kitchen: ranging from
Dark kitchens, however, are “optimised small food producers to corporate Why interesting: Kitchen Republic’s
for delivery”: their sole purpose is to catering companies to virtual
main focus is on building out the
help food businesses make takeaway restaurants. It also, uniquely, runs
services it offers to its community
food, and get it out of the door, fast. of food producers, co-packers,
a shift system, whereby customers
distributors and investors to help
CloudKitchens is the big global player can book kitchen space for the accelerate the growth of young food
here. It rents commercial kitchen early morning, daytime or evening, businesses.
space to food businesses in the US; depending on the requirements of
some are chain restaurants in need of the business. This makes space rental
extra prep space, others are people cheaper for everyone.
trying out a new food business idea. In early 2020, Karma Kitchen will host
It promises to help its clients get a three-week accelerator programme branding and HR, and help them
more orders via delivery platforms, for small restaurants looking to reach launch on Uber Eats to test out their
save on operational costs and new customers, run by Uber Eats. The offering with real customers.
become “smarter” kitchens using its idea is to take them through a crash
technology. course on things like photography,
In Europe, there’s a smattering of
smaller players playing this real estate
game. FoodStars, a London-based
commercial kitchen startup which
was founded in 2015 and acquired by
CloudKitchens in 2018, has six sites —
and is opening two more.
But for Sifted, the basic kitchen
rental model isn’t where there’s most
potential for growth (although there’s
clearly potential for scale). Instead, the
most interesting operators are those
building a broader offering.
Take London-based Karma Kitchen,
which has one operational shared Uber Eats
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Gini and Eccie Newton, Karma Kitchen cofounders
Karma Kitchen has also recently Karma Kitchen
“ VC VOICE launched a marketplace with Uber
Eats, where customers can order
Founded: 2018, London
There’s definitely an items from a range of its tenants —
Founders: Eccie Newton, Gini Newton
takeaway food from several virtual
opportunity here to restaurants, grocery goods from small Money raised: £750,000
build a differentiated producers and desserts supplied by Number of kitchen sites: 1
proposition. The key will Unilever — and receive them in a What it does: Karma Kitchen provides
single delivery. shared and private kitchen rental
be to prove scalability: space to a variety of tenants, from
What is the true value With these additional offerings, restaurants to virtual food brands to
Karma Kitchen becomes a brand, not market stall producers.
proposition to your
just a white box space. As a result, Why interesting: Karma Kitchen is
members? Who are it hasn’t suffered from the same launching an accelerator programme
your members — and negative media coverage or consumer with Uber Eats for local restaurants to
sentiment that’s plagued Deliveroo’s test out delivery-only food production.
do you have to attract It’s also opening two new sites early
dark kitchen sites. It’s currently raising
bigger brands in order a Series A round to fund further next year, and raising a Series A round
to properly scale? And sites in London — and is considering to fund further expansion.
further expansion in the UK and
can these entrepreneurs
Europe.
scale very fast via your
kitchen? As much as the
community element is
important and exciting, Takeaway
you need to sort
Snapping up cheap, conveniently-located real estate to transform
out a pain point and into dark kitchens seems like a smart game to play; there’s appetite
these brands will have for more kitchen rental space from both food delivery players
options.” and restaurants — although this is a capital-intensive business.
Antoine Nussenbaum But creating a brand around rental space seems even smarter: it
Partner, Felix Capital worked for WeWork for offices (for a while); will it work for kitchens?
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2.
Delivery
platform
dark kitchens
Glovo
consumers receive food in the future. Founded: 2015, Barcelona
In Europe, Deliveroo rents by far the
most dark kitchen sites. It has 21 But it’s a challenging and fairly capital Founders: Oscar Pierre, Sacha
“Editions” (16 in the UK), which house intensive model to roll out, and is Michaud
a total of 140 individual restaurants. taking longer than initially expected.” Team size: 1,300
Glovo runs two dark kitchen sites in Money raised: €460m
Glovo, Deliveroo and Uber Eats are
Spain. Uber Eats, by contrast, doesn’t Markets: 26 (11 in Europe)
all attracted to dark kitchens for the
run any of its own dark kitchens, but Number of kitchen sites: 5 (two in
same reason: it’s cheaper to produce
it does deliver from more than 2000 Europe, three in LatAm). Glovo plans to
food in these spaces — and therefore
“virtual restaurants” in Europe. open more in Milan, Tbilisi and Kiev.
it’s easier to entice customers to order
What it does: Glovo is the “everything
Expansion hasn’t been quite as speedy more food, more often.
app”: it delivers not only takeaway
as these businesses first hoped. When
food, but also groceries and clothes.
news came out about Deliveroo’s “It’s a challenging and
plans to open dark kitchens, it seemed
as though it might open hundreds of
fairly capital intensive
sites within a year. Three years on, it model to roll out, and is more stores and partners will start
has a fraction of that. taking longer than initially offering food delivery for €7-8, which
is really exciting.”
“Deliveroo pioneered this concept expected.”
before any other company,” says
Yannis Alivizatos, general manager at
Yannis Alivizatos “Then you start thinking,
General manager, Deliveroo Editions
Deliveroo Editions. “It’s obvious this is it really worth cooking
model is very attractive, and is going
“The number one reason why people at home?”
to become one of the main ways
don’t order more food delivery is
Oscar Pierre
because it’s expensive,” says Glovo
CEO, Glovo
founder Oscar Pierre. “In Spain, you’re
paying €12 per person, more or less,
Glovo currently has one dark
which is expensive. And the reason it’s
kitchen site in Madrid and another
expensive is because we’re still paying
in Barcelona, which it offers to
the prices of running a restaurant —
restaurants on its platform in
which has nothing to do with delivery.
exchange for 5% extra commission on
“If you look at the P&L [profit and loss] orders taken; they’re all full. Taking a
of a dark kitchen, the cost is massively commission, rather than charging a
different. So, because of how flat monthly fee, keeps the platform
competitive a dark kitchen is in terms and the restaurants’ incentives
of cost, all delivery will move into dark aligned, says Pierre; it’s in everyone’s
Thuisbezorgd.nl kitchens because with time, more and interest to get more orders.
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“ VC VOICE
If I were a food delivery
operator, I’d be thinking that
A Deliveroo advert on the Paris metro
finding locations, leasing
them or buying them,
Deliveroo runs its kitchens somewhat grow and we run the sites for them — equipping them, making the
differently. It doesn’t charge tenants dispatching orders, handing them to food, getting the supplies,
rent, but reportedly takes up to 40% riders, maintaining and cleaning the safety, health, accessibility…
of the turnover of restaurant brands site,” says Alivizatos. “That’s the benefit that’s an expertise. It’s a
based in its “Editions” kitchens, which we offer back.” whole industry in itself, with
have to deliver exclusively through
very different margins and
Deliveroo. (“Every market has a Alivizatos claims that many
return profile on invested
different commission structure,” says restaurants in Editions’ sites are seeing
capital. Sure, we can do
Alivizatos. “It’s a function of a lot of incremental revenues of 30% “without
this — but are we the best
different things: how many locations increasing fixed costs by a penny”.
a restaurant has, what locations it’s in, people to do this?
what type of restaurant it is.”) It’s also been working with restaurant
brands to help them develop new The verdict is still out. Dark
“We do the logistics; they cook. We concepts, to be produced in its kitchens are going to be a
help them find the right go-to-market kitchens. “In a few instances we big industry, period. But will
strategy and find the best way to have been more involved, but our food delivery companies
objective is not for us directly to be operate them, or new
a content creator,” says Alivizatos. players coming up who only
(There has been some concern among do that?”
restaurateurs that Deliveroo will start
using the data it has on customer Johan Svanström
demand to cut out food businesses Partner at EQT Ventures and board
Deliveroo completely and fill the app with its own member of Finnish food delivery
virtual restaurants.) platform Wolt
Founded: 2013, London
Founders: Will Shu, Greg Orlowski
“Editions” team size: 100+ globally
Money raised: $1.53bn
Markets: 7 (in Europe) Takeaway
Number of kitchen sites: 31 (globally)
Deliveroo has lead the way with dark kitchens — but it hasn’t been
What it does: Deliveroo is growing
into a “full-stack” food service business, a smooth ride so far. It can’t expand this business line at lightning
with an extensive logistics network, speed, like its delivery platform, and it’s proving to need more
dark kitchens and supply chain service. localisation than initially thought. Still, both Glovo and Deliveroo
Why interesting: It’s Europe’s big shot remain convinced that this is the route to bringing down the cost of
— but it might be overstretching itself.
deliveries. Will that play out?
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Taster
3.
Founded: 2017
Founder: Anton Soulier
Delivery-only
HQ: London
Team size: 25
Money raised: €11.6m
food brands
Markets: France, Spain and the UK
Number of kitchen sites: 12
Number of food brands: 3
What it does: Taster has designed
three “virtual” food brands specifically
for takeaways, each with a vibrant
presence on social media but no
restaurants. These meals are prepared
And finally, the most exciting dark Food thought instead of settling for
in dark kitchens and delivered via
kitchen operators: the delivery-only middling meals, why not design food
third-party platforms.
food brands. specifically for takeaway?
Why interesting: Taster wants to
Some restaurant food just does “Deliveroo, Uber Eats and Glovo — prove that by combining the skills of
not deliver well — chips get soggy, these guys are good at logistics; we great chefs with data insights into
what customers really want, it can
burgers fall apart, pizzas go cold. So really want to focus on making the
create takeaway meals which are
startups like Taster, Keatz and Honest food,” says Paul Gebhardt, cofounder
tastier and less wasteful than the
of Keatz, which has designed six
average restaurant — and which prove
takeaway brands specifically for popular across the continent.
delivery. “We usually say it’s restaurant
food prepared for now: from the
beginning, we look at foods that travel says Gebhardt: Keatz’s model is similar
well.” to Taster’s. “We can iterate and check
which brands attract more demand.”
Honest Food Co Taster currently has three food brands,
covering Korean, Vietnamese and Since starting in 2016, Keatz has
Founded: 2017 Hawaiain cuisine, and is in the process dropped some of its brands; there
of designing three more, also with an was a pizza brand, which was in too
Acquired: 2019 (Delivery Hero)
“Asian touch”. The “creation phase” competitive a space, and a ramen
Founders: Robin Steps, Sebastian Klein
is lengthy; over a few months, Taster brand, which was hard to deliver
HQ: Berlin
develops a brand, figures out a menu and quite seasonal. Now Keatz has
Team size: 80 and gets a supply chain in place. That, six brands which is, says Gebhardt,
Money raised: >€10 (exact amount says Taster founder Anton Soulier, “already quite a stretch.”
undisclosed) is “one of our biggest challenges”.
Markets: Germany, Austria, UK Consistency is key: Taster’s Korean Honest Food runs a somewhat
Number of restaurant partners: >100 Fried Chicken needs to taste the same different model; its seven food
in London as in Paris as in Madrid. brands are franchised to restaurant
Number of food brands: 6
partners that are keen to extend their
What it does: Honest Food has created Once all that is in place, Taster gets delivery offering without having to
delivery-only food brands which it cooking. It trials the new brand in create a new menu in-house. Honest
distributes via partner restaurants,
one of its kitchens, gathers customer Food’s meals are prepared in a large
which prepare and deliver the meals.
feedback and A/B tests recipes for industrial kitchen in Vienna, and
Why interesting: Honest Food can a few months more, before finally
scale faster than Keatz or Taster
then shipped, frozen, to restaurant
rolling it out to other kitchens. partners. Restaurants then do the
because it doesn’t need to find and kit
out its own kitchens, resulting in better final stages of cooking and deliver to
“The beauty of this concept is that we
margins. customers.
can act more like a digital company,”
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Keatz
Founded: 2015
Founders: Paul Gebhardt, Dimitrios
Ploutarchos
HQ: Madrid & Amsterdam
Team size: 25
Money raised: €19.4m
Markets: Spain, Portgual and the
Netherlands; expanding to Germany Taster
and the UK.
Number of kitchen sites: 6
Gebhardt; there are still stoves Restaurant groups are already
Number of food brands: 6
and chefs, but there are also wifi approaching Soulier, he says,
What it does: Keatz has created six
convection ovens and other tools interested in licensing this technology.
virtual food brands, all designed to
which cut down on labour costs. “The
travel well.
entire management of the kitchen is
Why interesting: Keatz is pivoting Brands without buildings
digitised; staff planning, staff training,
away from running its own kitchens to
demand forecasting and reducing “Building brands is a challenge; it’s
focus on franchising its food brands to
existing kitchen operators. This could
waste.” more an art than purely science,” says
be a sign that operating full-stack Gebhardt. Unlike restaurants, these
Inside the Taster kitchen in Paris’ 15th
virtual restaurants is challenging. delivery-only brands can’t rely on
arrondissement, the six members
customers wandering past and taking
of staff use an assortment of tech
a peak at a menu, or catching a whiff
tools built in-house, including Trail,
This model, argues Elmar Broscheit, an of something tasty and heading inside.
a checklist app. When orders come
angel investor in Honest Food, works in and items are sold, they’re tracked “The storefront is the biggest
especially well in places where there in real-time — and over time, Taster advertising space,” says Gebhardt. “We
are limited cuisines on offer from local hopes to be use this to forecast how need to invest much more into social
restaurants. “The value proposition is many ingredients to order on any media, word-of-mouth and digital
probably higher in mid-tier to more given day, or time of year, or ahead of marketing than just a nice interior and
rural cities,” he says: it’s an easy a big sports game, to minimise waste service.”
way for a small Italian restaurant to and maximise profits. To help with that
double up as a Mexican takeaway, for in the more immediate future, in the Taster has found a middle ground:
example. 15th arrondissement kitchen there’s four of its kitchens in Paris are on busy
also a newly-installed set of weighing streets, so customers can see where
scales from Winnow, a UK startup they are, they just can’t walk inside.
Smooth operators
which helps kitchens measure and cut “It’s super important to have a physical
But it’s not just the food itself which down on food waste. presence,” says Soulier, pointing to
these companies think they can do other brands, like direct-to-consumer
better than their competitors; it’s also “Initially my ambition was to create eyewear company Warby Parker,
the production process. a food business; little by little that’s which started online and later opened
shifted to a food tech business,” physical stores.
From quickly handing over the grub says Soulier, an early employee at
to the driver, to forecasting demand Deliveroo. “We have a team dedicated Also out of the direct-to-consumer
based on data and ordering supplies to building tools that can help the playbook, Taster has been working
accordingly, Taster and Keatz are supply chain, operations, forecasting, with influencers to grow an online
aiming to make their kitchens as efficiency in the kitchen. With tech, community for each brand. “A lot of
efficient as possible. we think that we can really ensure customers’ journey [looks like this]:
consistency by providing the right find restaurant on Deliveroo, check
“It’s not a robo kitchen yet,” says Google reviews, check Instagram
information to the right people.”
© SIFTED EU 202016 SIFTED REPORTS: FOOD DELIVERY
presence. Having a strong Instagram
presence gives them confidence in the
brand; it’s how to win this game.”
“The goal is to build
household delivery brands
— like the go-to healthy
salad brand — and that
takes time.”
Paul Gebhardt
CEO, Keatz
Not everyone is convinced, however. Inside a Taster dark kitchen
Antoine Nussenbaum, partner at
London-based VC firm Felix Capital,
which focuses solely on digital lifestyle in the market. In Spain, it has tried to Honest Food, meanwhile, was acquired
brands, thinks it won’t be quite so easy mitigate the risk by running its own by Delivery Hero in December 2019.
to provide a really distinct offering. web shop, Keatz.es, where customers Glovo also acquired a Spanish dark
“They’re in the early days of proving can order its brands directly, and is kitchen startup, Instamaki, late last
customer love,” he says: can delivery- pivoting to a model closer to that of year.
only food brands provide excellent Honest Food.
In a few years’ time, it’s feasible that
meals and a superior customer
there could be a dark kitchen in every
experience, solely via a social media Regardless of these hurdles, Taster
urban neighbourhood in Europe.
presence and some sustainable is expanding fast. Its big goal is to
What’s holding back an explosion of
packaging? be able to deliver its three brands
growth in this sector is real estate,
to the whole of London; right now,
Gebhardt recognises it’s a long game: not consumer demand. But growth is
it covers about 30% of the city. It
“The goal is to build household delivery coming — and any of the companies
also wants to open more kitchens
brands — like the go-to healthy salad mentioned here could make serious
in Paris and Madrid, and move into
brand — and that takes time.” money out of that.
secondary cities. In October 2019, it
also expanded into Brighton, a small,
Nussenbaum thinks another challenge
densely-populated city in the UK with a
for the delivery-only food brands will
big student population.
be their dependence on the delivery
platforms. The key, he reckons, isn’t to
get customers onside; it’s to get the
platforms onside.
This is especially crucial in Europe
because there are fewer food delivery
platforms than in other markets,
Takeaway
like the US, and so they hold more
influence, adds Borscheit. “It’s more
Dark kitchens are proving a great way to cater for consumers’
important for virtual restaurant endless appetite for convenient food, at a lower cost than the
chains and cloud kitchens to convince traditional restaurant model. It’s not yet clear who will be the
marketplaces they really add value to big winners in the still-young sector; the complex world of real
their offering,” he says. estate makes it hard to build dark kitchen networks quickly,
Keatz itself discovered the dangers while there’s still some work to be done educating customers
of relying too heavily on third-party — both restaurants and eaters — about the benefits of dark
delivery platforms; when Deliveroo kitchens.
pulled out of Germany earlier this
year, Keatz closed down four kitchens
© SIFTED EU 2020SIFTED REPORTS: FOOD DELIVERY 17
Restaurants — big and small — are
getting fed up of third-party delivery
platforms.
There are plenty of pros to working with
third-party delivery platforms. They’re
excellent marketing platforms, for a
start. They deal with tricky logistics so
restaurants can focus on making food
and serving customers. And they promise
to drive extra customers to restaurants,
via the platform.
Thesis 2: But many restaurants aren’t so sure the
numbers work in their favour after all.
Brands are
“If you look at all the big chains,
Deliveroo and Uber Eats have been
promising incremental revenues — but
only a small number have seen this,” says
going to go
Paul Gebhardt from Keatz.
85% of orders on third-party delivery
platforms come from loyal customers,
according to Flipdish, a Dublin-based
it alone.
startup which makes white-labelled
ordering systems for restaurants:
platforms might be helping fewer people
“discover” new restaurants than it seems.
“[Third-party platforms] take customers
from you, then sell them back at 25%
[markup],” one industry insider told
us. Even if a customer searches for a
particular restaurant online, it’s highly
likely that its listings on third-party
© SIFTED EU 202018 SIFTED REPORTS: FOOD DELIVERY
The biggest food delivery apps in key European geographies
Ranking of the most popular apps by download rates in H2 2019
Source: App Annie
delivery sites will appear above its own extremely popular with customers Uber Eats. Others are taking orders
website on the results page. Some ordering takeaway, even via apps in-house; Nando’s is slowly rolling out
platforms also insist on exclusivity like Deliveroo offering them a world home deliveries across the UK.
agreements — even going so far of choice. That means those brands,
“More brands are increasing the
as discouraging restaurants from like McDonald’s, are customers that
number of platforms they use also,
running their own ordering portals. delivery platforms really don’t want
with two fifths that offer delivery
“There’s a fear culture,” the insider to lose (McDonald’s recently revealed
now partnering with more than one
added. that its exclusive partnership with
85%
third-party delivery operator,” says
Uber Eats is responsible for 10% of its
Katie Prowse, insight manager at
business in the UK — and opened its
MCA Insight, with reference to top UK
own dark kitchen in London to cater
restaurant brands.
for demand).
of orders on third-party delivery
platforms come from loyal Yet some large brands are wriggling That could become a problem for the
customers, according to Flipdish out of the exclusivity deals they once on-demand delivery platforms very
had with one of the big platforms. soon.
Gourmet Burger Kitchen, a UK-based
Restaurants of all sizes are choosing
Understandably, there is growing burger chain, took orders solely
to go it (almost) alone. With greater
resentment within the restaurant through Deliveroo until last year; now
control of their own orders, brands
sector against the delivery players. it’s listed on Deliveroo, Just Eat and
Restaurant operators are worried
about what role they have left to play
in a future where the likes of Deliveroo The money is in restaurant-to-consumer delivery
control nearly all aspects of the food Projected European market size, $bn
chain — from supply chain through to
food production and delivery.
Going it alone
“A lot of big chains are trying to
become independent — deliver
themselves, or work with [a logistics
firm like] Stuart,” says Gebhardt.
“There’s an entire industry developed
around this use case; it’s quite a big
threat for Deliveroo and Uber Eats.”
It might seem counterintuitive,
but well-known brands remain
© SIFTED EU 2020SIFTED REPORTS: FOOD DELIVERY 19
Software startups based in Europe working in food logistics and delivery
save on commission fees, build tyrannical grip of the delivery Foodhub, a UK-based food ordering
loyalty with customers, and release platforms. portal, charges restaurants 0%
themselves from the (some say) commission and markets itself to
And there’s a startup (or several) to customers as a way to support local
help them with that. restaurants. It also encourages
“ ANALYST OPINION
Deliveroo and Uber Eats can
One is Flipdish, which sells a
white-labelled ordering system to
restaurants to offer FoodHub users
exclusive offers.
offer branded restaurants a restaurants and takeaway joints Taking their own orders, restaurants
full package of software and to take and manage online orders. are also able to build more customer
delivery logistics, so that When Conor McCarthy cofounded the loyalty. They can entice customers to
they can just keep focus on business in 2015, he wanted to make download their app with discounts,
an alternative to Just Eat — but when
the food and in-store diners. encourage them to order regularly
he spoke to restaurants, he realised
Further to this, delivery
what they wanted was their own app
third-party operations are
instead.
becoming increasingly
advanced in the data For many of Flipdish’s customers, the
analysis and insight that end goal is to leave the third-party
they provide to restaurant delivery platforms, says McCarthy.
partners, becoming almost Over 50 of Flipdish’s customers — Flipdish
ranging from individual restaurants to
strategic partners in how
chains with up to 10 stores — have left Founded: 2015, Dublin
restaurants can drive sales
Just Eat so far.
through delivery, who their Founders: Conor McCarthy, James
McCarthy
consumers are and what “They’re saving €30,000 per year in
sort of dishes they want. fees,” claims McCarthy. Flipdish takes a Team size: 85
Taking the commission ‘hit’ 7% fee on cash orders; half that of Money raised: €7m
for big operators is almost Markets: 11, including UK, US, Ireland,
not a negative, as they are France, Germany & Spain
still seeing increased orders, “The battle is over Number of restaurant clients: >1500
and boosting revenue that commission” What it does: Flipdish’s software helps
they otherwise would not restaurants take and manage their
Antoine Nussenbaum own online food delivery orders.
see.”
Partner, Felix Capital Why interesting: It’s partnered
with courier firm Stuart to also fulfil
Katie Prowse
delivery, offering an alternative to
Insight manager at MCA Insight
third-party delivery platforms.
© SIFTED EU 202020 SIFTED REPORTS: FOOD DELIVERY
Image: Pexels
with offers like “Buy 10 get one free” with up to 200 sites (such as Prezzo Ventures investor Johan Svanström. “If
and run retention campaigns — for and Pizza Pilgrims), says click-and- you have 15,000 restaurants, they’re
example, messaging customers who collect has “a lot of room for growth”. probably not all seeing the same kind
haven’t ordered for 28 days with deals. Deliveroo and Uber Eats both of benefit — and perhaps shouldn’t all
introduced collections in 2019, hoping have the same commission.”
These software startups can’t, to entice new restaurants onto their
however, help fulfil deliveries. Flipdish Nussenbaum admits that in its six-year
platforms as a result.
has partnered with courier firm Stuart existence, Deliveroo has “scaled so fast
to solve this problem; Flipdish takes There is, of course, an alternative it hasn’t done everything perfectly”:
orders, Stuart delivers them. way to woo restaurants: third-party now, he says, is a “new era of doing
platforms could cut their fees. “The things better”.
But restaurants don’t always need battle is over commission,” says
to offer delivery; customers are With new offerings like supply chain
Nussenbaum, an investor in Deliveroo.
increasingly choosing to pick orders up management and dark kitchens,
themselves. Matt Gilbert, cofounder “The risk of growing very big and Deliveroo has clearly been trying to
of Orderswift, a London-based startup very fast is that you typically start position itself as the partner of choice
which makes ordering software for slipping on customer centricity, in this of restaurants — although these
independent and chain restaurants case restaurant centricity,” says EQT moves have been met by scepticism.
Takeaway
As some third-party delivery platforms have been in a hurry to entice more and more customers
to use their apps, they’ve been neglecting another set of customers: restaurants themselves. As
competitors continue to crop up (such as ride-hailing firm Bolt, which now offers food delivery) and
a combination of software and logistics startups (such as Flipdish and Stuart) provide restaurants
with an alternative way to serve customers ordering online, the biggest delivery platforms might
need to tweak their offerings and, perhaps, cut commissions.
© SIFTED EU 2020SIFTED REPORTS: FOOD DELIVERY 21
On-demand delivery platform Glovo was
a latecomer to the European delivery
game. It launched in Barcelona in 2015,
and has a smaller team and less funding
than the likes of Deliveroo and Delivery
Hero.
But what it does have is a seemingly
smart strategy.
Thesis 3: Glovo does not enter markets where
there are already two strong players. It
chose not to fight with Deliveroo, Uber
On-demand
Eats and Just Eat in London; it avoided
Mexico, where Colombian competitor
Rappi (backed by SoftBank) is slugging it
out with Uber Eats.
grocery is
It is also aggressively expanding into
services which its European competitors
do not (yet) offer, such as grocery —
which Glovo founder Oscar Pierre thinks
going to get
could be a big, big business. He plans to
launch more than 100 “dark stores” in the
next 18 months.
Glovo currently delivers store goods –
interesting.
milk, alcohol, toilet paper, nappies, ready
meals — to customers in Barcelona,
Madrid, Buenos Aires and Lima. Couriers
pick items up from “dark stores” (like
convenience stores, but without any
customers) and deliver them speedily.
It’s not the cheapest way to get hold of
items, but it can save customers a car
trip or a walk in the rain, and at certain
© SIFTED EU 202022 SIFTED REPORTS: FOOD DELIVERY
times of day, might be the only way to The delivery players are all on a
get hold of those things. mission to become customers’ go-to
app. Uber talks about becoming
British tech company Ocado
pioneered this on a big scale two
LISEK “the operating system for everyday
life”; Glovo talks about being the
decades ago, building a huge online “everything app”, echoing Amazon,
Founded: 2018
grocery business without owning any the “everything store” (while takeaway
HQ: Warsaw, Poland
actual supermarkets. The next step is food counts for 80% of its business, it
to create a similar service, on-demand. Team size:SIFTED REPORTS: FOOD DELIVERY 23
Grocery delivery startups based in Europe
where it’s losing a hell of a lot of Both grocery services still have a way
“ VC VOICE money,” says Keatz’ Gebhardt. to go, though. “We’re not yet ready
to do the €100 basket,” admits Pierre
Dark stores as a concept Grocery giants quaking (the holy grail of grocery delivery).
make so much sense. Many “If in SuperGlovo people are buying
At the same time, big grocery firms
food delivery companies are trying to figure out how to play on average seven items, through
struggle with profitability, their cards. Carrefour they’re buying maybe twice
and dark stores depending as much. But that’s still more like €25-
on the type of SKUs [Stock “They’re all starting to freak out,” says 30.”
Keeping Units] should in Pierre, who recently partnered with
French supermarket Carrefour to
theory have high margins
deliver larger “baskets” to customers.
when they hit a decent
“I don’t understand why there’s a lot of
volume of orders. It’s not just
noise now, and not two years ago.”
about people getting coke
and crisps while watching The Carrefour partnership, which Getir
Netflix; it could be a way to is live in Spain, Italy, France
make grocery delivery more and Argentina, might seem
Founded: 2015, Istanbul
convenient for people who counterintuitive, given that Glovo is
also doing its own grocery deliveries. Founder: Nazim Salur
can’t plan when they’ll be at
But the two services fulfill different Team size: 340 (head office)
home 24 hours in advance.
customer needs, says Pierre. Money raised: Undisclosed
But the business model has
Markets: Istanbul
not been properly proven Carrefour is there for “bigger shops”
Customers: 1.3m
at large scale yet — and the and to attract a more risk-averse
customer. “A lot of people are not Number of restaurant partners: 2000
competition for customers
is heavily increasing from going to trust a supermarket called Number of distribution centres: 108
large players like Amazon, SuperGlovo, but most will trust the What it does: Getir (which means
the delivery companies that Carrefour brand,” says Pierre. “bring” in Turkish) delivers 1000+ items
to customers in Istanbul, 24/7, from
are either partnering with SuperGlovo is there for customers ice cream to phone chargers to pet
supermarkets or building wanting speed and convenience, at food. It also launched a takeaway food
their own dark stores, or the any time of the day. Glovo is pushing delivery service in 2019.
supermarkets themselves.” hard to guarantee deliveries within 15 Why interesting: With an average
minutes; Pierre reckons Glovo needs delivery time of 10 minutes, Getir
Magda Lukaszewicz six strategically located dark stores claims to be the fastest on-demand
Investment Associate, in Barcelona to make that a reality in delivery player in the world. It’s
Balderton Capital the city (it currently has two, but is expanding into new cities in Turkey
building three more) — and hopes to and has international ambitions.
have all six operational by end of year.
© SIFTED EU 202024 SIFTED REPORTS: FOOD DELIVERY
Image: Pexels
It also remains to be seen whether the service, but Pierre thinks it could
Glovo can stand for food quality as be a healthy boost to the business. All
well as convenience — or if it even big brands are trying to find new ways
wants or needs to. There are plenty of to reach customers — and willing to
new online grocery players with strong put money behind it. If SuperGlovo is
brands already targeting customers only going to offer two brands of beer,
who care about the provenance of there will be competition for those FRICHTI
their food, such as Farmdrop in the listings. “Brands want to be the brand
UK and Crisp in the Netherlands; that we have.” Founded: 2015, Paris
would Glovo ever see itself as their
Tech trajectory Founders: Julia Bijaoui, Quentin Vacher
competitor?
Money raised: $48.2m
Glovo’s four SuperGlovos in
Brand sampling Markets: France
Madrid and Barcelona aren’t yet as
What it does: Frichti delivers all
Glovo has, however, hit on one technologically advanced as they could
kinds of food: pre-prepared meals
potential goldmine: sampling. be. Glovo is yet to develop any tools for made in-house, takeaway meals from
the stores; staff are using a picker app restaurant partner, meal kits and a
Brand houses like Danone, Unilever from a third-party. select range of grocery goods. The
and Reckitt Benckiser are showing
brand focuses on the quality of its
interest in using SuperGlovo for testing “We’re really behind, in terms of the
food, while also trying to make it super
out new products. number of engineers that we need,” convenient.
admits Pierre. “It’s probably the
“Sampling is a tough thing for any Why interesting: Frichti has
number one mistake we’ve made —
an extremely complex logistics
FMCG [Fast Moving Consumer Goods] we should have started hiring a lot infrastructure; rather than pick up and
company,” says Pierre. “And we’re the earlier.” deliver one order at a time, its couriers
best at it — because we not only have
collect and drop off numerous orders
the [reach], but we also have the data.” To help solve its “tech debt”, in
at once, to make the whole system
November 2019 Glovo bought a Polish more efficient.
“Say Danone launches a new yoghurt, food delivery startup, Pizza Portal, in
and wants all the people in the north order to open a tech hub in Warsaw.
of Madrid to receive one sample — “I think the toughest moment of
they pay pretty well for each of these launching a tech hub is starting it —
samples,” he adds. we’re not a brand, or a leader [locally]
Glovo is still ironing out the details of — so [acquiring] a tech team is a great
way to kick off,” says Pierre. He hopes
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