Eateries are getting squeezed by delivery apps. Restaurants can enjoy a 69% profit margin onsite, versus just 38% from deliveries. Uber could give up profit to keep them happy, but that’s not what IPO investors want to hear.
Venture capitalists have all aligned on the best solution: kitchens that only serve delivery customers, known as “cloud”, “ghost” or “dark” kitchens, that use a combination of advanced food preparation, underused real estate and algorithm-driven optimisation to lower overheads and increase output.
Meet the virtual restaurant, or “ghost kitchen,” a business that distributes meals through apps, but has no sit-down, brick and mortar location. Delivery-only restaurants, run out of low-rent kitchens without a storefront, are shifting the landscape of ordering food online.
It wasn’t coronavirus that hobbled Deliveroo: it was its small margins and the crippling costs of competing both in its home market and abroad. In the UK, there are three big players in the market, in the US there are half a dozen, in Europe there are over 20.
The restaurant industry is in a scary place, one that fairly guarantees heartbreak. We’re eating at street-corner stalls and food trucks, in front of the TV and at the grocery—everywhere but restaurants. They might not be here when we get back.