7 February 2018

Courier Talks: Is delivery the future of breakfast, lunch and dinner?

Our panel talks explosive growth and the nightmare of keeping chips warm.

We hosted this Courier Talks session at Mortimer House in Fitzrovia to understand how food businesses are adapting to the emergence of on-demand delivery companies. On the panel were Toussaint Wattinne (Uber Eats), Zan Kaufman (Bleecker Burger) and Brittney Bean (Mother Clucker).

Courier: How much is food delivery growing in London?

Toussaint Wattinne: There has been an acceleration in the food delivery space in the last year and also in the share that online food delivery is taking of that overall pie.

We’ve had more than two million people sign up to use Uber Eats over the last 18 months in the UK. One recent phenomenon is the big chunk of consumers who are now ordering food more frequently, almost habitually.

Zan Kaufman: In the last six months delivery has taken London by storm. You look at your weekly profit and loss and it’s like, holy shit.

You need to treat delivery companies with respect or you’re going to get run over by this thing.

What do you mean ‘by storm’?

ZK: Over the last year, deliveries at our Spitalfields site increased 250%.

Has the adoption of delivery been a smooth process?

Brittney Bean: It was really difficult for a period of time to figure out how we simultaneously serve our customers if they walk up to order something, while also getting all this food out to these dudes on bikes.

We run street food operations, so there’s a kitchen the size of a table, with one guy and 17 iPads  in it, because every one of these delivery services has a dedicated iPad. It was like a Forex desk.

ZK: Initially, I told Deliveroo to fuck off. It’s not something I’m proud of now because we have a close relationship, but I had a problem with the percentage they wanted – over 30%.

Where did you bring them down to?

ZK: It’s less than that. I think we just need to have mutual respect for each other.

Are restaurants freaking out over the need to re-engineer business around delivery?

TW: It’s definitely one of the first questions that comes up, so you can’t ignore it.

There are a couple of considerations. One, the share of the total business that it represents, because moving
from 10% to 50% of your total business changes the impact on your bottom line. They are pretty comfortable until it hits around 40%.

The second part is how much of that share is incremental versus how much eats up in-store traffic. The vast majority of feedback we received is that this business was incremental, based on historical analysis of like-for-like store sales.

‘Consumers are ordering food almost habitually.’ — Toussaint Wattinne, Uber Eats

Do you feel this is incremental? If so, where were those people previously eating?

BB: I wish I could answer that question, but it’s hard to say with certainty.

We treat a lot of the delivery as discovery. We opened a Deliveroo Editions unit [an off-site, delivery-only kitchen] in Crouch End. We’d never done anything in Crouch End, so no one there knows who we are. Most likely they’re finding us in the app.

ZK: Most of our Deliveroo orders, if I were to guess, are in addition to our in-person sales. People are not going from our website to Deliveroo. They’re on Deliveroo and they’re like, ‘Oh, this is a burger with a good rating.’

TW: My feeling is that a lot of it is coming from people trading up from a ready meal bought in a supermarket.

The big restaurant chains are doing some quite advanced analysis on this. They reckon around 60% to 75% of their delivery sales are from customers who might otherwise not have previously come to them.

Have you had to remodel your business to accommodate delivery?

BB: We opened Editions units, which allowed us to push what we saw as a growth-driver in a way that didn’t cannibalise our existing business.

ZK: We have to adapt. We’ve asked ourselves: how do we manage this? We need to talk to the team about respect for the delivery drivers. We need to learn their names. We all need to be on the same side, and we need to treat drivers with the same respect that we treat customers who order a burger in person.

Would Uber Eats go down the Editions route?

TW: We’re always looking at how we can fulfil both the restaurant needs and the end user needs in a better way. Editions tries to achieve that in a few ways.

We’re looking into a few areas. One is what we’ve dubbed a ‘virtual kitchen’; this idea that you have a second menu that you’re offering only for delivery that’s enabling you to bring further incremental sales.

The second is closer to Deliveroo Editions, based around dedicated kitchens for delivery. We’re working with a few restaurant partners around what that looks like. We’re still in early days.

Zan, are you thinking about doing Deliveroo Editions?

ZK: You can’t not think about it. But I need my team to see who they’re fighting for. They need to see customers.

I also worry that if I put a team in an Edition, they might feel marginalised in relation to the other team, and I don’t want to start creating these hierarchies. That said, I’m ridiculously fickle, so this might change in the future.

There’s perhaps an existential question to this. What is a modern restaurant if you strip away service, atmosphere and all that stuff?

BB: It’s something we’re working on. The idea of trying to give something to our customer which is about more than just the product, and more about who we are as a brand.

ZK: Translate the experience on delivery? It’s just so hard. Like Brittney, we’re looking at it too. We’re still absorbing the volume. Transporting the brand will be the next step.

BB: It’s like what the music industry used to say about streaming. It’s all dependant on how that product gets to the consumer. People are looking at how songs work specifically on Spotify. So it may be the way you treat delivery is very different from the way you treat a sit-down restaurant experience, a takeaway experience or a street food experience. It’s all about optimising the product for the experience, while maintaining a consistent brand presence.

In the future will you open fewer real stores?

BB: We always plan to open shops. Maybe what changes is we’ll open units driven by delivery, based on location, and some driven by walk-ups.

Do restaurants worry about what Uber or Deliveroo can do to their reputation?

ZK: When things go wrong, people blame the restaurant. That’s the normal reaction. It might change in the future when they get more understanding of how this whole thing works, but you just deal with it and the upside is much higher than the downside.

Do some dishes travel better than others? Chips, for example? 

ZK: We have ‘angry’ fries and normal fries. Angry fries have sauce on them. When we first started on delivery you could only get those, because the sauce insulates heat. Normal fries are not good at all, but we were inundated with people asking for sauce on the side.

I had to give in, even though they’re a shadow of themselves once they’ve been delivered.

BB: If any of you are thinking to yourselves ‘What business should I launch tomorrow?’, make a food packaging company. And do it really well. I’d love to take chips off the menu, but people just want them.

Uber has been backed with over £16bn in venture funding and Deliveroo’s raised £740m – both are yet to turn a profit. Is this sustainable?

TW: As far as Uber Eats is concerned, our economics are healthy. In terms of the lifecycle of the business, we’ve been in the UK for 18 months. We’re in a much healthier financial standpoint than the rides business was at a similar point in its lifecycle. The marketplace is functioning healthily and is extremely sustainable from where we are.

Brittney and Zan, have you considered running your own fleets?

BB: The idea of running my own delivery service makes me want to run away and hide forever. Running your own businesses is enough of a pain in the arse; I don’t know why anybody would also choose to get some more people with bikes.

ZK: I’m from New York and New York delivery is amazing. There the delivery drivers double as kitchen porters, so initially I thought this could work for us.

Then I realised how hard it is to run a food business. Delivery was completely put on the back-burner. As we developed, I didn’t even question doing it with a third party. We don’t even have waiters and waitresses because I think they cause too many problems.

Do you worry about these guys jacking up commissions to make it more profitable? 

BB: No, not right now. I think there’s enough understanding that if you start screwing around with your suppliers, you’re not going to have anything to supply.

ZK: As the percentage has crept up my nerves have crept up. We’re well-known street food traders and people love our food, but does Uber care about that? I don’t know.

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