‘Dark kitchens won’t work’ but Deliveroo could launch as its own operator, warns Pho MD

The ‘dark kitchen’ concept trialled by foodservice delivery company Deliveroo is flawed and is not sustainable, but the firm and others like it may start appearing on the market as operators.

That’s the claim being made by the boss of Vietnamese cuisine specialist Pho, who warned that conventional foodservice operators are facing growing pressures from delivery companies.

Pho’s managing director, Mark Smith, said it is “quite clear” that Deliveroo’s RooBox and Editions models are not working.

Addressing the foodservice industry at Casual Dining recently, he said: “There isn’t enough money. I’ve spent a lot of time looking at the economics of these models. It isn’t working. There isn’t enough money for everyone.

“I think there may be a dark kitchen model where you use multi-operators but I can’t see Deliveroo Editions working as a model. And so what you’ve got now is the likes of Deliveroo – they will deny it – but they are looking at becoming operators in their own right.

“They start to become a competitor of ours. This is a big thing and if I was Deliveroo I would look at becoming an operator. It’s common sense.”

Smith believes one of the main advantages delivery companies like Deliveroo have over conventional operators is the vast amount of customer data they hold.

“They control the data. You can’t get the data because it’s valuable. So combine the customer data with a dark kitchen and that’s really powerful, [especially when they] start thinking about becoming an operator.”

While Smith insists he is an advocate of delivery, he warned operators that they must be aware of the risks and competition.

“What we saw initially with Deliveroo launching into the UK was huge resistance from operators. It was seen as a huge threat and the biggest thing was cannibalisation – taking customers who were coming into the restaurant and moving them into the home, and for the pleasure of that I’m paying 25% of my gross sales.”

But Smith feels that most foodservice operators would struggle to run effective and profitable delivery operations themselves. He drew on the example of Pizza Express and Wagamama piloting delivery schemes but failing to meet the logistical demands.

Smith concluded: “Deliveroo and Uber Eats are still loss-making businesses. Even after these huge commissions we’re paying. There’s no question that those rates are going to go up. Their rates are going to go up and that’s a huge risk.”




Related posts