Overview: business models delivery (I)

When delivery is not the same as delivery

The simplest delivery model: own restaurant, own drivers, order comes directly from the customer.
Imago Images / Eibner
The simplest delivery model: own restaurant, own drivers, order comes directly from the customer.

In the Corona pandemic, resourceful restaurants are switching their business model to take-away or delivery. But delivery is not just delivery. Christine Schäfer, researcher at the Gottlieb Duttweiler Institute in Zurich, has drawn up a detailed overview of the underlying business models. We document it in two parts. Part 1: From the independent lone fighter to the virtual restaurant.

1. Independent - OneShot

This model is the simplest - one caller, one kitchen and one employee who brings the hot food to the customer. The restaurant controls the quality, manages the relationship with the customer, bears the costs and retains all revenues. Most of the time, the operating costs for the work - especially for an in-house, paid fleet of drivers - and the rent are high, as an attractive, customer-oriented sales area in a central location is needed. Advantage: The restaurant can control all local customer information, there are no fees for an external third party.

2. Cloud Kitchen - Hub & Spoke

The model probably originated in 1973, when Domino's introduced its "30 Minutes or Free" warranty. If the pizza takes longer than 30 minutes to reach the customer, it is free. In order to keep this promise, Domino's created a so-called hub-and-spoke system with a central hub and a network of branches in strategic locations. All raw materials are processed into semi-finished goods at the hub and then finished in the stores. With this strategy, Domino's gained a competitive advantage early on, which paved the way to becoming a modern delivery provider.

3. ghost kitchen

A refinement of the Cloud Kitchen is the Ghost Kitchen. Many see in this model the future of the restaurant and a threat to the traditional dine-in restaurant. Ghost Kitchens are a highly efficient hybrid of menu concept, specialised production, logistics and low labour costs without dine-in customer
Three key components characterize Ghost Kitchens:
  • The guest room or take-away area is completely removed. The restaurant only operates from a kitchen that is close to the target customers, but typically in a rather remote location with low rents.
  • The restaurant does not hire its own staff for delivery, but uses (through partnership or agreement) the many third party suppliers such as GrubHub, Postmates or Doordash.
  • Most importantly, a Ghost Kitchen only needs an app, a website or a telephone ordering system to contact customers. This allows a wide variety of dishes to be produced in the same kitchen - salads, sandwiches, pizza, Asian and other ethnic dishes that are easy to cook and deliver. Cross-use of similar ingredients saves costs and creates new menu ideas.

4. virtual restaurant

Uber has revolutionized the taxi industry, now Uber Eats is actively involved in turning the global delivery industry upside down. By October 2018, Uber Eats had more than 1,600 virtual restaurants around the globe, including nearly 1,000 in the USA. Most operate from existing restaurant kitchens, but with new brands that are only available from Uber Eats.

European Food Trends Report 2019
This analysis is part of the European Food Trends Report 2019 of the Gottlieb Duttweiler Institute (GDI) in Zurich. Interested parties can request the report with many more insights at: gdi.ch/eftr19
One example of such a virtual restaurant concept is SushiYaa in Dallas: the small sushi chain operates five physical restaurants under the name SushiYaa - but their kitchens also prepare dishes for around two dozen virtual restaurants such as Bento Box, Poke Station or Mandu Dumpling House, which offer completely different dishes and are only available through Uber Eats.

Another form of virtual cuisine involves licensing existing restaurant recipes and menu cards in a virtual model. The start-up concept Good Uncle uses this to compete in the university catering segment. Good Uncle offers high quality ready meals at various prices. They are delivered with the company 's own delivery fleet using the drop off method.