Dive Brief:
- Uber is launching a restaurant accelerator program in London through a partnership with kitchen space rental company Karma Kitchen to help bolster its Uber Eats food delivery offerings, according to Quartz. Uber plans to pay Karma Kitchen for the space the program will take up.
- Five to seven restaurants with at least one location will be selected to participate in the three-week program based on what Uber Eats has identified as so-called selection gaps in its offerings. These are areas where the food delivery company wants to increase offerings of certain food types based on demand and availability of restaurants.
- Uber expects to run this program three times each year depending on the success of this initial program goes. It plans to help the restaurants on all areas of operations, including marketing, logistics, labor and branding.
Dive Insight:
The decision to accelerate the growth of certain restaurants to cover selection gaps is greater investment by Uber Eats than its recent moves, including dabbling in ghost kitchens that allow people to offer food through its delivery app. The company is even paying for the space to host restaurants in the shared kitchen space and has a direct stake in making sure that they succeed.
This strategy could fend off competition from rival Deliveroo, which recently launched a program where it will buy food ingredients and deliver them to restaurants. Any service that can help restaurants reduce costs could help ease tensions that delivery providers are eating too much into restaurant profit margins.
Other companies have seen the potential benefits of operating out of a ghost kitchen, including less overhead, not having to pay for a restaurant space and other financially driven perks. Kitchen United and other shared-kitchen models partner with third-party delivery companies and provide a ready-made stream of potential customers and assist with the logistics piece of the puzzle. FAT Brands, B.GOOD, Starbucks, Red Robin are all testing ghost kitchen models to increase off-premise offerings.
While the accelerator concept is limited to the U.K., Uber Eats could very well test it out in the U.S., especially if it allows it to better compete with Grubhub and DoorDash when it comes to claiming option-starved segments. But it could bring up fears that the company is using its own delivery data to compete against its restaurant partners, an issue that would need to be addressed if it decides to bring the program here.
