Uber’s food delivery business, UberEats, has been the talk of the town since analysts valued it at nearly $20B. But Uber isn’t just banking on existing late-night burrito delivery, it’s also fostering new local restaurants, which can now afford to operate almost solely online.
Bloomberg reports that these new delivery-only setups are becoming all the more popular, and it’s turning the traditionally thin-margined restaurant industry on its head.
Nobody ever goes in, and nobody ever goes out…
“Ghost restaurants” (restaurants with no brick-and-mortar presence) have been gaining in popularity since 2016, allowing companies like Green Summit to crank out different cuisines under multiple virtual restaurant brands all from one industrial kitchen.
These brands have been so successful that UberEats is now using its data to actively encourage their creation.
Here’s how it works:
- Step 1: UberEats’ data team identifies a demand for a specific cuisine in a given area (say, burgers).
- Step 2: The team approaches a local restaurateur with the proposition of adding a delivery burger brand onto its current brick-and-mortar operation.
- Step 3: Profit. The restaurant owner multiplies the revenue of their operation overnight, without having to invest in additional seating, kitchen space, or staffing (sometimes earning 28x more with their virtual brand than their OG eatery).
It’s aaalll part of Uber’s plan
Despite a mere $11B valuation, Grubhub remains the profitable industry leader with a 52% market share.
The main difference? UberEats is growing faster — in part thanks to its virtual restaurant program, which now works with 1.6k virtual restaurants globally.
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