Will Delivery Kill the Restaurant Kitchen as we Know it?

26 March, 2021

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The answer is scale. With immediate profit not a priority, the companies wanted to disrupt the industry and appropriate restaurants’ customers. They were criticised for the scale-at-all-costs approach, which saw gig workers take all the risk for very little benefit, as well as for ‘growth hacks’ such as adding restaurants to their platforms without their permission.

That was before the pandemic. Today the balance sheets of these companies look a lot healthier. Last week, Just Eat, the world’s biggest online takeaway app, posted earnings of €256 million for 2020, up from €18 million in 2019 thanks to a 42% leap in orders. This year the company expects demand for orders to soar even higher, with 88% growth in the first two months 2021.

The Amazon-backed company Deliveroo announced this week that it more than doubled gross transaction value in the first two months of 2021 as it seeks a valuation of up to £8.8 billion ($12.2 billion) in its upcoming IPO in London.

The convergence of customer demand, restaurants’ weakened position in the market, and a flood of investment into the online platforms, has delivered the perfect conditions in which to thrive. But will it continue? It’s worth noting that the period of perfect growth for these delivery companies is coming to an end. In the US, independent restaurants lobbied hard for financial support, and now it looks like they are finally getting some. Last month the UK's Supreme Court deemed Uber drivers as workers, and not self-employed, opening the door to benefits like minimum wage and holiday pay. The tide is turning.

Vaccines are being rolled out, too slowly in some countries, but there is an end in sight. What will happen then? Will people continue to eat as much at home? If the platform pushes the cost of workers' benefits onto the customers, will they be as quick to order food in? Will restaurateurs become so hooked on the revenue from takeout that they turn their back on guests and go dark?

Much will depend on what the customer wants. Delivery companies are betting that if the customer can get food delivered at home, which is the same quality and half the cost of food in a restaurant, that they will continue to eat takeout.

It’s the type of optimistic bet made by tech enthusiasts make or blackboard economists, who examine figures and trends while ignoring the very thing that makes it all tick – human nature.

The flaw in this kind of growth strategy is that it fails to factor in that restaurants are about so much more than food, and a delivery app can never compete with that. The restaurant is a community centre, a hub of social interaction, it’s where people fall in love, where they celebrate life events and it’s where they go to connect with other humans. That social function has been missed more than anything during the pandemic and it is what will drive the customer back to eat in a restaurant. Because no matter which way you slice it, when you want to celebrate life, you’re not going to do it by ordering in.

There is an alternative vision for the future, however. One that represents a non-binary economic model for restaurants. Imagine the Venn diagram of delivery and indoor dining, and somewhere in between there exists a future where restaurants keep their dining rooms and communities get to keep those important social centres - but these kitchens have takeout and pickup as part of their nightly service.

Delivery need not be all about undermining a restaurant’s ability to exist in a brick and mortar form. A year ago, when the gravity of the pandemic hit home and restaurants were shuttering all over the world, Nick Kokonas of the Alinea Group decided to change his online reservations platform Tock to Tock To Go, which would allow restaurateurs to pivot to delivery using their own staff. It allowed thousands of restaurants across the US, and then the world, to keep serving meals, even while the pandemic caused unprecedented damage to the industry.

Indeed, with the aid of Tock to Go, some restaurants were actually able to thrive during the pandemic. Restaurateurs across the world demonstrated their incredible agility and ability to innovate and reinvent as they pivoted to other options, like home entertainment or store-shelf products. Fine dining and Michelin-star restaurants overcame their fear of takeout and delivery, and a new, genuine ‘third way' of eating was born.

It is unlikely that this market will disappear. Once things ‘get back to normal’, restaurants will likely still serve people at home. However, the way we eat in the future will be decided by the restaurant workers who make up the industry, and above all, the customers, who will have to decide which model they wish to support. The idea that human behaviour can be permanently manipulated by clandestine economic forces designed to make a few people very rich at the expense of the many, is not something people emerging from a global pandemic will have much appetite for.

Ana Ros

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