From the source: Levi Aron, Deliveroo
On-demand food delivery platforms like Deliveroo are doing for restaurants what Amazon has done for retailers: lowering the barriers to entry for businesses to sell online, creating a diverse marketplace offering that attracts a large number of customers and leveraging the data from all these customer interactions to gain insights into the industry, creating another incentive for businesses to sign up.
But like Amazon, the seller consensus on food delivery platforms is mixed, depending who you talk to. For some restaurants, the exposure has undoubtedly led to incremental sales growth, while others cite the high commission rates the platforms charge as a negative. If the e-commerce sector is anything to go by, however, platforms like Deliveroo will only become more vital going forward.
Deliveroo’s country manager in Australia Levi Aron believes the company is not limited to just delivering meals from restaurants. The platform is already having conversations with food growers about supplying restaurants and trialling grocery delivery with supermarkets. Aron says there is an opportunity to get into areas like meal kits as well. But however Deliveroo evolves, it will be firmly rooted in data.
Inside Retail Weekly: On-demand food delivery platforms are a fairly recent addition to the restaurant landscape, even more so than e-commerce is to bricks-and-mortar retail. What’s it like to work in this space?
Levi Aron: We know a lot of businesses are trying to become more tech-enabled to help solve many different problems. The unique
opportunity we have as a platform with thousands upon thousands of restaurants in Australia and globally is that we’re able to gather
data and share insights that most restaurants – whether that’s a small mom-and-pop restaurant, or a small chain, or a large QSR or
fast casual restaurant – aren’t able to get on their own.
Going back to why [on-demand food delivery platforms are growing], the adoption of new technology in Australia is much higher
than most other countries. We find that people download more apps per capita in Australia than most other countries, and more people have smartphones in Australia than most other countries. There has been really strong growth across our business since we launched [in Australia] in November 2015 to this day, but also the way people think about food is changing, and that’s definitely fuelling what we’re doing today.
IRW: It seems that many retailers don’t yet have the ability to collect and analyse data in a way that’s useful for their business. Is this the case in the hospitality industry too?
LA: Everyone is looking for data, but it can be very noisy. There are so many points of reference to look at to decide whether to go down a certain path. The question at the end of the day is about how [data] betters the customer experience. In the future, we see data becoming more and more relevant. Can restaurants leverage it on their own, or can we solidify our partnerships to give them more of the insights they’re looking for? You could be a chain with 300 restaurants, but how do you understand what’s happening outside a certain city in Australia, or outside Australia?
We use data to understand whether there’s a cuisine gap or a pricing gap in certain suburbs. We might see that a suburb in Sydney doesn’t have any good poke restaurants [on Deliveroo], however there are three really good sushi restaurants. So we might go to one of them and say, ‘You have a lot of the ingredients that are required in a poke business. Why don’t we give you some of the insights we have from around the world to develop a poke brand, because we know it will do really well based on the population around you.’ We call these virtual brands.
IRW: We’re seeing some restaurants – like Red Rooster – launch their own delivery services. Is this a threat to platforms like Deliveroo?
LA: Any of the big players in this space are thinking about that. Not just restaurants, but every business. We believe the number one priority for customers is selection. We want to be able to offer our customers a selection that hits on price, cuisine, availability –
breakfast, lunch, dinner, late night, mid-morning snack offerings. This goes into the question of how we view ourselves, but it boils
down to what we can do to enhance customer experience, and from there, what we need to build to support that, versus just
building things we think are great but don’t actually enhance the customer experience.
IRW: Because Deliveroo is a marketplace like Amazon or Ebay, your customers include the businesses on your platform, not just the people who buy the product. Who do you view as your core customer?
LA: The companies you mentioned are two-pronged marketplaces, but we have to think about our consumers, restaurants and riders. If all three aren’t in sync, then we don’t have a business.
We entered Australia in Surry Hills [NSW] and St Kilda [VIC] with just five or 10 employees. We now
have 140 employees, over 6500 restaurants and over 6000 riders.
We’re very conscious of the fact that we need to build a sustainable business for our restaurants
and make sure we have very competitive rates and understand what their end goal is. We think
about how we can increase not just their revenue but also their opportunities, like I said before with
the poke example.
On the rider front, we’re more conscious than ever that we need to have a symbiotic relationship between riders, restaurants
and consumers. If we don’t focus on what is best for each of those three, then we’re not doing the right thing.
IRW: Not every decision will benefit all three equally. In those cases, where is your priority?
LA: The customer’s experience is number one. And the reason it’s so important is that if you don’t provide a good customer
experience, you won’t have enough customers ordering enough food to drive revenue for our restaurants, which helps drive our
riders’ revenue. But what I will say is that we always look to keep those three in sync, and if we sometimes have to prioritise one over
the other, it is only for a short time.
IRW: Does Deliveroo see itself as being in the restaurant business, the logistics business or the technology business?
LA: The thing we talk about internally, but not so much outwardly, is that we’re striving to
become the definitive food company, meaning we want to use our technology and our
resources to touch food everywhere. We think about what consumers are looking for. Are
they looking for fresh fruit or a great yogurt offering in the morning, or are they looking for
beverages at night? We want to be relevant for whatever that consumer is looking for. It may
not be a restaurant meal; it may be a meal pack to prepare at home or fresh fruit in the
office, but we want to bring it to them.
And it’s not just about moving things from A to B, it’s about getting into the chain supply
of food. We’re able to have very productive conversations with grass-fed beef producers and farmers who produce huge amounts
of produce about how can we help our restaurants buy better and make that process more efficient and effective, not just for
restaurants, but food in general.
So if we talk about how we classify ourselves, we classify ourselves as a food business. What you won’t see happening is
Deliveroo riders delivering pharmaceutical or electronics. We have a logistics business, so in theory, we could use our routing
systems to work with Australia Post or UPS, but we want to look at how we can better the experience in food.
IRW: Will we see Deliveroo get into grocery delivery?
LA: We partnered with Coles last year to deliver fresh produce and meat packs for barbecuing. We’re
currently delivering fresh produce in Australia and overseas, and we’re looking at different ways of testing and
learning from that. We will definitely engage with grocery stores and other businesses that play in this space,
but we’ll also have conversations with growers and restaurants to see how we can cut out costs and streamline things
in general. We want to lower the price of food and deliver it in a time that is more appropriate. You have different requirements for how much time you have for breakfast than dinner for example.
What we do know is that the customer has an appetite for this. We’re looking at what we can
IRW: There has been a fair amount of criticism of the gig economy when it comes to protections for workers. Has this impacted your business?
LA: We work with close to 40,000 riders globally and 6000 riders in
Australia, and we know they want flexibility. Ninety-one per cent of
our riders have told us that flexibility is extremely important to them. There is an
opportunity here for us to educate and work with stakeholders, including the
federal government, to ensure everyone who works in the on-demand economy
can enjoy the flexibility they want and the security they deserve. We want to
provide benefits like sick pay and holiday pay; however, that causes issues under
the current system because riders would be classified as employees rather than
independent contractors. We’re working on how we can change this, because
our riders are paramount to us and we’re confident in the model.
Further to this, we announced [last week] that we’re now offering free access
to long-term and short-term education to tens of thousands of riders around
the globe through open classrooms. It’s something we want to put out there
for our riders, not just employees. We’re going to fund 32 scholarships a year which are in excess of
$5700 each, so our riders can have opportunity to get a fully paid bachelor’s degree.
IRW: The other critique you sometimes hear about food delivery platforms is that the commission rates are cost-prohibitive to the smaller players in the restaurant industry. Do you think the rates are too high?
LA: I can’t speak for other companies out there, but what I can
say is that we focus on sustainability in every relationship we go
into. We want to have conversations with restaurants to make sure
they understand the cost of their goods, they understand the cost
of their labour and we understand their objectives and how we can
partner with them to grow.
I think the hospitality industry has seen tough times, and we see
Deliveroo as helping to increase awareness and build more revenue
[for restaurants]. But if restaurants on their own are not doing well
because their price positioning isn’t right, or they don’t have the
right cuisine mix, or they’re in an area that has a lot of restaurants,
then they shouldn’t look at Deliveroo as the answer to all
IRW: What are some of the key challenges in the restaurant industry today?
LA: When times get tough, people look at iterating the business and cutting costs in certain areas, which negatively impacts the
customer experience. Once you start down that path, it’s very hard to keep customer retention. The restaurant business is probably
one of the hardest I’ve seen out there, and the only way you can get through it is by leveraging data.
IRW: Deliveroo last year came out with a delivery-only kitchen concept called Editions. How is this
LA: We see Deliveroo Editions as a gold standard. It’s all about using our data to
find locations that have a gap in cuisine, price point or hero brand, and it’s an
opportunity to incubate new ideas For example, in January we did a trial with one
of our Editions kitchens in Melbourne to remove unnecessary cutlery and napkins
from orders, since many people have food delivered to locations where they already
have that available. Since then, we’ve rolled it out globally to make cutlery an
opt-in, and we found that 70 per cent of customers are not opting in for cutlery.
We’re very conscious of sustainability, not just from a financial point of view, but
the environmental impact as well. We‘ll continuously see what we can do with
Editions, whether it’s meal packs or fresh fruit, and take a lot of the
learnings to our restaurant partners.