Page 85 - Bloomberg Businessweek-October 29, 2018

FOOD Bloomberg Pursuits October 29, 2018

Uber’s Secret Restaurant Empire

The ride-share titan is using data to drive the creation
of virtual venues all over the world. By Kate Krader

On Aug. 1, Brooklyn Burger Factory began selling gourmet in Toronto, following various food delivery experiments
patties in its residential neighborhood of Crown Heights. But including Uber Fresh. The virtual restaurant program began
even though the restaurant serves a steady stream of jerk quietly in early 2016, and by March it had spread to 10 cit-
burgers, salmon burgers, and veggie burgers, not a single ies. Today the company works with 1,600 virtual restau-
person has shown up to eat one. rants around the world in the 300 or so cities in which Uber
That’s because the restaurant exists only in the Uber Eats operates. Almost 1,000 of them are in the U.S., ranging
Eats delivery app. Brooklyn Burger Factory is located in the from Co5 Farm Fresh in San Francisco to Italian Dream in
kitchen of Gerizim Cafe & Ice Cream, a small establishment Oklahoma City. The company has also expanded in Australia
on Ralph Avenue. There used to be only a couple of unspec- and New Zealand, mostly in Auckland but also in smaller
tacular burgers on the menu at Gerizim Cafe, and only about cities such as Hamilton.
one a day sold, according to co-owner Joel Farmer. There are now more than 300 Uber Eats employees as
But the data team at Uber Eats perceived a demand for the unit leverages Uber Technologies Inc.’s existing driv-
gourmet burgers in the area, and they ers, data, and name recognition to expand.
approached Farmer about the possibility Droege sees the most growth outside of the
of expanding the selection. Farmer liked major urban centers—such as Montpellier
the idea; most of the raw ingredients were in southern France or Ahmedabad in the 71
already on hand. The Brooklyn Burger west Indian state of Gujarat. Liz Meyerdirk,
Factory has been such a success—it’s now the global head of business development
selling as many as 75 burgers a day, with at Uber Eats, estimates the department is
revenue 28 times that of Gerizim Cafe— growing as fast as UberX did in its first three
that Farmer is changing the name of the years. “Over the last year, 40 percent of
entire operation. new Uber Eats users are new to Uber, driv-
MIA Wings, likewise, operates out of a ing platform growth,” she says.
brick-and-mortar Miami Beach cafe called When the virtual restaurant team notices
Venezia Pizza & Lounge. Since it began deliv- supply gaps in any given neighborhood—
ering chicken wings in September, Venezia if, say, the data show that the number of
has had an 80 percent increase in revenue. brunch places is lower than could be served
In Montreal, the casual Turkish restaurant based on searches—they’ll begin contacting
Sultan had so much success with the savory galettes and fries businesses in the area. “We’d say, ‘If you served brunch, that
being sold through the virtual French Takos it went ahead would be good for your delivery business,’ ” Droege says. For
and made that the official name of the joint. restaurateurs, it can be a chance to spread their fixed costs
It’s a phenomenon that Jason Droege, vice president for over a higher volume of orders.
Uber Everything, labels the “virtual restaurant.” Such places The arrangement often results in restaurants with culi-
start with no storefronts and no seats; they operate out of nary ambitions serving basics for people at home. The
a corner of a professional kitchen, inside a restaurant with menu at Rahi, an inventive Indian spot in New York’s
a different name and menu. Greenwich Village, contains more experimental dishes such
These kinds of unconventional options are proliferating as coconut-mango curry cod with crab butter. But the Uber
as the online food delivery business continues its pace of Eats menu has classic dishes including butter chicken and
20 percent year-over-year growth. Delivery overall is fore- vegetable samosas. “That’s what people want when they
ILLUSTRATION BY MATIJA MEDVED volume by 2022. Grubhub, the category leader with a 52 per- delivers via Caviar and Grubhub.
order Indian food,” says owner Roni Mazumdar. He also
cast to account for some $75.9 billion in gross merchandise
Even Michelin-starred cooks have gotten into it. At Pasta
cent market share and an $11 billion valuation, has been prof-
itable since 2011.
on Demand, the virtual restaurant from Marea chef Michael
White, you can order his classic rigatoni from the comfort
Uber Eats is still a secondary player in this segment, but
it’s expanding the fastest. It kicked off in December 2015
of your phone. <BW>