Uber Eats enters virtual restaurant space in exclusive partnership with Cafe Coffee Day

Jason Droege, VP Uber Everything, was in Delhi on Friday to announce a partnership with Cafe Coffee Day, for the launch of a first-of-its kind virtual restaurant.

“It is our first global partnership and foray into a business like this. It just proves that we are serious of about the Uber Eats business in India,” said Jason, addressing a media round table.

A virtual restaurant is different from a cloud kitchen or the more recently launched Swiggy Access concept.

Explaining what a virtual kitchen does, Bhavik Rathod, Head Uber Eats India and South Asia said,

“A virtual kitchen is a tie-up with a restaurant that has a storefront, and the kitchen space, where the existing kitchen space is being used to create multiple food brands primarily for delivery. We are not creating a kitchen infrastructure space and inviting restaurant partners to give them access to different locations. The existing kitchen space might not be used to full capacity. The idea is to leverage our data insights and technology and the existing infrastructure, and create food menus and brands that the customer is looking for.”

With this exclusive partnership with Cafe Coffee Day, Uber Eats will leverage the latter's existing 1,700 cafes, and kitchen space. “It gives us an opportunity to create multiple specialised brands with a strong value proposition,” said Jason.

Launching soon

The first brand, which is yet to be named, will be launched next month. The menu will focus on home-styled meals, which the consumer is looking for. The team is starting with 10 cafes in Bengaluru, and on the basis of user behaviour and order patterns it will expand to Cafe Coffee Day’s 1,700 restaurants.

“Today’s generation needs a mix of physical and digital presence, phygital is the way to go, and this partnership helps us leverage that. The idea is to create a differentiated experience of virtual restaurants, that cater to multiple needs of consumers with various brands, ” explained Venu Madhav, CEO, Cafe Coffee Day.

Uber Eats was launched in 2015, with the brand entering India in May 2017. It is present in 250 cities across 36 cities globally, and in India in 37 cities. “We have seen a 7x growth in the last six months,” says Bhavik.

The team claims to add 4500+ delivery partners every week across India, boasts of a close to 35 minutes average delivery time, adds 100 restaurants every day and has over 2,000 delivery only cloud kitchens. So far, Uber’s global team has spent $62.5 million on building Uber Eats’ standalone app. India is the company’s third largest market globally after the US and Australia.

The growing Uber Eats business

According to The Information magazine, Uber Eats’ global revenue in January-April 2018 was $1.5 billion. The global team estimates the company’s valuation between $10 billion and $15 billion. Its parent, Uber, is valued at $68 billion.

Uber Eats’ competitors are strong and well-funded: while new unicorns Swiggy and Zomato have the backing of DST Global and Alibaba-owned Ant Financials respectively, Ola-owned FoodPanda have dipped into Softbank’s pockets.

FoodPanda has a base of 150 million consumers, completes 3,00,000 orders a day, and has over 125,000 delivery partners. It is also offering deep discounts like 'Biryani at Rs 79' and some snacks at Rs 19. Swiggy reportedly completes more than four million orders a month, and as of June last year, the number was over 14 million. Zomato has reportedly completed over 16.5 million orders this year.

The Uber Eats team, however, is bullish about India. Most food-delivery businesses hold a margin of 15-30 percent, and Uber Eats reportedly has a margin of 25-30 percent.

The overall food tech market in India is believed to touch $2.5 billion by 2021, as against its current $700 million, predicts RedSeer.

Uber is looking to soon use drones for food delivery under its ambitious Uber Elevate and Air programme.

“Virtual restaurants will bring a paradigm shift in food delivery and restaurant business in India,” concluded Jason.