A company that began as a small online marketplace for books back in 1994 is now a multimillion-dollar business dominating the world. From its humble beginnings, Amazon expanded and continues to grow. Despite the challenges brought by the pandemic, Amazon was able to reach a market capitalization of over US$1 trillion in early February 2020.
As Amazon strives to expand to new products and services, they are expressing interest in the latest food delivery trend. According to CNBC, Amazon led a $575 million funding round for Deliveroo in May 2019. Deliveroo is a digital platform for food deliveries, which also claims to have pioneered the idea for cloud kitchens.
What are Cloud Kitchens?
As described by Medium.com, cloud kitchen is a new business model that food establishments use, which are practically stripped-down commercial cooking spaces with no dine-in option. These cloud kitchens allow food establishments to come up with more food options at a lower cost.
The traditional way in which restaurants, caterers, and fast food chains operate requires facilities designed to make food specifically for delivery or catering. By using cloud kitchens, there will be no need for tables, chairs, servers, hosts, or storefront. With this concept, food is accessible online or through a mobile app and delivered directly to the customer's location.
Deliveroo: A Useful Instrument
The idea of cloud kitchens or referred to as ghost kitchens and dark kitchens is claimed to be from Deliveroo, which started in 2017. With the use of the cloud kitchen idea, Amazon can benefit from the success that Deliveroo has with its delivery-only kitchens.
At present, Deliveroo has 14 Editions sites in the U.K. and 32 globally. There are an estimated 220 cloud kitchens spread across all of Deliveroo's Editions sites. Furthermore, the company is planning to double the number of its Editions sites to 64 this year.
With the pandemic still on-going and several lockdown protocols still in place, takeouts are now the only viable option for many businesses. This is why dark kitchens have become a useful asset for some business owners.
As these business owners turn to the cloud or dark kitchen business models, Deliveroo finds itself on a roll to gain more profit. Although the company is yet to show its full market performance results for 2020, in 2019, the company's revenue grew to £771 million.
A Promising Benefit For Amazon
Although Amazon is seen only as a minor investor of Deliveroo, some analysts believe that they could form a more in-depth business relationship soon. Related reports revealed that Amazon also ventured on an online takeout business in the UK previously but was shut down in 2019.
However, with the approval of their investment deal by CMA in August, this could open up new doors for both companies. Several analysts predict that Amazon could put Deliveroo into its app to create a hybrid app, just like what Uber did when it incorporated the UberEats app into its own main app. We can only anticipate how this will execute this in the future.
Meanwhile, rivals of Deliveroo like UberEats decided to close their cloud kitchen in Paris as part of a drive to cut costs. On the other hand, DoorDash opened its first delivery only kitchen in October 2019 and is still in operation.
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