# Uber Eats’ Path to Delivery Domination: Restaurant "Inception"



## mrpjfresh (Aug 16, 2016)

*Nearly 1,000 of the food delivery service's U.S. restaurant partners are actually "virtual restaurants," operating out of real restaurants but peddling entirely separate, delivery-only menus*
by Whitney Filloon Oct 24, 2018, 1:18pm EDT

 
Uber's version of virtual restaurants are different; instead of relying on commissary kitchens, they take advantage of restaurants that already exist. As Uber Eats head Jason Droege recently told Eater, "They're restaurant brands located in physical restaurants. And the brand only exists on Uber Eats." In Dallas, for example, a small sushi chain called SushiYaa operates five brick-and-mortar restaurants - but those restaurants are also home to around two dozen virtual restaurants with names like Bento Box, Poke Station, and Mandu Dumpling House, serving entirely separate menus and dishes that are only available for delivery via Uber Eats.

The massive amount of customer data Uber Eats collects from its estimated 8 million-plus users (Uber does not break out the number of users of its food delivery service from users of its ride-share service) means that it has unique insight into what kinds of foods are rising in popularity, and it's capitalizing on that knowledge to expand its business. SushiYaa's VP of operations Louie Kim says the restaurant was initially approached by Uber Eats about a year and a half ago, before the poke bowl trend really hit Dallas. Uber Eats suggested SushiYaa could increase their business by catering to customer demand with a virtual poke restaurant: All they needed was a restaurant name and a tablet to intercept orders, and they could utilize their existing kitchen space to produce food for their virtual poke restaurant.

https://www.eater.com/2018/10/24/18018334/uber-eats-virtual-restaurants

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Similar, example focused article from NPR:
*Uber's Online-only Restaurants: The Future or End of Dining Out?*
https://www.npr.org/sections/thesal...staurants-the-future-or-the-end-of-dining-out

La Gran Via Bakery is an institution in this neighborhood. It's been around since 1978 - three generations of pastry chefs making cakes, cupcakes and traditional Latin American pastries.

Which is why, when co-owner Betsy Leyva was recently pitched the idea of creating a hamburger restaurant on the side, she balked.

"I was like, are you crazy? What do you mean? What are you talking about?" she says. Uber, the ride-sharing company, was suggesting she create a "virtual restaurant" - one that only exists online, and delivers through Uber Eats.

There are now about 800 such virtual restaurants in the U.S., often created when enough customers look through the Uber Eats app for a certain type of food in their area that they can't find.

"When we see people searching for something but not finding it, that signals to us that there's an opportunity and there's unmet demand," says Elyse Propis, who leads Uber Eats' virtual restaurant initiative across North America.

So the company approaches an eatery and suggests creating a virtual side restaurant, with those dishes people are craving but can't get.



Jay Jerrier said:


> "They charge us between 30 and 35 percent of whatever the bill is," Jerrier says. "And then the customer pays anywhere from two bucks to six bucks for the delivery. Plus a service fee. Plus credit card fees. So, you know, it's nuts."


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And Bloomberg:
*Uber's Secret Restaurant Empire:*
https://www.bloomberg.com/news/articles/2018-10-24/uber-s-secret-empire-of-virtual-restaurants

On Aug. 1, Brooklyn Burger Factory began selling gourmet patties in its residential neighborhood of Crown Heights. But even though the restaurant serves a steady stream of jerk burgers, salmon burgers, and veggie burgers, not a single person has shown up to eat one.

That's because the restaurant exists only in the Uber Eats delivery app. Brooklyn Burger Factory is located in the kitchen of Gerizim Cafe & Ice Cream, a small establishment on Ralph Avenue. There used to be only a couple of unspectacular burgers on the menu at Gerizim Cafe, and only about one a day sold, according to co-owner Joel Farmer.

But the data team at Uber Eats perceived a demand for gourmet burgers in the area, and they approached Farmer about the possibility of expanding the selection. Farmer liked the idea; most of the raw ingredients were already on hand. The Brooklyn Burger Factory has been such a success-it's now selling as many as 75 burgers a day, with revenue 28 times that of Gerizim Cafe-that Farmer is changing the name of the entire operation.

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Interesting recent articles about how Uber is using user data and the aggressive evolution and recruitment of the new "phantom restaurant" trend as Uber looks to increase profitability before their 2019 IPO. Restaurant inception... restaurant within a restaurant within restaurant


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## CZ75 (Aug 10, 2018)

Phantom restaurant is no different than a simple take-out place. Just through an app and with the added convenience of delivery.


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## ChinatownJake (Jan 3, 2016)

The other end of this equation is cloud kitchens, which set up for delivery only also but have no actual dine-in area, restaurant. One in L.A., on Washington Blvd. at Normandie, is a massive warehouse maze of industrial size kitchens, feeding dozens of online restaurant brands and a horde of drivers (from all services) congregated in the reception area waiting for their order.

Here is one of their brands:

https://www.skinnybitchpizza.com/order-now


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## Rakos (Sep 2, 2014)

So does this mean...

That in a virtual restaurant...

There are no roaches...8>O

Other than maybe...

What the driver is smoking...8>)

Rakos


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## CZ75 (Aug 10, 2018)

ChinatownJake said:


> The other end of this equation is cloud kitchens, which set up for delivery only also but have no actual dine-in area, restaurant. One in L.A., on Washington Blvd. at Normandie, is a massive warehouse maze of industrial size kitchens, feeding dozens of online restaurant brands and a horde of drivers (from all services) congregated in the reception area waiting for their order.
> 
> Here is one of their brands:
> 
> https://www.skinnybitchpizza.com/order-now


Interesting. Doesn't even have to be one massive warehouse, even, I would envision some small squarish building to retrofit for a kitchen. Maybe have a counter by the front door with all the delivery platform tablets but no cash register. One person up front and a few in the kitchen. I could see a lot of small kitchens scattered around a metroplex like DFW serving each city with that online ordering and delivery through existing mobile apps or perhaps their own if it scales.

It would certainly have to be a better version of fast food. Or at least, have the perception of better (healthier, greener, GMO-free, whatever trendy thing is in style, etc). I don't know, a Poke Bowl outfit. Perhaps a Curry Kitchen with only 10 types of curry? I guess there's endless ideas.


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## TwoFiddyMile (Mar 13, 2015)

Rakos said:


> So does this mean...
> 
> That in a virtual restaurant...
> 
> ...


What's that pile behind him, the bones of his enemies?


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## Z129 (May 30, 2018)

mrpjfresh said:


> *Nearly 1,000 of the food delivery service's U.S. restaurant partners are actually "virtual restaurants," operating out of real restaurants but peddling entirely separate, delivery-only menus*
> by Whitney Filloon Oct 24, 2018, 1:18pm EDT
> 
> 
> ...


Pretty smart.

I thought Travis was off doing this whole virtual restaurant thing on his own without Uber.


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## The Jax (Apr 17, 2018)

ChinatownJake said:


> The other end of this equation is cloud kitchens, which set up for delivery only also but have no actual dine-in area, restaurant. One in L.A., on Washington Blvd. at Normandie, is a massive warehouse maze of industrial size kitchens, feeding dozens of online restaurant brands and a horde of drivers (from all services) congregated in the reception area waiting for their order.
> 
> Here is one of their brands:
> 
> https://www.skinnybitchpizza.com/order-now


As someone who is not only an active delivery driver but a consultant in the industry, I personally think these locations that rent out closet sized kitchens in mass numbers in a medium sized office/warehouse are dangerous and should be illegal. While they pass food code, the local fire inspector is the one that issues the certificate of occupancy. Also while these places do pass a health inspection, the property itself was not designed originally for this type of use. These places are regularly and routinely in violation of their certificate of occupancy's maximum amount of people inside the structure and on the property (parking lot full of cars for workers and delivery drivers and delivery trucks). Besides being inside an airplane, this is the last place I would want to be when a fire breaks out. Small hallways, too many people, and chaos. No thanks.


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