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DoorDash's New Delivery Kitchen Capitalizes On The "Netflix Economy"


DoorDash has opened its first shared pick-up and delivery kitchen in Redwood City, California. 

Instead of providing square footage for dine-in customers, five restaurant operations will use the kitchen solely to prepare food for delivery through DoorDash's app. The four restaurants participating thus far are The Halal Guys, Nations Giant Hamburgers, Rooster & Rice and Humphry Slocombe. 

Rather than opening dine-in locations, these restaurants are choosing lower rent, risk and permit regulations. People living in Palo Alto, Menlo Park, Atherton, Woodside, Belmont and San Carlos can benefit from this delivery service.

While each restaurant will provide its own kitchen staff, DoorDash will provide staff for janitorial services, as well as assistance for pick-up and delivery. 

DoorDash's kitchen in Redwood City departs from the usual ghost kitchen model in that it serves as a more visible storefront for the delivery company valued at $12.6 billion. 

"This is in an area where consumers are driving by," says Fuad Hannon, DoorDash's head of new business verticals. "It's highly visible. It's not a shared kitchen that's in the back of some warehouse."

DoorDash plans to study this test-kitchen in Northern California before opening another. Hannon hopes that through this endeavor, DoorDash will differentiate itself from other delivery companies as merchant-centered. 

Revenue in the food delivery industry in the U.S. has grown from $18.3 billion in 2017 to $22 billion in 2019. More than 37% of delivery customers are between the ages 25 and 34. Companies like DoorDash, Postmates and UberEats have transformed the convenience of eating at home by delivering meals  that ranges from fast food to fine dining. 

Last week, Fox Business' Stuart Varney asked Chris Coombes, owner of upscale Boston restaurants Boston Chops and Deuxave why anyone would have a $100 meal for two delivered. 

"I don't know why anyone would do that," said Coombes. "I've been pretty resistant to delivery at my fine dining restaurant. As a chef and entrepreneur, I have this endless set of receding goals and one of which is perfect food. I just don't believe that once someone takes food into a to-go container and puts it in a car that it can be perfect."

Coombes went on to say that while he does delivery out of the two restaurants, the revenue only accounts for 0.5%. For fast-casual dining, however, like the restaurants in DoorDash's kitchen, delivery makes a larger impact on the top line. 

"My largest competition right now isn't other restaurants. It's actually Netflix Inc (NASDAQ: NFLX) and the Netflix economy," Coombes said.

Image Sourced from Pixabay 

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