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How Blockchain can create New Business Model Innovation for Food Delivery Apps like Uber Eats

Covid19 is detering people from moving out. Governments all over the world are doing their best to open mass testing centres to evaluate the spread of this virus. It has shaken the economies of the world where some companies are loosing their market, while some are restructuring themselves and some are trying to innovate their own field to deliver more value to their target customers. (Eg — delivering groceries and essential items)

Image for postImage for postMcDonald’s Chatswood

The Gig Economy seems to flourish year on year and it is complementing these new business models even in this covid 19 affected economy.

Image for postForbes.com

Effects are visible in today’s new modes of services related to Transportation, Hyperlocal Services and Food Delivery Apps. The online food delivery apps in Australia like Deliveroo, Uber eats, Menulog, Doordash etc have become a household name. The popularity and the success of these businesses in the online food delivery segment right now suggests that there is a clear psychographic shift from eating prepared meals at home.

The demand is more on the variety of selection, pricing, delivery time & good quality of food ingredients used. The Food App delivery companies look at themselves less as a logistic company and more as a service company which aims to bring ease and save time for their end user without letting them take the risk of moving outside their house.

The restaurant industry has now realized 2 segments that they need to cater to (In-house dinners and the online ordering customers) This has given rise to new business models in the restaurant industry as we see around us.

Cloud Kitchen

- A cloud kitchen is basically a takeaway outlet that provides no dine-in facility. They function as a production unit with a space for preparing food. The food is ordered is ordered which is prepared by these kitchens, hence, the name cloud kitchen. (4)

Shared Kitchen Rental Space

- A shared-use kitchen is a licensed commercial space that is certified for food production. Renters or members can use the kitchen by the hour or day to produce food while fulfilling regulatory compliance. (5)

Delivery Company Owned Cloud Kitchen Model/Dark Kitchens

- The space is provided for free by the food delivery app (Deliveroo in Australia), The restaurants only pay for staff and produce, Deliveroo then takes a higher percentage of the meal costs (6) Food Delivery App Customers expect Great Price, Fast Delivery, Good Tasting Food and an unspoken expectation is that they are buying safe food. Operations can be highly enhanced when online food

Delivery apps can control and develop some important parts of the value chain. It’s a great value add for the restaurant industry to have a partner (Marketplace) which can assist them in buying the food inventory with quality & deliver them with a reliable service to their kitchen. This is where blockchain technology plays an important part in creating a robust Marketplace for the restaurants which shows traceability and transparency. Blockchain is a Digital P2P Ledger that stores the encrypted data, which is fraud proof.

In simple words, it is an innovative way of keeping track of things and doing that in a way that’s transparent.

The Food supply network involves Farmers — Processors — Food Manufacturers — Distributors — Retailer — Restaurants. Each segment above deals in its own way and records the process on papers or in a system which doesn’t speak to other participants in this food system.

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This largely obstructs any participants in the food system to have a larger picture of what’s happening in the food system.

Individual players in this food system can capture and record all the information (what they have done, when they have done, where that product is) on to the blockchain digital ledger. Linking this data with IoT (Internet of Things) can produce insights that will bring more efficiency in the food system benefiting all the stakeholders from Farmers to Restauranteurs.

Blockchain helps all the food system stake holders get this overall view which helps them to interact in real time with each other producing more efficiency. Pinpointing the source, transportation route, and time in transit of each ingredient, operators and distributors can quickly react to a food-safety crisis and market demand surge more skilfully. Imagine how all the stakeholders would operate if they had a system which showed them every instance of their order like growth origin, current status and anticipated time of arrivial with the help of blockchain and IoT.

Eg -1) Sweetgreen a US fast casual restaurant chain that serves salads has been testing blockchain product to track its tomato supplies from farm to store.(1)

2) Starbucks is delivering more information about its products to its consumers by using a blockchain system designed by Microsoft that will track beans from farm to cup(2)

Value from the New Business Model - The creation of a new business model of Food Inventory Marketplace by the online food delivery apps can bring a great value addition to Restaurateurs. The restaurants can now order their inventory from reliable and reputed source. It gives an authentic appeal both to the restaurants and the customers by letting them know the source and the quality of their food. The restaurants get an edge to maintain their inventory, trace it and know exactly what time and date will it be delivered.

Applying the AI component to this inventory module can give insights to the restaurants on when to order the future stocks and how much quantity is needed for optimum operation of their restaurant thus reducing the risk of over ordering and inventory wastage.

AI and IoT (Internet of Things) add more efficiency in the existing delivery model 3rd Party Collaboration. Logistical Data produced by many enterprises can do a collaboration to share their data on a single platform from where these individual companies can derive more insights and bring more efficiency in their existing operations.

AI and IoT Use Case

  1. Ford, Uber and Lyft have agreed to pool their road traffic data in an open platform SharedStreets to improve mobility in and around cities. (7)
  2. Uber Eats Pool discounts- Applying Delivery Pool Strategy to enhance delivery productivity Showing / Recommending Single Restaurant for different customers nearby each other in the same area. Incentivising the customers some $ off on ordering from those recommended restaurants and sharing the same delivery courier. This concept is applied by uber in few countries like India and Australia.

Recommendations on Innovations to increase the competitive strategy in online food delivery market.

  1. Automatic recommendations for Restaurants to display offers and discounts in their slow hours and slack periods, helping restaurants save on wastage and increase utilization rate. This helps Restaurateurs save on wastage (Surplus Food and Slow Hours) by placing an ad of food on discount of a meal bundle on offer/discount. This is an incremental product innovation which can be applied by delivery players in the near future.
  2. The other issue in the online food delivery app is that the food is not delivered to its customers by the food delivery driver. In case of Lebanon and Beyond, a Sydney based restaurant this happens once every week, and that causes a detrimental damage to the restaurants brand and the online food delivery app. The customer who has already paid for the order has to either wait for another hour for a second delivery attempt of the same order from the same restaurant or they have an option to opt for a complete refund.

In most of such cases it’s the delivery driver at fault who doesn’t deliver the food even though they get paid and incentivised on it. To countermove in order to save the brand image of the restaurant and the online food delivery app, Food Delivery Apps can make a partnership collaboration with few restaurants in each area where such incidents takes place. Let their food get delivered as a substitute order for the missing order.

Clubbing this solution with a partial refund can save the brand image of both the food delivery app and the restaurant whose food wasn’t delivered.

References

:(1) https://www.businessinsider.com/sweetgreen-blockchain-tackle-food-poisoning-outbreaks-2018-12/?r=AU&IR=TSweetgreen has a plan to tackle one of the biggest challenges facing the food industry right now.(2019). Retrieved from https://www.businessinsider.com/sweetgreen-blockchain-tackle-food-poisoning-outbreaks-2018-12/?r=AU&IR=T

(2) https://www.forbes.com/sites/darrynpollock/2019/05/07/starbucks-teams-up-with-microsoft-to-boost-its-bean-to-cup-blockchain/#16bec38f3b5dStarbucks Teams Up With Microsoft To Boost Its Bean-To-Cup Blockchain. (2019). Retrieved from https://www.forbes.com/sites/darrynpollock/2019/05/07/starbucks-teams-up-with-microsoft-to-boost-its-bean-to-cup-blockchain/#16bec38f3b5d

(3) https://techcrunch.com/2018/12/10/uber-ads/How Uber will become an ad company, starting with Eats Pool TechCrunch. (2019). Retrievedfrom https://techcrunch.com/2018/12/10/uber-ads/

(4) https://www.posist.com/restaurant-times/trending/cloud-kitchens-smarter-way-run-restaurant-business.htmlHow Cloud Kitchens Are High Profit, Low Risk Restaurant Business Ventures | The Restaurant Times. (2019). Retrieved from https://www.posist.com/restaurant-times/trending/cloud-kitchens-smarter-way-run-restaurant-business.html

(5) https://en.wikipedia.org/wiki/Kitchen_incubatorKitchen incubator. (2019). Retrieved from https://en.wikipedia.org/wiki/Kitchen_incubator\

(6) https://www.abc.net.au/news/2018-04-13/the-dark-kitchens-of-food-delivery-apps/9642460 Your favourite delivery meal might not be made where you think. (2019). Retrieved from https://www.abc.net.au/news/2018-04-13/the-dark-kitchens-of-food-delivery-apps/9642460

(7)https://media.ford.com/content/fordmedia/fna/us/en/news/2018/09/26/ford-uber-and-lyft-agreement-data.htmlFORD, UBER AND LYFT ANNOUNCE AGREEMENT TO SHARE DATA THROUGH NEW PLATFORM THATGIVES CITIES AND MOBILITY COMPANIES NEW TOOLS TO MANAGE CONGESTION, CUT GREENHOUSE GASES AND REDUCE CRASHES | Ford Media Center. (2019). Retrievedfrom https://media.ford.com/content/fordmedia/fna/us/en/news/2018/09/26/ford-uber-and-lyft-agreement-data.htm

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Himanshu Kolhekar

Himanshu Kolhekar

FinTech Mentor

Coursera.org

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