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Comment by actuator | Hacker News Reader

I think this is pretty common across industries where a platform acts as an aggregator/marketplace. Case in point services like Amazon.com, Netflix have their own brands/content as well. Netflix is known for using data of people's content consumption to make new content. I think this makes sense for two reasons:-

- Tighter control over what you produce, so higher margins and potential differentiators(like the burger example in article).

- Acts as a defensible strategy for the aggregator if it can tie these brands with itself.

The only scary thing is when these marketplaces/aggregators just kill small businesses because of controlling the "storefront", discovery and leveraging economies of scale. Example search in Amazon: https://imgur.com/a/zHDueIk

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In the case of "virtual restaurants", centralized, high volume kitchens are much more cost efficient - for example they can get salmon for $6/pound instead of the $9-$11/pound restaurants pay, and can save maybe up to 85% on labor.

So thinking that a small business could play in the "virtual restaurant" industry, is probably not realistic.

And yet, most of the centralised places have shut down. I'm thinking of Maple and others, which I enjoyed using in NYC, and yet they are gone now.

Since this new market is just being created, it makes sense that a lot of companies will be shut down, in that search for the best business model.

One possible guess is: in this very competitive market it's really hard/expensive to get new customers. But here, UBER had a big advantage.

Also, customers aren't loyal. But in the case of UBER, even if those customers change a virtual restaurant brand, they're very likely to stay in the UBER app, and UBER may have some power to guide them.

And if many "virtual restaurants" share the same highly-efficient commercial kitchen, and aggregate their orders from suppliers - they still get most of the efficiencies of a large commercial kitchen.

But I think that's part of the barrier of entry for a small restaurant. I enjoy supporting local food trucks, and while the food is good, the workflow is terrible. If you look at a quick service restaurant as a logistics company, they are successful at getting completing the transaction and delivery quickly.

For a small restaurant to be successful, while quality is still a necessity, their pseudo "supply chain management" process needs to avoid as many bottlenecks as possible.

I think the main advantage of small restaurants is the labor advantage. Owner, family, friends are willing to work at ridiculously low (no) wages until there is a decent profit.

> I think this is pretty common across industries where a platform acts as an aggregator/marketplace. Case in point services like Amazon.com, Netflix have their own brands/content as well. Netflix is known for using data of people's content consumption to make new content. I think this makes sense for two reasons:-

In this case it's quite different, I believe, in that Uber will notice an underserved market and reach out to existing players/small business in that area to expand into that market. This sounds very different than Uber using their market knowledge to create a competitive advantage for themselves.

This is just the cynic in me; but I think this is just for now, because it allows them to test these theories and ramp up faster. In the future Uber might just decide to go the Amazon way or just cut deals where they earn significantly higher margins compared to other restaurants.

I doubt. Making food had nothing to do with their core business...

I think that would be smart - I emailed a similar idea to a doordash recruiter a while back.

They should use the data from food delivery to find the most commonly requested items and then just have kitchens make “Amazon basic” versions with nice packaging/branding that undercut on price.

I think this could be a new type of fast food take over if done right.

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