Using Data-Driven Concepts To Unlock Incremental Growth
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As a technology company, using data to inform every decision we make is in our DNA at Uber Eats. Whether that’s analyzing demand for food delivery in a city to guide expansion plans, or ensuring we have enough couriers and restaurants on the app at peak ordering times, our every move is driven by data.
For most brick and mortar restaurants, accessing data, let alone understanding how to extract value, has been a challenge few have managed to crack at scale However, data should play a fundamental role in any restaurant’s decision-making process, especially given the historically high cost and risk associated with launching and running such a business.
Think about it. Before you’ve even opened your doors, the upfront costs for rent, equipment, staff, and stock can run in to hundreds of thousands of dirhams even for a small to medium-sized establishment. Furthermore, for most SMEs, the choice of location and cuisine is at best an informed guess, and at worst, a stab in the dark. Then of course the restaurant has to stand out from the crowd to attract customers, which in an ultra-competitive market like the UAE isn’t simple. In fact, according to data from KPMG, the number of food and beverage outlets in the UAE is expected to swell to over 19,000 by 2020 from approximately 16,000 currently- that’s more restaurants per person that any other country in the world.
For existing businesses looking to expand, the risks remain equally high. A large capital investment is usually required to acquire new premises, and while selling burgers in one area may be popular, there’s no guarantee local residents from across town will be equally enthusiastic. Without data, it’s an endless amount of guesswork, which inevitably creates a high-risk model. The exponential rise of food delivery apps like Uber Eats, has started to provide entrepreneurs and restaurant owners with the data and insights they need to unlock the value of their business. While there’s nothing new about food delivery apps helping restaurants reach more customers and creating incremental demand, the data restaurants now have at their fingertips is quickly becoming a game changer.
Related: Uber Launches UberEATS In Dubai
For example, we’re working with thousands of restaurants around the world to help them identify “selection gaps” in their market, using data to launch delivery-only menus that answer latent demand in their local area for a particular cuisine. We like to call these data-driven concepts virtual restaurants (VRs). In essence, a VR only exists in the digital world; there is no storefront or front of house, and they can only be accessed via an app or a website. Importantly, VRs require minimal investment and with data informing every decision, from the name and menu to the location, success is almost assured.
We started helping partners experiment with datadriven concepts in a number of US cities towards the end of 2016. Since then we’ve been overwhelmed by the success of VRs, with nearly 2000 from across the world now operating on our app. In the UAE, we currently have over 60 operational VRs, giving restaurant owners the ability to create greater value from their businesses. With the UAE being one of the quickest countries to embrace new technology, it’s no wonder VRs are on the rise. The Wise Eatery is a great example. Its parent company, Easy Bites, offered a wide selection of meals including sandwiches, burgers, salads and wraps, but they were missing one dish which our data identified was in high demand in the Dubai Media City area- healthy bowls. Easy Bites used this insight to launch The Wise Eatery as a VR serving a range of healthy bowls, and as a result, increased their revenues by 200%.
Another example is our partnership with Wet Burger. We worked with their team to identify selection gaps in the Mirdif neighborhood of Dubai. Our data showed that there was a huge demand for healthy meal options, but there were very few options available on our app. To plug this gap, we teamed up with Wet Burger to launch a new VR called Healthy 27. Wet Burger put in minimal additional investment, and were able to operate out of their underutilized kitchen to grow their revenue. While local residents in the area now had access to healthy food. Everybody wins. Another benefit of operating a VR is the speed at which you can adapt to change. Our data clearly shows where and what our eaters want, and using that information, VRs can adjust their menus and offerings to push incremental sales.
For instance: while acai bowls remain one of the most searched items on Uber Eats, Kad Che wasn’t getting many orders despite having a huge selection of great tasting acai bowls. Why? Because they were difficult to find in their vast menu. Looking at our data, we suggested they split their menu to launch an acai concept and a breakfast concept as two separate VRs. They launched Casa do Acai and Wake & Break, which made it much easier for customers to find what they were looking for, which resulted in 275% revenue growth. This is how effective data and insights can be.
While it is still early days, the rise of VRs offers an insight into the future of food delivery, and the tremendous economic impact they can have for the food retail industry.