Disruptive innovation

Satellite kitchens are the new online retail

May 21, 2018

Technology has disrupted one legacy industry after another; Airbnb disrupted hospitality, Amazon revolutionised retail and Deliveroo brought food to our doorsteps from our phones, any time, and from any kitchen.

As a food delivery service provider, Deliveroo has actually created three waves of disruption; first, it disrupted the food and restaurant industry, and now, using a data first approach, it is disrupting the food delivery business model and creating new challenges for the commercial real estate sector.

A report by market research company, Technavio, shows that the global online on-demand food delivery services market is set to grow at a CAGR of nearly 32% until 2021.

Considering that meal delivery has not typically been the most profitable activity for a restaurant, this is a major turnaround and a whole new market being created.

To capitalise on this, potential barriers need to be overcome — most importantly, the asymmetry between demand and supply.


While consumers are willing to pay for food to be delivered to their doorsteps, restaurants want to protect their brand and reputation and are not allowing a meal to travel 30 minutes across the city where it might arrive cold and in poor condition.

Data — and the insights it provides — is the key that bridges this gap to unlock potential growth.


The simple solution would be to send meals out from an optimised location that would minimise transit time, but not every restaurant can set up shop all over town. This is where Deliveroo has been able to drive innovation to stay ahead of its competition.

Leveraging location intelligence to analyse data including the clusters of existing demand, potential within an unserved market, and demographics, Deliveroo has been able to identify locations for satellite kitchens — strategically located converted shipping containers operating as delivery-only kitchens for restaurants to lease and operate from.

This, in turn, has created the agility to move the kitchen — a traditional heavy sunk cost — to where demand and revenue exists as that demand and market shifts.

To sell the idea to potential restaurant partners, Deliveroo uses location and demographic data to visualise the demand around the stand-alone kitchens — and because it’s all backed by data, restaurant owners are sold on the idea and revenue to make the most of this new, low-cost kitchen investment. 

It’s both a challenge and an opportunity for the commercial real estate market which was first jolted by online shopping, then shared office space.


Now the sector must contend with satellite kitchens, and inevitably there will be more disruptions in the future. Many would argue it is ripe for disruption anyway — and according to Deloitte, the disruption has already started.

Organisations such as JLL and Knight Frank are meeting this challenge head on. Adopting some of the same location analytic techniques used by Deliveroo, they amplify their expertise to innovate on behalf of their clients and guide them towards locations that are most likely to maximise profitability and reduce risk.

The oldest adage of real estate is ‘location, location, location’, but only location analytics can completely unlock the value of any location. The ability to map entire location data assets — such as demographics, travel times, predicted market changes, inventory, client growth, infrastructure investment — helps to unlock new commercial insights while driving a new wave of industry disruption. 

To find out more about GIS applications in commercial real estate, contact an Esri Australia specialist on 1800 870 750 or send us an email.