With a celebrity clientele, glittering reviews and a coveted Michelin star, Mayfair restaurant Hakkasan has long been a sought-after reservation.
But since London’s elite dining scene was laid low by Covid, it has been offering gourmets a taste of the high life at home, including signature Chinese dishes such as Peking duck at £110 and roasted silver cod in champagne and honey for £52.
The freshly cooked dishes are transported to the customer’s door by turquoise-clad moped riders from the ubiquitous Deliveroo fleet, who ferry hot food on demand from local restaurants, fast-food chains and even coffee shops.
But Hakkasan customers might be surprised to know that, despite the chilli-hot price tag, there’s a good chance their gourmet Cantonese food has come no closer to rubbing shoulders with high society than they have.
They might find, in fact, their dinner has never been anywhere near the kitchens of Hakkasan’s flagship restaurant in Bruton Street. Instead, it has been knocked up in a windowless industrial shed in a shabby North London car park.
Hakkasan customers might be surprised to know that there is a good chance their food has been knocked up in a windowless industrial shed in a shabby North London car park
Mayfair restaurant Hakkasan has long been a sought-after reservation and has been offering signature Chinese dishes from home since the dining scene was laid low by Covid
There, in a gated compound protected by two security guards, is one of Deliveroo’s ‘dark kitchens’, where food ordered from a number of major restaurant brands – including Indian chain Dishoom, popular burger joints Honest Burger and Shake Shack, and the curry house Moto – is actually cooked.
According to its own version of recent history, Deliveroo, which is backed to the tune of nearly £500million by internet giant Amazon, has been the saviour of the restaurant trade during the coronavirus crisis.
Yet for all the slick marketing, there are growing questions about the way this new ‘disruptor’ operates, including its use of dark kitchens, and rising fears that it will do to independent restaurants what Amazon has already done to small local shops here and in America.
For a growing number of restaurateurs, Deliveroo is not so much their saviour as a predator whose seemingly unstoppable growth, high commission fees and close control of customer data threaten to crush the life out of old-fashioned family businesses.
‘Restaurant’ meals from a BLEAK pre-fab
The commercial model is deceptively simple: Deliveroo, founded in Britain seven years ago, takes food from restaurants to customers who order by app, then charges the restaurants commission. The system is easy to use and hugely popular.
The company dispatches thousands of meals every day around the country. Soon it will float on the stock market, advised, it was reported yesterday, by Wall Street giant Goldman Sachs.
Deliveroo customers might be less delighted, though, if they fully understood where some of the food has actually been produced. Take Hakkasan, which is, after all, a name synonymous with fine dining.
Would food-lovers familiar with its luxurious restaurants expect their meals to be cooked by chefs rubbing shoulders – literally – with colleagues preparing meals for Honest Burger and Shake Shack?
The clue is the word ‘Editions’ marked on the app, along with an address that might not be familiar.
When we visited the satellite kitchen in Swiss Cottage, North London, where some of the Hakkasan takeaways are cooked, we found an anonymous building in a grey car park close to the traffic-choked Finchley Road.
Speaking to us outside, a chef for one of the other brands (which we have agreed not to name) described tough working conditions in which two dozen cooks turn out meals for eight different companies.
It’s a similar picture at Deliveroo’s dark kitchen in Battersea, South London, a small red-brick unit that looks like a row of garages
Deliveroo does little to advertise its presence at the Battersea kitchen and the only obvious clue is a group of 30 motorbikes parked outside as the riders wait to collect hot food
‘There aren’t any windows,’ he says. ‘I don’t know why – you’d have to ask Deliveroo that. We have air conditioning, but it’s not really the same.’
It’s a similar picture at Deliveroo’s dark kitchen in Battersea, South London, a small red-brick unit that looks like a row of garages. Deliveroo does little to advertise its presence here and the only obvious clue is a group of 30 motorbikes parked outside as the riders wait to collect brown paper bags of hot food passed through a single doorway.
When we were invited inside, we found eight little windowless kitchens, the different cuisines all prepared side by side with shared shelves and equipment. The powerful aroma of Indian spices mingled with something sweet and the smell of raw meat.
‘We make everything here from sushi to Mexican food to curry to Lebanese cuisine,’ explained one of the cooks. ‘There are about 20 to 30 chefs cooped up inside. It’s like an open-plan office, but for food prep.
‘It’s quite a depressing place to work, but if you’re busy you don’t think about it so much.’
Another said: ‘I’m not sure if the customers realise where their food is really coming from. But I don’t think they care as long as their food is quick and hot. I don’t think they think about it at all.’
A third agreed: ‘All they care about is prompt delivery. It’s the smaller restaurants this really affects.
‘The big brands can afford to use these dark kitchens, not the independents. It’s a shame. Of course I prefer working in a proper kitchen in a real restaurant with the buzz of it all and the customers there. But what can I say? A job is a job.’
At least he’s not working in a cluster of prefabricated boxes across town in Poplar, East London. Huddled together beneath a flyover and looking more like the temporary HQ for a construction project than a catering hub, these, too, are kitchens serving Deliveroo and 14 restaurant brands, including Honest Burger, Motu Indian Kitchen, Patty And Bun, The Good Earth and Dirty Bones.
Hundreds of shiny metal canisters once containing the drug nitrous oxide, or ‘hippy crack’, lay strewn around the car park outside the facility when we visited. The gas provides a quick, cheap high.
We heard a clattering from somewhere as yet more of the canisters hit the ground, then watched as a group of young men in motorcycle gear suddenly appeared from between two parked cars.
Leaving a small collection of ‘hippy crack’ containers in their wake, they rejoined their mopeds parked outside the kitchen and sat down to wait. On the back of one of these mopeds was a Deliveroo-branded food box.
Deliveroo says it will be investigating the claim as a matter of urgency.
Since London’s elite dining scene was laid low by Covid, Hakkasan has been offering gourmets food at home, including Chinese dishes such as Peking duck at £110 and sesame prawn toast
Would food-lovers familiar with Hakkasan expect their meals to be cooked by chefs rubbing shoulders – literally – with colleagues preparing meals for Honest Burger and Shake Shack?
Family firms hammered by the crippling fees
If Deliveroo customers appreciate the convenience and choice on offer, restaurateurs who have agreed to work with the app are realising there’s a sting in the tail – substantial commission fees that can account for much as 35 per cent of each sale. This is in addition to the delivery fee, generally £3 to £5, charged to the customer.
James Chiavarini, whose family have run Italian restaurants in West London, including the popular Il Portico, for decades, is an outspoken voice in an industry where many prefer to keep their concerns private, fearing the growing influence of the delivery service.
He speaks from what he says is bitter personal experience. ‘Even in a world of Covid-19, I believe Deliveroo represents the biggest threat of all to the hospitality industry in urban areas,’ he concludes.
‘They originally marketed themselves as a tool to help restaurants like mine, but Deliveroo is now crushing the industry. This might sound like hyperbole, but I can assure you it is not.’
Mr Chiavarini showed The Mail on Sunday an invoice from Deliveroo for 13 deliveries over a 24-hour period in May.
It showed that he sold a total of £372.50 of meals, but after Deliveroo’s 35 per cent commission, VAT and a hefty discount he says he was encouraged to offer to get a better placement on the app, he was left with just £147.11 (Deliveroo disputes making the suggestion he offer discounts, insisting the app takes no account of these).
In the end, he was left to pay staff wages, rent and the cost of the food out of just 39 per cent of the price paid by the customer.
‘It’s nuts,’ he continues. ‘And Deliveroo’s attitude is ‘Like it or lump it’. They’ve really got people’s backs up.’
After three months with Deliveroo, he decided to leave. Now he relies on old-fashioned customers instead.
Not that everyone pays such whopping levels of commission. Leading brands such as McDonald’s, Starbucks and Wagamama are important to Deliveroo, which might be why they often hand over a notably smaller cut than most independent operators – 20 per cent, say, rather than 35.
It’s a point that certainly rankles with Pietro Mingolla, owner of Bianco Nero, an Italian restaurant in Maidenhead, Berkshire.
‘I’ve stopped using Deliveroo because they charge so much money – 35 per cent plus VAT, which means that I’m giving them £42 out of a £100 order,’ he said. ‘It’s simply not viable for us.
‘It annoys me that Deliveroo charge an extortionate amount and give a better deal to bigger restaurants and chains.
‘It would have helped during Covid if Deliveroo could have halved their rate, but no.
In one of Deliveroo’s ‘dark kitchens’, food ordered from a number of major brands – including popular burger joints Honest Burger and Shake Shack – is actually cooked
When we visited the satellite kitchen in Swiss Cottage, where some of the Hakkasan takeaways are cooked, we found an anonymous building in a grey car park close to Finchley Road
‘I think too many restaurants are afraid of switching off Deliveroo because they are so desperate for the money.’
Andy Kwok, director at The Good Earth, a 40-year-old family-run group of Chinese restaurants and takeaways in London and Surrey, is one of those who feel they have no choice.
‘I did join them and it did work, but it became a competition to our own business because their commission rate was very, very high.
‘But if you stop using Deliveroo, you lose customers. We turned it off for three months to see if customers would come directly to us. And not enough of them did. Half were loyal to us but half stuck with Deliveroo, so we lost substantial business.
‘It’s not as straightforward as turning off the tap. You think you have a choice, but you might not because it’s a bit like a drug: you can’t stop it.
‘True, I don’t think our customers know about the Editions kitchens, but I don’t think they’d mind. If the food is good and is prepared hygienically, does it matter? I’ve seen restaurant kitchens with horrific levels of hygiene. If there’s a hygiene issue, with an Editions kitchen, Deliveroo will just chuck you out. They’re tough.’
Luke Johnson, owner of Gail’s Bakery and former chairman of Pizza Express, said: ‘I can’t see how restaurants can make a profit if they have to hand over 35 per cent. And I don’t really want to eat meals cooked on industrial estates that have been on the back of a moped for 20 minutes.
‘I passionately hope that diners will recover their confidence and go back to restaurants.’
London Mayor Sadiq Khan is now examining the question of Deliveroo’s commission rates in response to a petition that attracted 1,500 signatures.
One solution said to be under consideration is for London to follow New York and make it illegal for companies such as Deliveroo to charge more than 20 per cent.
Deliveroo? Bang goes the neighbourhood
Those living close to Deliveroo’s dark kitchens say they, too, are paying a heavy price for the firm’s operations. At Swiss Cottage, for example, locals have complained to the council about cooking smells, long operating hours and continual noise from motorcycle couriers.
‘Deliveroo are a nightmare for everyone in the area,’ said one. ‘I have lived here for 18 years and have never seen it appear so scruffy. The riders sprawl out on the pavements with their bags and bicycles, leaving rubbish everywhere.’
Outside Swiss Cottage in North London a chef for one of the other brands described tough working conditions in which two dozen cooks turn out meals for eight different companies
‘There is lots of noise from the site at all times and lots of unpleasant cooking smells – stale cooking oil as well,’ said another. ‘I have not been able to have my window open in hot weather.’
The chairman of the local residents’ association claimed Deliveroo had caused several local restaurants to decline.
At Swiss Cottage, locals complained to the council about cooking smells, long operating hours and noise from motorcycle couriers. Above, food ordered from Hakkashan on Deliveroo
Paying not a penny in corporation tax
Like many start-up companies, Deliveroo prioritised rapid growth to secure a dominant market position at the expense of turning a profit. For all its income, the company has consistently generated heavy losses and so paid little, if any, tax. It’s a tactic that other ‘disruptors’ such as Uber have also used.
The last available accounts, for 2018, show that Deliveroo made losses of £230 million on a turnover of £476 million (up from £277 million the previous year).
And like any firm that makes a loss, Roofoods Ltd, Deliveroo’s parent company, pays no corporation tax. In fact, the latest accounts reveal that, despite the astonishing quantity of food it delivers every day, Deliveroo claimed a £640,000 tax rebate thanks to a Government scheme aimed at encouraging investment in tech firms.
They also show that Deliveroo’s highest paid director – understood to be British-based co-founder Will Shu – earns a salary of £250,000 plus £8.3 million in share options.
In total, key managers received a staggering £20.7 million in share-based payments.
And the firm’s biggest asset? Your data
If the expansion of the dark kitchens is concerning, so is the fact that Deliveroo is using our personal data to accomplish it.
Every time you order food, you give your details to the app, yet this information is not shared with restaurateurs. Only Deliveroo sees who the customers are – where they live, what they are eating and when, how often and how much they spend.
Deliveroo can even see how old the customers are and track how their spending changes over time. It’s a commercial treasure trove.
Armed with this information, Deliveroo can make sure that the predicted demand is met – which puts it in a hugely powerful position in the marketplace.
Deliveroo’s property acquisitions manager, Patrick Weiss, has spoken about it openly: ‘Using our own technology, we can identify specific local cuisines missing in an area, identify customer demand for that missing cuisine and hand-pick brands that are most likely to appeal to customers in that area.’
And that, says James Chiavarini, could spell the end for the restaurant trade as we have known it.
‘Deliveroo wants a monopoly in my view. But in whose interest? It won’t be the customer’s. I believe that the company will finish the job that Covid-19 started and may yet put many established restaurants out of business altogether.
For all Deliveroo’s slick marketing, there are growing questions about the way this new ‘disruptor’ operates, including its use of dark kitchens
‘If we do not regulate soon, dark kitchens will become as ubiquitous as Ubers are on our roads.
‘That would be desperate news for restaurants we know and love and can only cause further devastation to town centres across Britain. If we’re serious about keeping our high streets busy, and keeping the economy going, it’s a prospect that should frighten us all.’
Last night a spokesman for Deliveroo said: ‘It is disappointing that misleading claims have been made about our business.
‘Deliveroo is a British company founded on a love for small, independent restaurants and we have made it our priority to support them, especially during Covid-19.
‘We are proud to have supported our small restaurant partners through the pandemic, providing a vital lifeline for restaurants which would otherwise not have been able to operate during the height of the crisis, protecting jobs.
‘This includes providing specially designed, delivery-only kitchens to bring customers more food choices and help restaurants increase sales.
‘Throughout this period, we have invested millions in our restaurant partners, helping them increase their income, and we have produced new tools to support both their dine-in and delivery businesses.
‘Alongside this, Deliveroo is now working with supermarkets to provide people with access to the essential items they need, and we are proud to be supporting NHS workers, to whom we have delivered hundreds of thousands of free meals.’
Hakkasan did not respond to a request for comment.