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It’s July 24th, and the food delivery wars are three months deep. Full disclosure: this reporter’s personal battle has been less about market share and more about waistlines, packing on a few extra pounds fueled by a steady diet of discounts and freebies.
The big players are duking it out, but my scale is the clear loser. A ceasefire in this culinary conflict wouldn’t be the worst thing—not for my wallet, but for the sake of my beleaguered bathroom scale.
Just as regulatory rumblings hinted at a potential slowdown in the subsidy slugfest, JD.com, a relative latecomer to the party, has just unveiled what could be a game-changing strategy.
Enter Seven Fresh Kitchen (七鲜小厨), a concept that quietly launched its first brick-and-mortar store in Beijing just two days ago.
The result? An absolute order tsunami. Before noon, the location was already grappling with hundreds of orders, couriers and customers jostling at the door to pick up their food.
JD.com’s founder, Richard Liu, had previously promised a “completely different” approach to the food delivery market than Meituan’s existing model. The secret sauce? JD.com is getting into the cooking business itself.
But there’s a twist. Seven Fresh Kitchen is built on a unique model of licensing signature dishes from established restaurants. JD.com handles everything else: sourcing ingredients, operating the storefront, preparing the food, and managing customer service.
Essentially, JD.com is sinking serious capital into building a joint venture-esque ecosystem centered around quality and reputation.
Think of it like this: restaurants contribute their culinary intellectual property as equity in the partnership. They focus on developing recipes, and JD.com handles the cooking and delivery. For example, a restaurant could license its signature dish to JD.com, receiving a guaranteed upfront payment. They also get a cut of every dish sold, with no ceiling on earnings.
JD.com is committing significant resources, covering all costs along the supply chain and vowing not to let partner restaurants lose money.
Typically, this capital-intensive approach is anathema to internet companies, who prefer minimizing fixed costs. However, JD.com seems willing to bet big on this endeavor.
And there might be method to the madness. One of the biggest consumer anxieties in the online food market is the rise of “ghost kitchens.”
These high-volume restaurants often operate out of unmarked locations, sometimes in questionable sanitary conditions. They’re the culinary equivalent of a black box.
Even if consumers diligently avoid these establishments, their very existence puts pressure on legitimate restaurants, driving down prices and potentially impacting quality. Even the likes of McDonalds have aggressively rolled out budget meal options.
What happens when your go-to spot suddenly closes? The search for a reliable, high-quality takeout option becomes increasingly challenging.
JD.com stands to benefit from consumers’ desire for better quality and trustworthy options. Reputation and product quality are cornerstones of JD.com’s brand, can JD.com replicate that winning formula in the food industry?
According to Seven Fresh Kitchen head Liu Bin, the concept is directly targeting the “ghost kitchen” phenomenon, aiming to drive them out through fair, transparent competition.
The strategy includes explicitly targeting areas saturated with these questionable establishments. The stores feature transparent kitchens, allowing customers to observe food preparation firsthand, and 24-hour live streams of the kitchen operation are available online.
The emphasis is on fresh, made-to-order meals. Unsurprisingly, the initial response has been overwhelming.
JD.com is leveraging its robust supply chain to negotiate favorable prices and secure high-quality ingredients. They are partnering with major suppliers, centrally sourcing ingredients, and using their cold chain logistics to deliver directly to stores. This enables them to keep prices competitive.
Restaurants are also incentivized to partner with JD.com. The ongoing delivery price wars have taken a toll on brick-and-mortar businesses.
While delivery can supplement income, dine-in service tends to be the financial backbone for many restaurants.
Many establishments have been forced to participate in the price wars by offering low-cost items for delivery. As a result, dining-in customers frequent those places much less often.
JD.com’s model offers a potential lifeline to restaurants that genuinely focus on quality and taste. Partnering with JD.com offers financial stability and ensures the dishes customers love are made available outside of physical storefronts.
The company also promises not to open new locations near partnering restaurants, to avoid competition and encourage partnerships.
Original article, Author: Tobias. If you wish to reprint this article, please indicate the source:https://aicnbc.com/5572.html
