Clockjack founder Jerry Goldberg is weighing up expansion strategies for his rotisserie chicken delivery business after closing his remaining restaurant site in Woolwich, MCA has learnt.
Goldberg, who now delivers to a wide catchment area from a large delivery-only kitchen in Monument, is considering whether to repeat the model in other major cities, or to open smaller kitchens serving local areas.
He told MCA he closed his Woolwich site in March and Soho in February in order to concentrate on delivery after deciding the economics of delivery-only were far more attractive than trying to do delivery from expensive bricks and mortar restaurant sites in prime locations.
Goldberg said he was still trying to establish the best model for growth in delivery-only.
He said: “The question is do we focus a cluster of kitchens in big conurbations like London, like in a restaurant business, or do we go for big kitchens in a large catchment area in major cities. There could also be a medium ground with big kitchens and a few satellite kitchens.
“We’re evaluating the best expansion strategy. It would be wrong to do exactly as a restaurant does, it’s not the same, there’s a different set of factors that drive expansion.
Goldberg said having a large single site model covering a wide catchment area was working well.
He said: “We’ve got very high capacity in our current kitchen, making it very attractive compared to a restaurant, which is limited by square footage. There’s a lot of space and storage, so we can grow significantly.
“The catchment goes from Soho to Canary Wharf, which means transport costs are more, but those costs are still less then additional kitchens.
“The question we’re asking now is how profitable can we make a big kitchen, and what is the optimum catchment area for a big kitchen?
“We don’t know the answer to that yet, but theory is the percentage margins are very attractive because of the relatively low property costs compared to the revenue capacity and the market it’s serving.
“The natural feeling in restaurants and multisite leisure is to grow you need to roll out, but it’s not quite the same here. The business model is profitable because of its cost to revenue economics.”
Though he admitted commission on delivery was expensive for bricks and mortar restaurants, he said the economics made sense for Clockjack.
Goldberg added: “The technology and transport network for the delivery companies is expensive to maintain, so I can understand why they need a certain percentage. Equally, it can be a very big dent in the gross margin in the supply side.
“It’s an issue, but both sides have reasonable reasons and costs to cover.”
He doubted whether delivery-only could make things cheaper for consumers, with new costs coming into the equation.
He added: “Although you’re saving on front of house and property, its being switched to high commission for distribution, plus there’s packaging.
“So the actual P&L are very different in delivery, you end up with the same level of costs.”