After CCCS probe, GrabFood and Deliveroo open up food delivery to eateries using shared kitchen

• The probe came about after Smart City Kitchens submitted a complaint to CCCS in July last year
• Singapore’s competition watchdog said it would take necessary action against anti-competitive conduct
• F&B merchants operating from Smart City Kitchens’ premises can now use multiple online food delivery providers

SINGAPORE — After initially shutting out eateries using shared kitchens run by a commercial kitchen operator, food delivery firms GrabFood and Deliveroo have stopped the practice following an investigation by the competition watchdog.

The Competition and Consumer Commission of Singapore (CCCS) said on Wednesday (Aug 5) that the two food delivery firms have opened up their services to food-and-beverage (F&B) merchants operating from Smart City Kitchens, which runs shared kitchens in towns such as Tampines, Clementi and Sembawang.

These F&B operators previously had access only to Foodpanda’s food delivery service.

Smart City Kitchens — which does not run a delivery service and, hence, relies on food delivery providers to fulfil orders for its merchants — submitted a complaint to CCCS in July last year. This came after GrabFood and Deliveroo refused to list restaurants operating out of its shared kitchens on their platforms.

This prompted CCCS to launch an investigation in September last year. The probe concluded this month.

GrabFood, Deliveroo and Foodpanda operate their own shared kitchens in Singapore. 

CCCS, which enforces Singapore’s competition laws, said: “The conduct which involved the refusal to supply online food delivery services to competing virtual kitchens has ceased.” 

Noting that competition in the shared kitchen sector remains dynamic, the government agency said that it would continue to monitor market practices and take necessary enforcement action against anti-competitive conduct.

F&B merchants operating from Smart City Kitchens’ premises now have the choice of using multiple online food delivery providers to expand their reach, CCCS added.

“There is greater competition in the virtual kitchen sector and consumers are also able to enjoy a greater choice of food ordered online.

“With greater competition, businesses are incentivised to innovate to cater more efficiently to the evolving needs and preferences of their customers,” CCCS said. 

SHARED KITCHENS KEEP COSTS LOW

Shared kitchens, otherwise known as cloud or virtual kitchens, provide F&B merchants with cooking facilities for food preparation, mostly for food delivery orders made online. In some cases, these kitchens come with a shared dining area.

CCCS said that these spaces provide another option for merchants to start small and gradually expand their business through online food deliveries without the costs associated with running a dine-in restaurant. 

These kitchens also give consumers a wider choice of food offerings for delivery.

Smart City Kitchens opened its first shared kitchen, a 13,000 sqf facility in Tampines North, in June last year. The facility has 30 individual kitchens that are rented out to F&B merchants for delivery operations. 

It also has kitchens in Clementi, Sembawang, Orchard and Telok Ayer, based on its website. 

GrabFood launched its first cloud kitchen in Singapore in January, joining rivals Deliveroo, which has three such kitchens, and Foodpanda, which runs two.

In response to TODAY’s queries, GrabFood reiterated what it said in January, that while it had contributed to the investigation process, it was not the subject of the probe.

GrabFood Singapore head Dilip Roussenaly also told The Straits Times then that it had started to work with some merchants out of Smart City Kitchens.

Similarly, Deliveroo said it started providing delivery services to these merchants earlier this year “after evaluating what is in the best interests of restaurant partners and customers”.

“We have had constructive discussions with Smart City Kitchens and now have a better understanding of their model and objectives which has in turn led us to revisit our position on working with them,” said a spokesperson.

Smart City Kitchens said in response to TODAY’s queries that it is pleased GrabFood and Deliveroo are now working with its customers.

The firm added that the partnership provides more opportunities for merchants in its shared kitchen to expand their reach to Singaporeans looking for food variety from the comfort of their homes.