Amazon may acquire Cheesecake factory next

There is no news of Amazon acquiring Cheesecake Factory but let me tell you why it makes sense.

Culinary business has been close to my heart and I always hope I could be part of it one day. While I may not change industries soon, I believe it’s high time large technology companies get into restaurant business. Amazon has an edge over all and I will explain how.

Problem statement: Gastronomy as a science has evolved leaps and bounds but look at some of the technology led business transformations at play — while solutions like restaurant search engine (Yelp) and Payment (Apple Pay, Square) have benefitted the industry, one segment VCs have been pumping $$ into is home food delivery — Uber Eats, GrubHub, eat24 etc. For me restaurant food delivery is an inefficient business model. Its core USP is increasing B2C coverage, expand restaurant’s customer reachability by few extra miles. But at its essence has high dependency on restaurant brands themselves investing in their region of operation. If the brand is densely present, eg. Starbucks, no one needs a delivery option, coffee is just 20 steps away. If the brand is sparsely present, the business opportunity is a radius of extra few miles.

Decoding restaurant food: There has to be a better model to help restaurant brands expand their business by not having them invest huge amount of money in prime location real estate, sourcing expense and human resources. Let us decode the restaurant food to understand the opportunity:

Restaurant food essentially utilize three major components — Infrastructure, Ingredients and Intellectual Property. While their IP is the key to their business, Infrastructure and Ingredients can very well be commoditized to help them scale up business. And there is no one who could do it better than Amazon.

Amazon Restaurant business model:

  • Consumers will access amazon ePortal for ordering food across various food brands selection just like they do on amazon.com. In fact, can select from a more cost efficient ‘Amazon Basic’ version of their favorite food.
  • Amazon can very well utilize its extensive warehouse footprint for ‘warehouse style large kitchens’. Leverage its sourcing strength for cutting down ingredients expense. Build skill automation wherever possible in the science of food preparation. Have trained cooks for final touches and quality control.
  • Amazon can then utilize its existing Prime Now network to get the food delivered.
  • Restaurant brands get license fees paid every time their ‘Intellectual Property’ is used for preparing an order.
  • Restaurants brand get to focus on their key skill — develop new menu products and not having to get into expensive real estate business.
  • Restaurants brands now have market covrage = Amazon coverage, literally everywhere without opening a single restaurant.
  • Consumers get to mix and match their favorite brands in one order.

Tip for Walmart — Instead of shutting down the stores, may be turn those properties into kitchen warehouses yourself, after all you have largest access to the ingredients and human resources.