WILL JD OPEN 10.000 DELIVERY KITCHENS IN CHINA?

Last month, JD CEO Richard Liu said, “JD Takeaway will soon have a completely different business model from Meituan.” He didn’t give any details at the time, but he mentioned they would integrate into the supply chain.

Yesterday, it became clear what he meant.

JD has just opened the first 7Fresh Chef (七鲜小厨Qixian Xiaochu) in Beijing. It already had 7Fresh supermarkets, which initially started as a response to Alibaba’s Hema (Freshippo). The leader of the 7Fresh Chef project calls it “the biggest supply chain model innovation in the catering takeaway industry in the past 15 years.”

▶️ Orders can be placed online and delivered or picked up. Delivery will be done through JD Takeaway, but JD doesn’t rule out becoming available on competitors' platforms in the future.

▶️ 7Fresh Chef isn’t a collection of merchant kitchens like Meituan’s Racoon Canteen, I wrote about a while ago. Instead, it is a self-operated kitchen that prepares dishes developed by others.

▶️ Chefs and catering chains can provide JD with ‘innovative recipes’ and JD will do the rest. These partners will receive a percentage of the sales. JD claims to guarantee a partner a minimum of RMB 1 million in income share.

▶️ There’s only one JD Chef in Beijing now, but JD plans to open 10.000 around the country.

▶️ While JD claims that 7.000 chefs have already signed up to be a partner, the media is sceptical. They question if JD won’t run off with the IP of these recipes.

▶️ JD says that the partnership will enable catering brands and chefs to sell their products around the country without their own investments into stores and kitchens. Most big brands cannot open more than a few thousand locations anyway.

▶️ JD promises to 'consider' the locations of their partner catering brands when picking locations for 7Fresh Chef.

▶️ JD claims to have scale advantages because of its ingredient supply chain and claims to be able to provide better food safety. It also claims to offer all the essential aspects for food delivery: affordability, quality, and safety.

▶️ Supplying factories will wash, cut and seal the ingredients and deliver them through a cold chain. JD claims this limits hygiene risks at the store.

Why I’m sceptical:

▶️ If there are that many partners, even when dishes are partially regional, how many items can there be on the menu?!

▶️ Too many dishes will result in a lack of standardisation and high costs.

▶️ When JD prepares dishes for a third party, that adds another link in the chain that increases costs.

▶️ JD says that dishes will be priced under RMB 20m which seems to go against intuition and would mean it competes with Meituan Pinhaofan.

▶️ JD might aim for ‘innovative dishes’, but most consumers want their all-time, not-so-innovative favourites.

▶️ When JD launched the 7Fresh supermarkets, it said it would open 1.000 stores around China in 5 years. 7 years later, it has 54.

Source: 36Kr