The Food Delivery War! Major Players and Current Trends.
Due to the advent of COVID, the stay-at-home economy grew with many people shifting to on-demand grocery and restaurant delivery. Statistics are bearing to this fact. Revenues generated from the online food delivery industry are expected to reach $26 billion in the upcoming year. It is expected that these revenues will grow at the rate of 5.1% and by 2024 the figure will touch $32 billion. The global food delivery trends are likely to reach the $154 billion mark by 2023.
The COVID Effect
It is a well-known fact that shoppers were slow to adapt to ordering food online and the online buying of groceries compared to categories such as apparel and technology. But now people have become cautious about going to the stores. As a result of this, you can see long entry lines. The US market alone saw a rise of 110% in their sales in April 2020.
More than 50% of surveyed grocery shoppers informed the surveyors that the advent of the coronavirus pandemic is leading them towards online buying of groceries permanently. Only a pandemic of such a large proportion could have spurred this quick adoption of e-commerce in the grocery category.
Overview of major players
1. DoorDash: The fastest-growing player in the US online food delivery sector is DoorDash. The start-up grew faster than any other company in a crowded space of food delivery. DoorDash bought Caviar from another company Square for $410 million. Little Caesars Pizza ranks number three in the list of largest pizza chains in the world. This company agreed to work with DoorDash by adding food delivery to its operations. This company also partnered with CVS to announce its involvement in the grocery delivery market.
DoorDash as expected filed for the IPO and has plans to use driverless drones and vehicles for its delivery. DoorDash is extremely tech-savvy and it has been the main reason for the company’s success. The data collected from the use of technology allowed them to get ahead of the competitors strategically. They also were responsible for introducing Storefront which helped various restaurants in taking orders by creating their websites.
2. UberEats: UberEats acquired Postmates and later announced its plans to enter the US grocery delivery market. When the pandemic was spreading its tentacles across the world, Uber experienced massive losses in its ride-hailing services.
Although their food delivery business is not profitable at the moment, they are hoping that their customers will keep on using their services in the future. Due to the rising demand for food delivery at the time of the pandemic, UberEats also benefited with a 54% rise in sales compared to the earlier year.
3. GrubHub: GrubHub was recently acquired by a Netherland-based company called Just Eat Takeaway for an all-stock deal amounting to $7.3 billion. GrubHub has indicated that its mission was to support the restaurants during the pandemic. The organization also partnered with Food Relief Fund from Hellmann and also with Verizon for providing thousands of locally prepared meals to the New York City hospital healthcare workers for no additional charges.
GrubHub was found to be non-compliant in many municipalities while attempting to cap their fees. One of the main reasons why GrubHub is falling behind in this food delivery war is due to the bad press it keeps getting. The company was accused of doing predatory gouging in terms of their fees to the restaurants.
The food delivery trends for 2022
The evolution of the food delivery sector during the pandemic is a testament to the progress of technology. It is one of the significant reasons behind the quickly evolving trends of the food delivery business. Here are some emerging trends to watch out for.
1. Hyperlocal food delivery: Hyperlocal food deliveries are those that can be executed in the confines of a neighborhood such as a specific block near a local restaurant. However, these hyperlocal deliveries can be challenging because of the speed at which they have to be executed. Another significant factor deciding their success is the scale.
There are classy hyperlocal food delivery tools available in the market these days and online. These tools allow the company to decrease the delivery turnaround time and develop faster routes to drive to several pickups and drops. This leads to delivery profitability and it increases customer loyalty.
2. Food delivery by using drones: Although this type of food delivery drift is picking up, there are several challenges. Some businesses such as Zomato, Domino’s, and UberEats have been successful in testing deliveries by using drones. The main challenge is that there are certain limits to the drone in terms of capacity.
It also cannot travel too far and battery life is also short-lived. But the technology-savvy food delivery companies such as Dominos have managed to deliver pizza by leveraging the drones. When drone technology grows into a sustainable process, its popularity will increase especially in a hyperlocal scenario.
3. Autonomous food delivery: This was one of the top food delivery trends in 2020. Although this kind of food delivery appears to be out of a sci-fi movie, there are a few residents in metros such as London getting used to the food delivery executed by robots. There are some robots out there that go out to fetch groceries, and meals from restaurants.
For instance, students of George Mason University in Virginia send these robots to food outlets and restaurants close to the university campus to get food. So, this is already in motion. When these autonomous food deliveries become sustainable you will soon get a robot ringing your doorbell for delivering pizza.
Reasons why you need to take your business online
The war for the food delivery market has brought one thing to the forefront. Any business needs to go online for success. Many people these days use the web for reviewing products before buying them. There are millions of people all across the globe that use the internet before making their purchases.
It also means that you need to stand out from the competitor to improve your chances of success. For achieving this you will need the power of the internet on your side. Some of the reasons why you need to take your food delivery business or any other business online are,
- It extends your reach.
- Makes the business more cost-effective.
- You become more active on social media.
- Allows you to build your brand.
- Provides referrals for your business.
Can the restaurants cope with the additional charges?
The big companies such as DoorDash, UberEats, and GrubHub charge around 25% in addition to a 3% credit card fee for the food. Many cities such as NYC and San Francisco have put caps on the amounts these delivery apps can charge to the restaurants. Many restaurants closed shop during the pandemic as people shifted to online food ordering. It was expected that in the end, around 80% of the restaurants in the US will close down permanently. But it is beneficial for the food delivery companies to have these restaurants in business.
In a few months from now, the COVID pandemic will be more in control with vaccinations. The question is, will people keep on using these services at the same frequency? Yes, it is quite likely. After the crisis is under control people would have seen the benefits of these food delivery services and will be keen to use them further. Similar to the new working from home conditions, these services are going to become a part of the new normal.
The on-demand food delivery business is a very good low overhead business and can bring in impressive returns on investment. They will provide an opportunity to get more ROI. If you are looking to start a new food delivery business online get in touch with the pros at Jungleworks for expert assistance.
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