Trends: On-Demand Food Delivery

The largest category of on-demand spending is online marketplaces with 16.3 million consumers each month spending almost $36 billion annually. Transportation comes in second with 7.3 million monthly consumers and $5.6 billion in annual spending, followed by food delivery at 5.5 million monthly consumers and $4.6 billion annual spending. This is expected to double this year based on data from the U.S. Census Bureau’s American Community Survey.

Food delivery is big business. Consumers demand convenience and choice when it comes to takeout. Food delivery options used to be limited to pizza and Chinese food, but now virtually any type of cuisine is available to the public. The opportunity is huge. The on-demand services range from providing ingredients and recipes to delivering pre-cooked gourmet meals to your doorstep

Here’s a rundown of the market for 2017:

Recipe and ingredient dinner kits: Certain established players offer subscription boxes that include recipes and ingredients for three dinners per week for at least two people. Costs range from $10 – $15 per dinner and the services offer varying degrees of customization. Smaller players such offer a spin on the same model and may have more limited delivery areas.

Restaurant takeout: These are essentially mobile platforms that connect consumers with local restaurants for takeout delivery. Restaurants pay the services a commission. Certain big players such as Uber and Amazon, have the logistical manpower to be agile. The marketing is soon changing for smaller players like Grubhub do not own a fleet of their own.

Prepared food delivery: Companies such as Munchery prepare their own gourmet meals and deliver to local markets. They may cater to individuals, or focus on corporate clients in startup hubs such as New York and San Francisco. The sweet spot: inventive, healthy meals in the $10 range.

Niche delivery services: There are endless variations on the delivery theme – name a food preference, and there’s surely a startup that can accommodate you. For instance, Purple Carrot is a recipe and ingredient delivery service that appeals to vegans with it’s all raw, whole food and plant-based aesthetic. And some like Fuel Food will send you five to 10 prepared meals per week, complete with calorie counts and nutritional information.

Food chains need to carefully assess which strategy would be best for them. Each one is under increasing pressure to evolve, and different chains are building out their delivery operations and business models in different ways.