The rise of food delivery services is causing restaurants and grocery stores to adapt, and the services themselves to innovate
Food delivery has come a long way since the Noid was terrifying Domino’s drivers and customers with threats of cold pizza. Last July, Swiss investment bank UBS issued a report predicting that the global food delivery service business will be valued at $365 billion by 2030. This number includes takeout apps (GrubHub, DoorDash, etc.) and meal kits (Blue Apron, HelloFresh), along with grocery delivery services such as Instacart.
When a relatively new trend becomes such a massive worldwide force, there are sure to be repercussions. Grocery stores and restaurants need to rethink their business models to accommodate a new type of customer, while delivery services need to find ways to stand out from an increasingly crowded field.
For some restaurants, the surge in delivery business is a double-edged sword. They appreciate the extra business but are forced to find more space for pickups while not interfering with the dining experience of customers in the restaurant. Eatsa, a San Francisco-based restaurant that has been an early adopter of automation, has proposed an innovative solution with its Spotlight Pickup System. Essentially a “smart shelf,” the Spotlight connects to Uber Eats and GrubHub, displaying the customer’s name for easy pickup without waiting in line at a restaurant. The shelf contains sensors alerting staff when a meal has been picked up or when it may have been left on the shelf for too long and needs to be remade to maintain high quality.
Quality control has become a major issue, particularly for restaurants that typically don’t make food for takeout customers. Restaurants such as Alimento in Los Angeles have opened sister locations tailored specifically to delivery orders, offering food that can be reheated or withstand delivery times without losing texture or flavor. Meanwhile, Lamb Weston — which supplies potatoes to McDonald’s, KFC, and others — is experimenting with new batters and packaging to keep fries fresh during delivery. Knowing that the restaurants that can make quality food for delivery will be the ones to thrive as food delivery services increase, many other restaurants are expected to experiment with new forms of packaging over the next few years.
Groceries by Delivery
The rise of food delivery services is proving that convenience is king — a trend that involves not only meals delivered from restaurants, but food bought at grocery stores as well. One change emerging from the disruption of food courier services is “shoppable recipes.” eMeals is a delivery service specializing in meal planning and shoppable recipes. The service offers subscribers a selection of recipes to choose from and a convenient way to send their shopping list to Amazon, Instacart, Walmart, ClickList, or Shipt for delivery.
Not to be outdone, some of the companies that partnered with eMeals have started their own meal kit services available for delivery or pickup, including Walmart and Kroger (which teamed with robotics startup Nuro with the goal of bringing driverless delivery to its customers). Meanwhile, Amazon partnered with Fexy Media to expand its footprint in the shoppable recipes market. Fexy, a media company that owns recipe sites such as Simply Recipes and Serious Eats, now features a buy button on each recipe that allows one-click shopping through Prime Now for same-day delivery of ingredients.
Mercatus, a company that develops online shopping platforms for grocery store chains, recently partnered with DoorDash and Shipt to allow its clients to seamlessly integrate aspects of the food delivery services into their business model.
Competition Driving Innovation
As the market grows for food delivery services, new startups are entering the fray with an eye on getting a piece of the market that has so far been dominated by Door Dash, GrubHub, and Uber Eats. As is typically the case, the new companies are pushing the envelope, creating innovative ways to get the attention of customers, and the established companies are looking to maintain their stranglehold on the market by adopting new strategies.
Uber Eats recently paired with Cineplex to expand its menu and offer buttery popcorn, candy, and soft drinks to people who want movie theater snacks while enjoying movies at home. At the same time, GrubHub has initiated a “Donate the Change” feature that allows socially conscious customers to support the No Kid Hungry charity, and Door Dash has partnered with GM Cruise to bring food to customers via a self-driving car.
Meal kit company Blue Apron has felt the strain of competition and decided to employ new marketing techniques to stand out from the crowd. The company has started offering recipes such as The Quantum of Salsa Burger and The Gouda Wife Burger inspired by the animated show Bob’s Burgers and making them available as kits. The recipes were created by Alvin Cailan of the popular Los Angeles restaurant, Eggslut, assuring they are of high quality and not simply novelty items.
Startups are trying to find new niches within the market as well. For example, Chewse targets offices, offering lunch delivery for an entire worksite, while Veestro caters to vegans and vegetarians with plant-based food delivery.
Of course, these food delivery services generally start as tech companies, so it should come as no surprise that technology is being employed as a way for services to separate themselves from the crowd. Alphabet’s drone branch, Project Wing, teamed with Guzman y Gomez to deliver Tex-Mex by air, while Australian company Jafflechutes parachutes snacks to designated spots at specific times to those who place orders.
Technology is leading consumers to expect and demand convenience and immediacy in every transaction. What was once only the realm of e-commerce sites is now bleeding into brick-and-mortar businesses and restaurants. Adapting to changing consumer attitudes is the only way many of these businesses will be able to survive.