5/18/2015 Nation's Restaurant News
As consumers increasingly look for dining on demand, a rapidly changing landscape of third-party delivery providers is jockeying to tap the growing $70 billion takeout and delivery business.
Blame Uber and Lyft, disruptors of the taxi industry that have created a fleet of independent contractors using their own cars and ride-hailing apps. The new wave of delivery providers have borrowed the same model, using sophisticated technology that gives virtually anyone with a car the chance to earn money connecting diners with their restaurant meals.
The result has been a proliferation of third-party providers who are likely to offer better rates for restaurants as they strive to offer more delivery options to guests, said Lacy Morris, vice president of information technology for Johnny Rockets, which now offers delivery in some markets.
“Technology is really driving this, and there are more players doing the quality that you need, so that’s lowering fees,” Morris said. “It eats away at margins, but because the market is demanding this service, you have to be prepared to surrender part of your share for that.”
One such provider is Postmates, which has been in the spotlight, with McDonald’s, Starbucks and Chipotle Mexican Grill recently announcing partnerships. Several others are also poised for national growth, fueling the delivery wars.
DoorDash was born in Palo Alto, Calif., about a year ago, and already the service is available in 52 cities. The company expects to reach 120 cities before the end of the year, including 20 major metropolitan areas.
Baltimore-based Order Up, founded in 2009, is in 35 cities, with a focus on second-tier markets like Charlottesville, Va., Santa Barbara, Calif., and Denver.
Uber offers food delivery in New York and Chicago, and is testing an expansion of that service in Los Angeles called UberEats.
Caviar, which operates in 18 markets across the U.S., was acquired by payment provider Square last year. Food Lovers United Co., known as FLUC, is growing out of the San Francisco Bay area. AndDavid Chang is attempting to own the process from kitchen to consumer with a delivery-only restaurant in New York called Maple.
As a result, longtime players like GrubHub Inc., which merged with Seamless in 2013, are also broadening their skills.
GrubHub/Seamless is a leading provider of digital ordering services, with 35,000 restaurant partners, allowing guests to browse menus, order and pay online or via mobile app for delivery, although the actual movement of food from point A to point B was left to the restaurants.
Earlier this year, however, GrubHub acquired delivery providers Restaurants on the Run and DiningIn, and the company plans to move further into owning that “last mile” of delivery and becoming more of a one-stop-shop. GrubHub now delivers food in more than 15 cities, including Los Angeles, Chicago and San Francisco, with more to come.
Pressure on restaurants to deliver is only expected to increase.
Google recently launched a delivery icon that shows up in search results for restaurants that offer delivery.
Guests can tap the truck-shaped icon and are given a selection of delivery services to choose from before they are taken to the restaurant site to order. Initially, delivery service providers will include GrubHub/Seamless, Eat24, Delivery.com, BeyondMenu and MyPizza.com, but more will be added in time, the company said.
Despite such pressures, most restaurant operators are not likely to invest in hiring, managing and insuring their own delivery drivers – especially with the growing number of players offering third-party services.See Original Article