Tech Companies

Food Delivery Economy

The food delivery economy has changed and revolutionized the food industry. 30 to 40 percent of customers order delivery from the top restaurants in America.

The big players in food delivery are Uber Eats, Door Dash, Grubhub and Postmates.

Consumers looking for convenient meals ordered $10.2 billion from third-party delivery services in 2018.

Restaurants adapting to the changing landscape will likely have new challenges in the next decade, including a focus on food quality and increased consolidation of third-party delivery providers.

McDonald’s, Starbucks and Chipotle Mexican Grill are among the many national restaurant chains that have partnered with delivery services. But for some, the extra sales from delivery also mean lower profit margins and major operational changes.

The game-changer was when McDonald’s, started offering delivery through an exclusive partnership with Uber Eats. The arrangement irked its U.S. franchisees, who complained about the high fees they had to pay the delivery provider for every order.

Delivery providers typically charge restaurants 15% to 30% on every order they fulfill. But commission fees have been decreasing in part because of competition.

McDonald’s renegotiated its Uber Eats contract, reportedly pushing for a lower commission fee and ending its exclusive contract. It later announced partnerships with DoorDash and GrubHub.

As restaurants grapple with the problems posed by delivery, they are also exploring the use of ghost kitchens, offsite locations that are used exclusively for delivery orders. Venture capitalists have been pouring money into ghost start-ups like Kitchen United and Zuul Kitchens as chains like Wendy’s, Chick-fil-A and Sweetgreen explore them as an option.

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