The Future of Food Delivery

During the COVID-19 pandemic, many industries have been severely affected and the world altered for both the foreseeable and long-term futures. The food industry is no exception. With restaurants closed across the country and many still justifiably nervous to eat out despite re-openings, food delivery services such as Uber Eats, GrubHub, Postmates and DoorDash have been a saving grace for many. After all, who wants to cook after a long week of Zoom meetings and staring at a screen? While takeout is hardly a new invention, it has been a way to enjoy one’s favorite restaurant, support a local business or simply change things up during what might have been a stagnant week at home.

Delivery apps make ordering food that much easier. With the help of a smartphone, a consumer can browse many restaurants in their area in every food category imaginable, connect their credit card and have their food delivered to their door in under an hour. Don’t know what you want for dinner? Not familiar with the takeout options in your area? Food delivery apps make it so simple and easy to find the right option. The only problem is that essentially every food delivery app offers the same services, so there is substantial competition between companies to keep fees low. While food delivery apps have seen sales increases during the pandemic, there haven’t necessarily been huge profit increases.

As a result, food delivery app companies have all been in discussions with one another both before and during the pandemic to merge or buy each other out. Last year, low-brow delivery service DoorDash bought high-brow deliver service Caviar. Just under a month ago, popular food delivery service GrubHub was acquired by Dutch company Just Eat Takeaway for a whopping $7.3 billion in an all-stock deal that leaves GrubHub’s CEO running all North American operations. While Uber was in talks to acquire GrubHub just a month before that, the deal fell apart amid antitrust scrutiny.

News comes this week that Uber, whose rideshare division has been struggling during the pandemic, acquired Postmates to build upon its food delivery division, Uber Eats. The $2.65 billion all-stock deal will have Postmates continue to operate under its own name within Uber Eats. With this deal, UberEats with Postmates will now have a 37 percent share of food delivery sales in the U.S., according to Edison Trends. DoorDash remains on top with 45 percent of sales, and GrubHub (under Just Eat Takeaway) has 17 percent.

Many of the delivery apps have cast themselves as saviors of the restaurant industry during the pandemic, but that might not be the case. While these apps have provided restaurants that didn’t previously do takeout or delivery with a way to continue operating during the pandemic, their fees have caused some restaurants to go out of business. Delivery apps sometimes take up to 40 percent sales from the average order, which has become a huge expense for restauranteurs who don’t feel like they have another option if they want to keep up.

While food delivery apps have provided a great deal of convenience for consumers during the pandemic and allowed restaurants a chance to stay afloat, it is a potentially double-edged sword for restauranteurs who can’t survive the fees. If you’d like to support your favorite restaurants directly, try picking up your food if you’re able or order from a restaurant that handles its own delivery.

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