As you can see, there have been many food delivery startups to come to life since 2011 (even then, this photo only shows those with at least $5 million in funding!). At first these delivery services may not seem like tech-companies…they are! It’s similar to how “Amazon was once just a bookstore.”
There are two types of food delivery services that I will be focusing on. One type will be a service that will deliver food from any local restaurant (delivery is no longer limited to the local pizza joint) and the second kind is a service that delivers the ingredients for you to prepare the meal at home (no need to grocery shop/plan for dinner).
Postmates (founded 2011)
Postmates was founded at the beginning of the 5 year food delivery hype and received $278 million in funding from various investors. Postmates describes themselves as “transforming the way goods move around cities by enabling anyone to have anything delivered on-demand.” With Postmates, you are able to order food (or groceries, drink, or other items–although this post will only focus on the food component) from any location of your choice and the Postmates deliverer will pick your food up and bring it right to your door. Postmates also advertises that their service supports local businesses because users can only order from restaurants that are local enough for the deliverers to access (which can be said to be true for all food delivery services). Postmates uses a model similar to Uber in that their deliverers can sign up to pick-up/deliver food and “go online” at any time, for as long as they’d like (this is the common model for food delivery services). Additionally, Postmates is available in over 100 US cities and is currently testing their service in Mexico City. The average delivery fee is $3.99.
GrubHub (founded 2004)
Although GrubHub received funding earlier than 2011 (they raised $84.1 million between 2007 and 2013), I felt they are an important competitor in the market. GrubHub declares themselves “the nation’s leading online and mobile food ordering company dedicated to connecting hungry diners with local takeout restaurants.” GrubHub didn’t start off as GrubHub, but as a digital restaurant menu website called Seamless. A few years later, the founders created GrubHub as we know it today and merged the two companies. GrubHub is available in over 1,300 cities in the USA and London. GrubHub went public in April 2014 at a $2.7 billion evaluation. There is either a minimum order cost or a delivery fee of as low as $2.
DoorDash (founded 2013)
DoorDash exists in over 600 cities, a large number since their founding a short 4 years ago. DoorDash is a food delivery service that has raised $186.7 million from 2013-2016, investors include Sequoia Capital and Y Combinator. DoorDash uses the same delivery model as the food services above and has a website and app platform. DoorDash’s delivery fee ranges from $.99 to $7.99.
Meal Kit Delivery:
Blue Apron (founded 2012)
Blue Apron is a “ingredient-and-recipe meal kit service” that provides all the ingredients to fresh, high quality meals from home. Blue Apron ships to the continental USA and charges a price between $59.94-$139.84 per week. From 2012 to 2017, Blue Apron raised $199.4 million. In 2017, they went public at a $1.9 billion evaluation. Since their IPO, they have struggled and had to lay off 6% of their staff in November 2017. The reason they haven’t been doing so great? Competitors such as Amazon (began once they acquired Whole Foods) and Walmart are now selling meal kits too. A unique aspect of Blue Apron is their various meal options for certain dietary types, in addition to their fresh, high quality ingredients.
HelloFresh (founded 2011)
HelloFresh is a “a food subscription company that sends pre-portioned ingredients to users’ doorstep each week”. HelloFresh is able to ship to the continental USA and charges $69-$129 per week for their meals. HelloFresh raised $364.5 between 2012-2016 and went public in 2017 at a $1.7 billion evaluation. Something unique about HelloFresh is that they offer a wine club for users to sign up for. Because HelloFresh was founded in Germany, they do have a strong international presence that serves as an advantage to other US based companies.
As you can see from the first image in this post, there are a lot more companies whose purpose is to deliver food, whether it is immediately ready to be eaten or ingredients to cook with. But at the end of the day, they are all very similar. They are all modernizing something that is so tedious and burdensome–food (shopping, planning, etc.). With these services, you are able to get pre-made food from your favorite restaurant brought directly to your doorstep or have high quality ingredients, pre-measured and ready for cooking, delivered to your home.
What makes this possible for these companies? Their digital platforms for ordering, suggesting meals or restaurants, and the ability to track orders. With tech innovation, they allow their users to see all their options, customize their foods based on dietary restrictions or preferences, and order with a click of a button. Regarding the take-out delivery service such as GrubHub, you are able to track your deliverer so you know exactly when your food will arrive (unlike old-school style when you had to guesstimate their arrival). For services like Blue Apron, you can order your meals for the week and have them delivered in a ice packed box so their freshness is maintained.
Of course not all food delivery services can survive in this competitive market (sorry Sprig), but a decent amount of them are doing well. This is why it’s so competitive for companies to be the best–why should consumers choose Blue Apron over HelloFresh, or DoorDash over the established GrubHub? At the end of the day, the reasons for these are the same as Uber versus Lyft. Which company has faster service? Which company delivers the best ride (freshest food)? Which is cheapest, without sacrificing quality (or at least not all the quality)?
Speaking of Uber, Uber launched Uber Eats in 2014. Uber Eats automatically differentiates themselves by the name behind their company…Uber. It wasn’t long before Uber expanded their reach and started delivering food. After all, Uber has over 1.5 million drivers and the ability for drivers to double as Uber Eats deliverers is easy thanks to their easily navigable app. Uber Eats is also entertaining the idea of making in-app food stores that allow users to buy foods off of special menus exclusive to Uber Eats users.
To survive in the competitive market, large food delivery companies are working to gain competitive advantage by using the data they have accumulated from all of their users and are starting to open up restaurants for delivery-only of foods that match the most popular user preferences! This makes delivery faster and cuts down labor costs.
What other tech advances do you think the food delivery industry will make? Comment below!