How many ways can you get food delivered?

A lot.

Food Starutps Pic

(Shout out to BC startup Drizly!)

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).

Restaurant Delivery:

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:

BF-AM374A_MEALK_16U_20161202163905

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.

amazon meal kit

Blue Apron’s biggest competitor is now Amazon…Who isn’t Amazon a competitor to?!

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.

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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)?

uber

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.

Other companies getting involved in the food-delivery space include Square which has recently acquired Entrees-On Trays.

What other tech advances do you think the food delivery industry will make? Comment below!

10 thoughts on “How many ways can you get food delivered?

  1. Great, in-depth summary of an evolving industry, Katie! I know I’ve tried at least a handful of the companies mentioned (at least for Restaurant Delivery) and I am interested in trying some of the Meal Kit Delivery startups, especially after reading your post. I think one interesting competitor is Square’s Caviar (https://www.trycaviar.com/boston) which just recently entered into the Boston market. Although the industry is becoming saturated with all these food delivery startups, I do believe customers will continue to prioritize convenience and pay more for it. Another industry gaining ground is drinkable meals. Although the cultural acceptance may be slow, the convenience and nutrition of drinkable meals will continue to evolve and capture market share. For instance, I have been a satisfied Soylent customer (www.soylent.com) for over 3 years and have seen the company grow and gain popularity. It will definitely be interesting to see how these industries interact and how the food delivery industries play out!

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  2. Thanks for the great post, Katie! Sometimes I get so sick of BC food and these companies make it so easy to get a great meal. I did not know that these meal-kit services existed either, but they may be worth a try when I have a kitchen in my house next year! This seems like a very crowded market, so I am curious to see how these companies will continue to differentiate themselves to create a competitive advantage.

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  3. This post made me really hungry. You did a great analysis of all the major competitors—I wonder if big VC investment will continue for food delivery services, and which will come out on top in the end. You made a good point about how the digital platforms allow you to customize your meal with ease. The externalities of food delivery are really interesting to me. On the positive side, Grubhub has posted about how they stimulate revenue for restaurants (https://media.grubhub.com/media/press-releases/press-release-details/2015/the-grubhub-effect-restaurants-using-grubhubs-platform-see-six-times-greater-monthly-revenue-growth-than-restaurants-not-on-the-platform/default.aspx) and Blue Apron decreases wasted food. But on the negative side, Blue Apron’s packaging is concerning (https://www.buzzfeed.com/ellencushing/these-are-the-trashy-consequences-of-blue-apron-delivery?utm_term=.vyjZOj8pwA#.rd5Oy2AQR8)

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  4. Hey Katie, awesome post! I thought the featured image was really powerful as it shows just how large this industry has grown, and how many players there are as well! It will surely be interesting to see what companies survive in the competitive market. I have used Grubhub at college and love the ease of service as they bring the food right to my dorm! I think the companies will continue to make the processes more streamlined and even faster. Over the summer when I was working in NYC, members of the office signed up for a subscription to MealPal, where we would pay in advance for a certain amount of lunches, and each day we would pick what we wanted and when we would be arriving. When we went to go pick the food up it would be ready for us and we would have already paid online. This type of service, while not meal delivery, allowed us as a consumer in a city to have more control over the process and flexibility to not spend our lunch time waiting in a line or waiting for the delivery person.

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  5. Pingback: How We Eat Will Continue to Change | Tech Trek

  6. Awesome post, Katie! My friend did a presentation on GrubHub last semester and before that I wasn’t aware of how complex the food delivery industry had become with new technology. It seems that the industry is constantly changing with mergers and acquisitions. In GrubHub’s case, I know they gained their market share by gobbling up some successful regional companies (like Foodler). It will be interesting to see if these more specialized services can prevail or whether they will be acquired or defeated by bigger companies like Amazon.

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  7. Hey Katie, great post! It was hard not to find my mind wandering thinking about the possibility of getting cupcakes delivered…

    I’m always fascinated by the food delivery industry. Growing up, my family never once got things like pizza delivered, and I still have yet to pay for any delivery services in college. Personally, I love going to grocery stores and restaurants and seeing food before I purchase any of it. However, I do understand a time crunch or lack of access to transportation makes these services appealing. Personally, it seems that the industry is fairly saturated, as many existing restaurants already offer delivery services and well established companies, like Uber, have also entered the playing field. I’m curious to see how these companies use their data to predict consumers desires, or even typical time periods of hunger.

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  8. Great post, Katie! I find it fascinating (and truly had no idea) how many different entities are currently looking to join this space. It certainly improves our lives as consumers, though, and demonstrates the power of convenience in influencing our decisions.

    One thing that I am interested to see is Amazon’s eventual participation (or lack thereof) in the industry: such a decision would make sense given its strong global network and delivery infrastructure. The company also has enough capital to simply acquire a few of these startups and use their platforms if it preferred that route. With that said, do you think this could be a potential move for them later down the road? Or would that be spreading their logistical abilities too thin? Great job again!

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  9. Grubhub is an interesting case, as they grew into the behemoth they are now through acquisitions (most notably, Foodler), and are one of the few IPO’d food delivery companies. Food delivery is panning out to be an innovative and highly competitive space!

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  10. Katie, really enjoyed your post. As someone who drove for UberEats this last summer, I’m very interested in how this market will shape up. My biggest complaint (while driving for UberEats) was the pay relative to actually driving Uber. Hopefully, they’ll be either be able to subsidize it or figure out another way to boost it so that they don’t loose delivery drivers to their own taxi business.

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