Ordering in: The rapid evolution of food delivery
How the world eats is changing dramatically. A little under two decades ago, restaurant-quality meal delivery was still largely limited to foods such as pizza and Chinese. Nowadays, food delivery has become a global market worth more than $150 billion, having more than tripled since 2017. The advent of appealing, user-friendly apps and tech-enabled driver networks, coupled with changing consumer expectations, has unlocked ready-to-eat food delivery as a major category.
Sizing the Market and Global Trends
In the United States, the market has more than doubled during the COVID-19 pandemic, following healthy historical growth of 8 percent. The most mature delivery markets worldwide—including Australia, Canada, the United Kingdom, and the United States—grew twofold to as much as fourfold in 2018 and 2019. This exponential growth continued in 2020 and early 2021 to the point where these markets are now four to seven times larger than they were in 2018.
Significantly, the market has maintained that trajectory, continuing to grow throughout 2020 and into 2021. While population growth was a factor, the bulk of the increase came at the expense of the grocery sector, with millennials and Gen Zers preferring the convenience of prepared meals. This trend toward convenience has grown more pronounced during the pandemic.
Economic Structure and Business Models
Succeeding in the fast-growing food-delivery ecosystem will require understanding how overlapping economic forces affect a complex web of stakeholders. Considerations such as brand, real estate, operating efficiency, breadth of offerings, and changing consumer habits will determine which stakeholders win or lose as the industry develops.
Different players utilize distinct strategies to capture the market:
- UberEats: The order and delivery model is based on the marketplace involving restaurant partners and driver providers.
- GoPuff: GoPuff is a direct seller, distinguishing its business model from most other delivery services. GoPuff purchases the goods, store them, and then sells them to customers directly from their stock.
- Instacart: It is a grocery delivery service that enables users to order food online. Shoppers shop for other people's groceries and deliver them to the customer's selected location.
Despite explosive growth, delivery platforms, with few exceptions, have remained unprofitable. As DoorDash chief operating officer Christopher Payne told the Wall Street Journal, “This is a cost-intensive business that is low-margin and scale driven.”
Major Investments and Consolidation
There are still major investments happening in the space, with recent fundraises and consolidation demonstrating the excitement and uncertainty still present in the sector. The following table summarizes key financial activities in the ecosystem:
| Entity / Transaction | Amount | Date |
|---|---|---|
| REEF Technology (Fundraise) | $700 million | November 2020 |
| Uber acquisition of Postmates | $2.65 billion | December 2020 |
| Wolt (Fundraise) | $530 million | January 2021 |
| Getir (Fundraise) | $550 million | June 2021 |
| Just Eat Takeaway acquisition of Grubhub | $7.3 billion | June 2021 |
| JOKR (Fundraise) | $170 million | July 2021 |
Catering and Safety During the Pandemic
Lockdowns and physical-distancing requirements early on in the pandemic gave the category an enormous boost, with delivery becoming a lifeline for the hurting restaurant industry. Moving forward, it is poised to remain a permanent fixture in the dining landscape. For businesses holding in-person meetings, it is critical to promote health and safety during catered events.
Key safety measures include:
- Enforce Infection Control: This includes proper cleaning and disinfection of high-touch surfaces using EPA-approved products.
- Stop the Spread: Set up a screening station before anyone enters your event to take their temperature and ask questions regarding potential symptoms.
- Practice Social Distancing: Be strategic about how you arrange your event furniture—maintaining at least six feet of space between tables and chairs.
- Choose Food Options Carefully: While a buffet may be the easier, cheaper option, it’s no longer a safe choice. Instead, opt for pre-packaged food that can be distributed individually.
You’ll want to vet your caterer properly to help make your meeting as safe as possible. When in doubt, follow the CDC website guidance to keep your team members and attendees safe.
