​​Interesting trends in the food delivery space
​​A few weeks back, a TechCrunch article was released titled “Leak reveals Uber’s $9.99 unlimited delivery Eats Pass” which got me interested in learning more about what was happening in the restaurant delivery industry. Through this article, I’m hoping to look into key players and determine what strategic moves will end up being differentiating factors of all the businesses. 
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​​Research published in November 2016 by McKinsey & Co. dove into looking into the overall market and assessing the key players. The following companies are what I will be basing most of my research and arguments on even if they are not specifically mentioned:
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​​List of food-delivery platforms (no particular order): 
  • ​​UberEats 
  • ​​DoorDash
  • ​​Amazon Restaurants
  • ​​Grubhub
  • ​​Deliveroo
  • ​​Caviar
  • ​​Postmates
  • ​​Foodpanda
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​​Looking at the overall market, it is fairly fragmented however, only a few players are really making noticeable movements in the area. Edison Trends, a research tank working on performance analytics, chose to investigate the food delivery market and put out data examining the market shares of GrubHub, Uber Eats, DoorDash and a few others. 
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​​Figure 1: Total Consumer Spend Trends
​​The data shows that over the past year GrubHub has had a drastic drop in market share, therefore, giving room for DoorDash to attract more consumer interest. DoorDash has been interesting to explore and growth over the past year has been a result of very well calculated moves by their management. This strong performance by DoorDash led them to a recent Series F round valuing them at $7.1 billion. 
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​​Some of the key factors that aided DoorDash’s rise to 26.5% market share were as follows:
  • ​​Geographic expansion to a total of 3,300 cities which was a  5x increase and gave DoorDash the ability to reach 80% of Americans nationally
  • ​​YoY growth increased from 250% to 325%
  • ​​DashPass was launched and scaled as a subscription service that added 30,000 customers weekly
  • ​​Lots of other factors also contributed including grocery enablement, advertising, and management changes
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​​As shown by the data, UberEats has stayed constant, neither falling nor rising but this is something that could easily be changed through the partners that they continue to add their platform. Currently, DoorDash is the leader in consumer spending however, it trails Uber Eats in the number of total transactions. This means that if Uber Eats can incentivize people on how much people are buying per order there is tremendous room for growth and light at the end of the tunnel. A huge factor that plays into increasing the number of payments per order are the types of restaurants that are on the platform. Uber Eats specifically has a good relationship with McDonald’s which is widely known for very inexpensive menu items. I believe that adding partners to the platform will naturally mitigate the problem of smaller payments per order as people become more dependent on eating most of their meals through food delivery methods.
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​​Lastly, GrubHub sits in between Uber Eats and DoorDash but has seen a steep drop A CNBC report indicates that the main reason we see such a steep drop with GrubHub is due to a lack of customer retention. This coupled with consumers using multiple platforms such as DoorDash and Uber Eats leads GrubHub to be negatively impacted two-fold because of the same customer retention problem. KeyBanc Capital Markets, the firm cited in the CNBC article finds that GrubHub’s retention has been slowly falling for some time. In Q1 of 2017, they had a 59% retention rate which slowly dropped to 42% in Q4 of 2017 and eventually in Q3 of 2018 they were at about 36%. This slow decline cross-applied to DoorDash’s acceleration shows that GrubHub, in particular, is struggling when consumers are using multiple food delivery products. 
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​​All of the platforms are similar and it is not groundbreaking technology that is going to give one player a competitive advantage over the other. The key to succeeding in this industry is to keep customers and isolate them to one singular platform. This is a fairly familiar problem that every industry has and some notable ones include Uber vs. Lyft, Amazon vs. Walmart, Amazon Prime Video vs. Netflix vs. Hulu. The list continues but the point is that there needs to be a way for companies in this food delivery space to attain a sense of customer loyalty. 
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​​Securing customer loyalty is what led me to write this article in the first place when I ran across Uber releasing a new product called the Uber Eats Pass. Additionally, when I discussed DoorDash’s sudden increase in consumer spending a key factor that helped them win over 30,000 customers week over week is the advent of a DashPass. 
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​​Digging into the DashPass this is what the subscription service looks like: 
  • ​​Thousands of restaurants nationwide that apply to the pass
  • ​​No delivery fee on orders over $15
  • ​​One-month free trial and $9.99 monthy afterwards
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​​Unfortunately, Uber Eats Pass hasn’t been publicly announced yet but with what I could find from the TechCrunch article the service looks as follows:
  • ​​Waive 15% Uber service fee
  • ​​$9.99 monthly 
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​​Lastly, I wanted to explore Postmates who has a similar subscription program. This is the first I’ve mentioned Postmates because they haven’t been competing in the same league with DoorDash, GrubHub and UberEats however there still might be areas to learn from. There service looks as follows: 
  • ​​Free delivery access to 350,000+ restaurants on all orders over $15
  • ​​No added fees for small carts or peak pricing 
  • ​​Exclusive membership offers (promos, discounts, events)
  • ​​$9.99 per month or $7.99 per month paid annually
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​​From my research, GrubHub does not have a similar subscription program that is in play. The reason the subscription programs are so important is because of customer acquisition. A good example is paying for Spotify Premium. Once I start paying for Spotify Premium there is no chance I would ever use Apple Music. There are two reasons for this: (1) I clearly enjoy a platform more to the point where I am investing in them (2) When my money is going into one platform I want to utilize that service instead of competing platforms. The same logic applies here when the DashPass is securing 30,000 new customers weekly GrubHub will struggle to convince them to pay for DashPass or UberEats monthly but use GrubHub instead. In an industry where using multiple platforms is causing problems for everyone, it's time to start thinking of how we can incentivize consumers to stay with us. 
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