Thought Food Delivery – The Economic Times

Kabir Ahuja et al

The United States is one of the most complex food delivery markets, with four active players – DoorDash, Grubhub, Postmates and Uber Eats – at the top, each controlling some major urban markets. In May 2021, DoorDash prevailed in San Jose (with 77% of the market), Houston (56%), Philadelphia (51%) and San Antonio (51%). Uber’s acquisition of Postmates in 2020 leveled the playing field, but only slightly. Together, Uber Eats and Postmates led the market in Los Angeles (50%) and New York (41%) in May 2021….

As the food delivery business continues to grow, a few key factors, from market dynamics to legal and regulatory issues, will help determine the success levels of different players.

Geographic competition between delivery platforms will be one of the biggest battlegrounds over the next few years.

Commission rates for restaurants are another major point of contention.

Another persistent issue is driver compensation and benefits.

Realistically, traditional restaurant profit margins of 7-22% make platform delivery commission coverage of around 15-30% unsustainable as delivery orders become a larger part of a restaurant’s business. restaurant. It’s less of an issue when in-house diners help cover occupancy and labor costs. But the business model is seriously threatened when on-site catering declines.

Excerpt from “Ordering: The Rapid Evolution of Food Delivery”, McKinsey & Co

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