“Your order is on its way.” Now that’s what I like to hear. Without leaving the comfort of my dorm, I can have a box of sushi or Pad Thai on its way to campus in a matter of minutes.
How have food delivery services such as Grubhub, Blue Apron, and Amazon Fresh changed the food landscape?
Let’s first dig into the different types of food delivery services.
- Grocery delivery, such as Amazon Fresh and the now-extinct Good Eggs. These services do the grocery shopping for you. Whenever you run out of snacks, why run to the store when you can order groceries online and ship them directly to your door?
- Meal kit delivery, such as Blue Apron, Hello Fresh, and Plated. These companies pick a recipe, portion the specific ingredients, and send you an idiot-proof package of everything you need to make a homemade meal.
- Restaurant delivery, such as GrubHub, DoorDash, Seamless, and Uber Eats. These are primarily app-based platforms that connect restaurants to their customers and deliver the food for them. Customers place an order online, and GrubHub will deliver the food on behalf of the restaurant—for a commission.
- Prepared food delivery, such as Sprig, Maple and SpoonRocket. These companies prepare specialty meals in their local industrial kitchen, and then use analytics to promptly deliver the food themselves. This seems to be a less widespread category.
- Niche delivery services, such as Green Blender for smoothie recipes and Caviar for gourmet food. These are just two examples of a seemingly endless supply of niche food delivery services. I would also categorize monthly snack-delivery services such as Snack Sack and Grazed into this group.
In this article, I will mainly be focusing on the overall food delivery industry, while diving deeper into restaurant delivery and meal kit delivery.
The meat and potatoes of the industry
Grocery store, meet the digital age. Food delivery has a lot going well for it now. Investments for food and grocery delivery services peaked in 2015 at an astounding $5.4B in funding. Until recently, very little shook the stability of the classic grocery store. Now, it’s a whole new digital world. 74% of millennials and 56% of adults say they would online order delivery from a restaurant if it was available. That opens up a huge market of people yearning for the ease of delivery. This is likely a result of our never-ending need for quick convenience. If we buy something online, it had better be here in 2 days. If it takes more than a second to load a webpage, the Wi-Fi is too slow. If there are no Ubers in the area, we can’t bear to wait more than 10 minutes for a ride. Productivity apps are making life more efficient, and eating is not an exception. For some, grocery shopping and cooking are perceived to be chores. If you don’t want to do it, get an app to do it for you!
Additionally, consumers are less price sensitive when it comes to foodservices, so they are more willing to spend extra on the convenience of food delivery and packaging. Powerful brands like Uber have the funds to outspend or “out-lose” their competition while building up habits among their consumers. Once they’re habituated to speedy food delivery, they won’t want to go back.
There’s a new Masterchef in town
Gordon Ramsey, meet GrubHub. Let’s take a peek at the Restaurant takeout category. What can services like GrubHub offer to local restaurants? Well, take the fact that 60% of restaurants go out of business within 3 years of opening. Ouch. The main reason for this mass mortality is poor accessibility. If customers can’t get to a restaurant, they won’t eat there. It’s that simple. But what if they could get to the restaurant online? That’s where companies like GrubHub come in.
Some quick stats from a GrubHub publication: After joining Grubhub, restaurants grow their monthly takeout revenue by an average of 30%. One in five restaurants doubles its revenue after working with GrubHub. And GrubHub cuts restaurant processing time by more than 50% by saving the back-and-forth conversations of phone orders.
Delivery services like GrubHub also enable smaller businesses to gain online delivery traction. If they can’t afford to have their own delivery fleet, GrubHub will handle it for them.
There are a couple downsides to restaurant delivery services. If GrubHub performs an unsatisfactory delivery service, that will likely reflect poorly on the restaurant, not GrubHub. Local restaurants may lose the intimate customer relationship they’ve developed. And GrubHub has to make their money somehow—so that comes in the form of service fees charged to the restaurants.
So, what’s the future of restaurant delivery? You guessed it: drones. Food delivery packages are small, nontoxic, and have high value per unit. For local deliveries, algorithmic drones could drop off fresh food with unmatched speed.
Rachel Ray isn’t the only one with 30-minute meals
Rachel Ray, meet Blue Apron. Meal kit delivery is a huge trend right now. Right on their website, Blue Apron asserts that food is better when you start from scratch. They work with chefs and farmers to provide sustainable recipes at a better value to help you cook incredible meals. It introduces people to new ingredients and recipes they might have normally tried.
Almost half of food in America is wasted. By specifically portioning ingredients for the recipes, they eliminate some food waste. Meal kit delivery services were expected to become a $5B industry in 2016. These services make life so much easier for busy Americans who don’t have time to plan, shop for, and prepare delicious meals.
Unwrapped–Food delivery edition
But Blue Apron is “trashy.” While eliminating some food waste is incredible, the effects may be offset by the packaging waste. All the packaging is biodegradable or recyclable, in theory. However, recycling some of the plastics and ice packs can be an involved process.
Aside from the economic impacts of digital technology on food delivery, it’s important to consider the environmental impacts. Having food shipped to your door creates extra emissions from transportation, in addition to packaging waste. E-commerce in general has increased the amount of cardboard produced yearly: over 35.4 million tons of it in 2014.
Amazon Fresh is trying to counter this environmental impact by shipping groceries in reusable green totes, that can be picked up at the next delivery. But they’re not always easy to repack!
SO, WHAT’S FOR DINNER TONIGHT?
The digital world is just cracking the surface of the food industry. From revamped restaurant delivery to grocery and meal kit delivery, technology has already enabled incredible changes in the way we consume food.
Have you used food delivery services? Where do you see the future of food delivery? Let me know in the comments!