What’ll you have to eat?
Food is an essential for life. Over the centuries, humans have innovated with food and the fundamental fact is that one can’t survive without it.
On a daily basis, it takes hours to plan, make, eat and clean up food. Multiple times per day. 365 days per year, barring the days of fasting observed for various reasons. If we can shave off time per day on this activity, we can get to indulge in more TV, online games, social media or hobbies in the garage!
The advent of the mobile phone, sophisticated B2B software and a courier network fueled by the on demand economy has created opportunities for many companies to have a go at your food budget. It looks like we are happy to trade our money for the convenience of food delivery.
GrubHub is a leading Chicago based company in food delivery. They reported Q1 2016 earnings of $112 million (27% increase YoY). They also claim 6.97 million “Active Diners” (ever heard of passive diners?), a 24% increase YoY. Daily Average Grubs were 267,800 , a 14% increase YoY.
There are various models in food delivery.
- Company handles ordering and payment, restaurants or chefs do the couriering themselves or use a Courier network. ex: Grubhub, Lish. This is traditional restaurant or chef based fulfillment.
- Company handles ordering, payments and delivery — PostMates, DoorDash, Amazon Now.
- Company handles everything except delivery — cooking the food with a proprietary menu in modern commercial kitchens, ordering, payments, delivery. May use a courier network — ex: Munchery
- Company hires people to move food around town in vehicles, hoping people order and are happy with instant fulfillment . Ex: UberEats.
Would you want to order a Taco that has spent a few hours in the back seat of a Uber Car, regardless of a classy container it has spent time in? May be, if you have a hunger attack and rendered immobile.
There is likely a bunch of hybrid models and experiments being conducted in food delivery.
Businesses are a major customer. If an admin has to feed tens of people in a few hours, a food delivery service is a godsend.
A few food delivery businesses have shut down in the last few months.
What’s a food delivery startup do to succeed? Some common sense thoughts:-
- Founders must have previous logistics or operations experience. Just not enough to be a foodie.
- Focus on a metro area and learn, learn learn. Know what KPI’s matter.
- Move to the next area. Know something unique about that market and deliver to that.
- Raise a ton of money. Train has likely left the station for food delivery startups so better have done this already.
- Find out areas or customer segments that the big guys don’t operate in. Breakfast ?
It looks like an acquisitive space too. GrubHub acquired Seamless and has recently acquired LABite.
If you have any thoughts, please comment.