The Future of Food Delivery

The Future of Food Delivery

James Sandrini 5th December 2018

Just Eat was founded in 2001. Deliveroo was founded in, get this, 2013. Uber Eats followed a year later. And whether Uber buys Deliveroo, or Amazon decide to truly, finally get into the game, it shouldn’t surprise anybody if food delivery looks a whole lot different in 5-to-10-year’s time.

What’s already happening / the things you knew:

Dark kitchens

‘Restaurants’ that exist solely for the purpose of prepping, cooking and distributing dishes via third parties. Some created by third parties, others directly by the distributor.

Subscription

Ok, so this is only on the delivery aspect for now, but a more holistic subscription service – a set fee in exchange for unlimited orders – is on the way.

Driverless cars

They haven’t developed it yet, but there’s a fancy picture of an autonomous vehicle delivering pizza on the internet, so…

And you can add drones (for delivery) and robotics (for production) to the list. These are already being trialled.

Industry backlash

It’s begun. People have wised up to the all-revenue-no-profit model that many restaurants suffer through and numerous operators have – or will be – looking for alternative methods to send their food to your door.

Our best guess at the future headliners:

Dynamic pricing 

Restaurants already offer this in-house (think 2-4-1 and happy hours deals), so this feels a logical next step.

This will need to be led by operators – a lower sale value is hardly in the delivery company’s interest, nor is lowering commissions to counter the reduced margin that the vendor is accepting – and may be a sign of desperation on behalf of one of the industries big players, but it seems inevitable that this most-basic of marketing tools will feature soon.

Loyalty

‘Loyalty’ is confused for dynamic pricing by just about everyone, so this will surely follow, only lead by distributors this time. Why shouldn’t you be able to redeem offers or gain additional access with the restaurants Deliveroo represents if you’re a regular customer of the platform?

Lower commissions

A price war is coming.

Not in 2019, maybe not until the mid-2020s, but the moment that a competitor enters the race (Amazon) and sees food delivery as just a part of a broader enterprise (Amazon), that need only increase acquisition & retention and not generate profit (Amazon), then the accepted level of commission will decrease overnight. They’ll have to.

This is hardly a divine prophecy. The same has occurred in numerous other industries.

The ethics of delivery

Our demand for convenience isn’t going anywhere, but public perception will shift as the news cycle moves beyond novelty, through the questions of (self) employment, and towards the grander inquests of our time: The environment, waste and privacy.

What is 20-minute-or-less fulfilment doing to the planet? Or our streets? How much more unrecyclable rubbish are we creating to support our burger & pizza habits? And what happens if anyone gets hold of the data that says where you were (and who you might be with), currently retained by delivery partners?

Consolidation

The race Uber and Deliveroo are fighting (and to some extent Just Eat) is zero-sum, in the same vein as ride sharing. And investors will only be so patient with increasing losses. Ultimately, one player will win out.

What say you? Where is food delivery headed? Let’s argue. Over email. Or coffee. Or, if you’re shy, here’s more future-food chat.