Do you need your own food delivery service?
Delivery isn’t just for pizza and Chinese food anymore. With services like UberEats, Caviar, GrubHub, Postmates, DoorDash and more, consumers use third-party food delivery apps more than ever. Recent data from NPD Group Market Research reveals that over half of restaurant takeout orders occur online. Restaurants are directly experiencing revenue growth from these services — up to a 20% increase across the entire industry, according to The NPD Group.
GrubHub, UberEats, and DoorDash are three of the biggest food delivery platforms. All three connect customers with local restaurants.
The most recent data shows that GrubHub processes about 220k orders daily and serves 15.1 million active diners. Close competitor UberEats had almost 8.7 million active mobile app users as of Q1 of 2017, despite being one of the youngest delivery apps.
GrubHub has the greatest overall market share. It’s also the most popular takeout delivery platform in nine major cities, according to August 2017 data for the 22 most populous cities in the US.
In these cities, even though DoorDash has around 245k overall active mobile app users, it has the second largest market share. UberEats is third. DoorDash specializes in partnerships with nationwide chain restaurants, and this allows for more volume with fewer partners.
Money, money, money
GrubHub has three sources of revenue, and they’re not exactly straightforward.
- Your restaurant’s location and the number of restaurants in the area both impact the amount of commission GrubHub collects per order . It’s commission ranges from 5% to 15% but according to an article on qz.com, GrubHub charges an average commission of 13.5%.
- If your restaurant doesn’t have its own delivery team, GrubHub will take care of it, but at a cost. They ask for an additional 10% cut per order, bringing the total rev-share to 23.5% on average. You can be on their app and have orders processed through it without paying for delivery. So, restaurants with their own delivery personnel don’t have to shell out the extra 10%.
- GrubHub also offers marketing and advertising for restaurants at extra cost. In other words, they’ll list your restaurant at the top of their app’s search results for a limited time.
The UberEats business model is similar; it charges restaurant partners on two fronts. The first is an optional marketing fee for the restaurant to come up as preferred in user searches (a promoted listing on their app).
The second is a recurring revenue share, namely a 30% cut on each order placed through their app. UberEats factors in the cost of their delivery service, as they have access to their courier partners over at Uber.
On the flip side, DoorDash has no specific set-up fees. The only costs for partner restaurants is a rev-share varying from 10-25% based on the restaurant.
The company has a ‘Y structure’ business model. This means that it focuses on all three sides of the food delivery business model: coordination between restaurants, drivers and customers. It has contracts with drivers and is thus able to take control over the entire delivery process. Both restaurants and customers can track the driver’s location to predict the time of dispatch and delivery, respectively.
Delivery services provide several perks to the restaurant industry, as they help people get food when they want it, even when they can’t get to a brick-and-mortar establishment. But before signing a contract, consider all possible angles and details of the proposed partnership and weigh in on what will be most beneficial to a restaurant’s specific needs. Why not think about having your own food delivery service within your restaurant mobile app?