it261: Food Delivery Continues to Boom

Thursday, 21 February 2019

Food Delivery Continues to Boom

It's been an interesting couple of weeks in the food delivery industry.

Controversy swirled around grocery delivery company Instacart and their policy on tipping, witch many called wage theft.

While this led to Instacart changing their policy, other food delivery companies so far are continuing with their tipping practices despite complaints by both drivers and customers.

The furor over tipping overshadowed a lot of news showing that the food delivery industry continues to boom. Examples include:

Doordash is in the process of raising roughly $500 million at a valuation of more than $6 billion. This is a substantial increase in their valuation.
Postmates has filed to go public. This is after recently raising $100 million at a $1.85 billion valuation.
Walmart is partnering with delivery companies to provide same-day grocery delivery to 40 percent of households across the United States.
Uber's financials suggest its delivery service, Uber Eats, is likely going generate $1 billion or more in net revenue in 2019.

And as the chart below from the Forbes article Uber's Secret Gold Mine shows, Uber Eats is about the same size as U.S. industry leader GrubHub.

The rapid growth of food delivery is also creating opportunities for a new kind of restaurant.

Referred to as "ghost" or "cloud" Kitchens, these restaurants prepare food for off-site dining only and use firms like GrubHub and Uber Eats for delivery.

This, BTW, is an excellent example of how digital transformation is changing industries.

The on-demand economy continues it's rapid growth. And, of course, it's not just food on demand. Everything is on demand and everything is being delivered.

And we see no reason why delivery shouldn't continue its rapid growth.