Disrupting the UberEATS of the world

Food delivery service is not new, but food delivery service as a business has changed in the little over one decade, from restaurant food delivery limited primarily to foods such as pizza and Chinese to alcohol and grocery. In the pre-covid world, we started to see the rise of a new customer behavior of app based online food ordering and getting it delivered to their doorstep from a nearby restaurant while sitting at home and watching Netflix rather than cooking some food at home. These appealing, user-friendly food delivery apps and tech-enabled driver networks, coupled with changing consumer expectations, have unlocked ready-to-eat food delivery as a major category. And during the pandemic, this behavior has become more evident as lockdowns, and physical-distancing requirements gave the category an enormous boost, with delivery becoming a new revenue channel for restaurants and a need for convenience and safety for the customers. And as we come out of the pandemic, this behavior has become a lifestyle and expectation. During the early days of the app-based food delivery service business, there were only a few players in the market. Over time, as the popularity and demand for online food delivery grew, several startups jumped onto the bandwagon, and the fierce battle of investor-funded ventures began. Each trying to lure customers to its app with heavy discounts and promotions. Eventually, the market started to consolidate with shutdowns and acquisitions, leaving few players to remain as leaders. So where were the restaurants in this shifting landscape?

Restaurants had a cold response to this new service that was creating a new customer behavior as they had to give up to 30% of their order revenue as commission to these app startups — giving such a chunk of their revenue as commission reduces their profit margin as there are so many variable costs in this business. But the pandemic created pressure on restaurants to adopt this sales channel but at a cost to the customers.

Almost all restaurants, dine-in, takeouts, and fast food that you may find on your street have joined these food delivery apps, but one may find that the prices listed in the app for the items don’t match up to the prices listed on the menus at their locations. The prices are marked up to include the commission the apps like UberEats will charge the restaurant. As a…