2015: Year of the Great Tech-Enabled Takeout Wars?
Are we on the cusp of a major food-delivery revolution in 2015?
Admittedly it’s been a long time since Santa had a lock on the market for jaw-droppingly fast delivery, and when it comes to getting your workaday lunch or dinner in a flash, Internet- and app-based ordering has steadily been gaining ground against dialing up the nearest sandwich shop.
But while newfangled tech-driven schemes may garner headlines—whether it’s Pizza Hut pushing its product via Xbox or Domino’s launching a hands-free ordering app in new Fords—it turns out there’s a whole lot of room for growth when it comes to online ordering.
Americans spend $70 billion a year on food takeout and delivery, according to Business Insider, and yet only $9 billion of that comes from online ordering. With a pie that size, it’s no wonder a couple of Internet giants appear to be sniffing around trying to grab a piece of it.
In near-simultaneous moves, both Amazon and Uber quietly began testing their own online restaurant-delivery programs in December. These are small operations—almost too small to qualify as news. Except, of course, we’re talking about one of the biggest Internet companies on the planet on the one hand, and one of the fastest-growing tech concerns on the other.
Amazon began testing its restaurant-delivery service in its hometown of Seattle earlier this month, allowing users to order from about 100 local eateries, according to Nation’s Restaurant News. If the online retailer is essentially a gigantic, Internet-sized mall, then this new service would appear to be the food court—a bunch of menus all in one place, with Amazon allowing you to pay via its site. But Amazon is just providing the digital real estate; the restaurants themselves are still delivering the food.
Meanwhile, the much-hyped (and controversial) alternative taxi service Uber started its own restaurant-delivery service in Los Angeles, UberFresh. It’s hardly eye-popping in scope: Not only is the service currently limited to three areas, there are just a handful of participating restaurants—and not everything on those restaurants’ menus is available for delivery, according to the Los Angeles Times.
Still, Uber promises you’ll be chowing down on your lunch or dinner in 10 minutes or less, with none of the headaches of standing in line or trying to find a place to park. No word yet on whether the company’s notorious surge pricing will apply to late-night Thai takeout.
Neither company appears to be saying much about its entrée into the food-delivery biz, no doubt wary about stirring up a bunch of publicity before they’ve had a chance to work out the kinks in their respective systems.
Both still have a long way to go to challenge the dominance of market leader GrubHub, which, after merging with competitor Seamless.com, went on to raise a heady $192 million in its IPO last April. The company currently features nearly 29,000 restaurants on its site in 600 cities, from San Francisco to London, and it remains something of a Wall Street darling, currently trading at around $32 a share, higher than its $26 per share IPO.
But despite its success thus far, GrubHub may well be poised to be overtaken by a more innovative competitor, going the way of, say, MySpace. Of the $9 billion market for online restaurant ordering, GrubHub has only managed to capture 19 percent—and that’s just a mere 2 percent of the total $70 billion delivery market overall.
“There are several start-ups going after food, but there are over 600,000 restaurants in the U.S.,” one big tech investor told Nation’s Restaurant News recently. “If the market has already proven that it can support that many restaurants, I would argue that there is room for one, two, five or 10 more [online delivery services] coming at it from a completely different angle.”