- Food delivery sales from companies like GrubHub and Uber Eats grew 51% between August and March, according to data from analytics firm Second Measure cited by Recode.
- GrubHub has the highest sales of any food delivery company in the U.S., but Uber Eats is coming on strong, and now leads in market share and customer spending in several major cities, according to Second Measure.
- DoorDash and Postmates recently discussed a merger, according to Recode. The combined companies would have a 24% market share in food delivery, making them bigger than Uber Eats but smaller than leader GrubHub.
As many analysts and retail executives will attest, consumers today are increasingly looking not just for groceries but for ready-to-eat meals, too. For many people, “what’s for dinner?” is a question they don’t answer until right before they’re ready to eat.
This explains the growth restaurant delivery services like GrubHub, Uber Eats and Caviar are experiencing, and why they’re such a threat to supermarkets. Rather than dash to the grocery store for ingredients or a frozen or fresh meal, shoppers sign on and for a small fee can have their dinner brought to their doorstep in an hour or less.
Some all-purpose delivery services like Postmates and Deliv work with grocers. Walmart, for one, just kicked off delivery with Postmates in Charlotte, North Carolina, as part of its plan to extend home delivery to 100 cities by the end of this year.
In a similar move, H-E-B purchased on-demand delivery company Favor back in February. The deal gave the company a stake in the rapidly growing Texas delivery market, and added another weapon to its online food fulfillment arsenal.
For the restaurant industry, delivery services have provided a much-needed boost to stagnant sales. According to a Cowen Company survey released last year, delivery is significantly outpacing overall restaurant growth, and is on pace to hit $76 billion in sales by 2022. In addition to third-party services, chains like McDonald’s and Panera offer order-ahead options that make meal pickup seamless.
For grocers, restaurant delivery amounts to yet another challenge to their business. However, they’re fighting back with increasingly sophisticated prepared food assortments. In recent years, grocers like Wegmans, Publix and Kroger have actually stolen sales away from restaurants as shoppers have reveled in the convenience of picking up ready-made meals and groceries in the same place. Delivery companies like GrubHub have given momentum back to the restaurant industry, but this is a fierce battle that’s only going to intensify.
“Everybody’s jumping on the delivery bandwagon, and that is very competitive with supermarket prepared foods,” Bob Goldin, a prepared foods expert and principal with consulting firm Pentallect, told Food Dive.
Grocers have the experience factor on their side, and can short circuit restaurant delivery by drawing shoppers into stores, and in some cases getting them to dine in-store.
But they still need to aggressively market their meal delivery options, and if possible come up with discounts and promotions that challenge restaurant delivery head-on. Many grocers offer delivery through Instacart or Shipt, but ordering individual meals doesn’t make economic sense for either party, given order minimums and delivery fees. Instead, retailers should focus on promoting their meals online and getting consumers to bundle them with their grocery orders.
Grocers may not be as fast or as cheap as restaurant delivery services, but they can beat them to the punch by inspiring shoppers to order meals ahead of time.