People have had cars, addresses, and telephones for a century. Pizza and Chinese food have been showing up at people’s doorsteps for decades. Surely it seems like everything one would need to build a food delivery contracting company existed before the internet. What was missing that prevented me from ordering tacos by phone in 1995?
In: Economics
They actually aren’t economically viable. Most of these companies don’t make profits, a few like OrderUp have already gone out of business. The rest will probably follow. And even when they totally outsource most of their costs onto their employees (employees drive their own cars and are responsible for their own gas, insurance, and maintenance) they still have to pay ridiculously low wages and wouldn’t even dream of paying for benefits like health insurance. And despite all that, these companies mostly still don’t turn a profit.
Food delivery just isn’t a viable business most of the time. If the price for delivery is low, then companies can’t turn a profit on such low margins, and if the price is high, then people just don’t order delivery very often because they can’t afford it, and then the company also can’t turn a profit.
Smartphones mostly. Basically every driver comes equipped with their own GPS and order management system that GrubHub or DoorDash doesn’t have to pay for.
The rest of it is mostly about convincing different restaurants that its more viable to get these services to deliver for them than it is to have their own delivery service. And that random people can be reliable enough to get the job done. Like Grubhub was founded in 2004, and the entire recruiting random people via smartphone to deliver things has been building up since then.
These types of food delivery companies are not new, they’ve been around for a very long time. Yes in 1995 in many cities had local companies doing restaurant delivery. They were pretty common.
Nothing is special with these companies. They are doing the exact same thing as the older ones. Many older ones even had online ordering setup in the mid-2000s that isn’t much different than it is now… in fact it looks pretty much identical.. hell to a degree, these new companies UI and ordering systems are actually worse.
Restaurant delivery is s actually a pretty poor business to be in as well. Margins tend to be very low, especially for home delivery, though large catering orders for businesses have always been the better, much more profitable option, though delivery for that isn’t as big of a business as you may think, especially outside of major cities and business hubs with many corporate offices. You need significant scale to even make it a good business to be in over being in another business when you’re past the “small business” phase that most delivery companies have existed in for the past 20 years.
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