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Is There A Battle Between Restaurants and UberEATS?

March 3, 2020

Consumers today have greater access to quality restaurant food than ever before, and their options for the types of foods and services they desire will only get greater as existing formats evolve and new formats emerge. Eventually consumers will have access to almost any type and quality of food and the accompanying service they desire – whenever and wherever they want it. Traditional restaurant segments are increasingly expanding, overlapping and merging, and there is a continuing encroachment of competing existing segments such as convenience stores and grocery stores, and new competing segments such as meal subscription services and meal delivery services – all of which are taking greater and greater market share from traditional restaurant formats.

Technologies, such as smartphones that enable the ability and ease in locating a restaurant or delivery service, previewing menu options, ordering and paying without ever having to speak to a human being are one driver of this evolution.  Emerging high speed meal delivery services is another major driver and is enabling consumers to gain access to an ever expanding variety of restaurant and food choices without ever having to dress for dinner or leave the comfort of home! Just as omni-channel retailing is revolutionizing the retail marketplace and increasingly taking share from traditional brick-and-mortar retailers, the emergence and growing popularity of convenient meal delivery service is revolutionizing the foodservice industry and taking share from both traditional dine-in and take out restaurant formats, as well as other forms of food retailers.

Baum + Whiteman predicts the single biggest restaurant trend of 2016 will be delivery services. They say, “Tech-driven delivery is 2016’s Big Disrupter of food retailing and food service … aimed at the ultimate consumer convenience … food brought quickly to homes, offices and (why not?) hotel guests. Delivery affects everyone from McDonald’s to your favorite white tablecloth emporium.” The biggest growth in this emerging area is from delivery services that deliver food from restaurants, not the restaurants delivering their own menus.

Although a few restaurant formats, such as pizza, have offered home delivery for years, most delivery services have not consistently been timely or efficient in their delivery process. New emerging high-speed food delivery services such as Amazon Prime Now, Google, Grubhub and UberEATS offer a variety of menu options and enable customers to get the meal they desire in an efficient and timely manner, while avoiding the hassle of the dining-in experience if they are not in the mood or do not have the time to get out. Amazon’s Prime Now application is able to get entire menus delivered in an hour or less. By pre-loading a limited food menu into their drivers’ cars UberEATS Instant is able to get deliveries to your curb in ten minutes. It’s happening in supermarkets and other food retailers as well with high speed grocery deliveries from delivery services such as Amazon Prime, Instacart, Jet and Peapod. In certain test zip codes in New York, Amazon Prime delivers groceries and prepared meals from supermarkets and gourmet shops in an hour. None of these services, however, actually has and prepares their own food offering. At this point, they’re merely middlemen, who acting as the conduit between restaurants and customers accept customer orders, place orders with the provider, make the deliveries and, collect and distribute payments. It should be noted however, that in the process, they are collecting a significant amount of personal information about who orders what, when and from which restaurants. This is extremely valuable information should they ever desire to develop their own branded food offerings.

These new omni-channel methods of purchasing meals are experiencing significant growth and have the potential to revolutionize the industry, especially for traditional dine-in restaurants. They must either figure out how to participate in these emerging new omni-channel formats such as the delivery service channel or make their restaurants into a unique destination environment and/or experience that is appealing enough in its own right to their existing and targeted customer base to provide a compelling reason for customers to get out to eat and not spend their evenings eating at home on the couch.