How do you make great food even better? Get it delivered. Amazon has spoiled us rotten with 2-day free shipping, and now restaurants are upping their delivery game. CEO Noah Glass of Olo, a web-based ordering platform for multi-unit platforms, has predicted that within the next few years 25% of restaurant sales will come from online orders.
And online delivery is definitely heating up. The global online food delivery market is expected to reach $161.74 billion by 2023 and the Americas are considered the second most favorable market for online food delivery services, according to a press release by Androit Market Research. The names GrubHub, DoorDash and EatStreet are widely recognized by consumers who expect restaurants to keep up with their demand for food delivery. Here’s what every restaurant owner needs to know about their options for online food delivery.
Aggregators and New Delivery
McKinsey & Company has identified two types of online platforms for food delivery: “aggregators” and “new delivery.”
The first type has been around since the early 2000s and are part of the traditional-delivery category — aggregators take orders from customers through a single online portal and route them to restaurants which then take care of the delivery. Through an app or website, customers can compare, menus, prices and customer reviews. Restaurants pay aggregators a fixed margin of the order, with no additional cost to the consumer. According to McKinsey, “Aggregators post earnings before interest, taxes, depreciation, and amortization (EBITDA) margins of 40 to 50 percent.”
New delivery platforms first appeared in 2013 and provide delivery for restaurants without their own drivers. These platforms have their own logistics networks and can also provide delivery for high-end restaurants that have not previously offered the option. McKinsey reports, “Despite the higher costs of maintaining delivery vehicles and drivers, the new-delivery players achieve EBITDA margins of more than 30 percent.”
The Largest Players
Uber Eats, GrubHub, DoorDash, Postmates and ChowNow are some of the most well-known food delivery platforms in the U.S., serving millions of customers and helping restaurants reach a wider audience. Read this article by CNBC to learn more about how online food delivery platforms are keeping their head in the game.