{"id":8862,"date":"2019-02-24T16:52:58","date_gmt":"2019-02-24T21:52:58","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/ubereats-grubhub-deliveroo-innovations-in-restaurant-delivery\/"},"modified":"2019-02-24T16:54:26","modified_gmt":"2019-02-24T21:54:26","slug":"ubereats-doordash-grubhub-innovations-in-restaurant-delivery","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/ubereats-doordash-grubhub-innovations-in-restaurant-delivery\/","title":{"rendered":"UberEats, DoorDash, Grubhub: Innovations in Restaurant Delivery"},"content":{"rendered":"<h2><strong>Restaurant Industry <\/strong><\/h2>\n<p>With $825B in annual sales, 1M+ locations, and employing 10% of the workforce, the restaurant industry is a major component of the U.S. economy<sup>1<\/sup>. Delivery is a growing component of restaurant sales. Investment Bank UBS forecasts delivery sales could rise 20%+ annually and reach $365B in 2035, from $35B in 2018<sup>2<\/sup>.<\/p>\n<p>The post will briefly describe the main innovations in delivery platforms and discuss potential future trends in the restaurant delivery industry.<\/p>\n<h2><strong>Recent Innovations <\/strong><\/h2>\n<p>While seemingly mainstream today, delivery platforms have made significant improvements in delivery processes:<\/p>\n<ul>\n<li><strong>Increased sales: <\/strong>Delivery may drive incremental restaurant sales. For example, McDonald\u2019s claims 65% of UberEats orders are incremental to its business<sup>3<\/sup>.<\/li>\n<li><strong>Efficient ordering: <\/strong>Restaurants are partnering with delivery aggregators to directly translate a customer\u2019s order to the restaurant\u2019s systems<sup>4<\/sup>. This reflects massive improvement over traditional phone-ordering systems and\/or manual data entry by employees.<\/li>\n<li><strong>Personalization\/Loyalty: <\/strong>Delivery aggregators are increasing customer sales by suggesting order add-ons and creating loyalty programs.<\/li>\n<li><strong>Delivery ETAs \/ GPS Tracking: <\/strong>Customers can more efficiently track orders through real-time GPS tracking.<\/li>\n<\/ul>\n<h2><strong>Where to next? Predictions on Future Trends<\/strong><\/h2>\n<p><strong>Data-driven Dark Kitchens:<\/strong><\/p>\n<p>Delivery platforms collect massive amounts of information from consumers, including personal information, favorite dishes, ordering habits, and price sensitivity. Armed with this data, some delivery platforms are using this data to create their own delivery-only restaurants, known as \u2018Dark Kitchens\u2019<sup>5<\/sup>. The idea is simple: A delivery platform identifies the top selling dishes from highly-rated restaurants across cuisines, reverse engineers the recipes, builds a dark kitchen in a cheap, delivery-optimal location, and encourages consumers to order directly from these locations.<\/p>\n<p>Dark kitchens create value in customer satisfaction (e.g., data-driven menu choices), strategic locations optimized around delivery, and grouping of several cuisines into one kitchen. This scenario presents significant risks to incumbent restaurants.<\/p>\n<p><strong>Virtual Assistant Ordering<\/strong><\/p>\n<p>Perhaps the future of delivery will rely not on the logistics provider, but the ordering platform used by the customer. For instance, most consumers may order through Alexa or Siri, who will take your order, provide restaurant recommendations, and outsource it to the preferred delivery partner or restaurant. Some restaurants are anticipating this trend by developing partnerships with virtual assistants to drive new sales (e.g., Applebee\u2019s\/IHOP and Google Home<sup>6<\/sup>).<\/p>\n<p><strong>Efficient Carryout: GeoFencing<\/strong><\/p>\n<p>While Delivery seems unstoppable today, the business case for delivering $10 in McNuggets for a $3 fee may not prove to be a sustainable business model. Last-mile delivery is known to be expensive, and rising labor costs, traffic congestion, and gas prices may adversely affect the economics.<\/p>\n<p>A natural replacement is carryout, in which the customer bears the delivery cost, often in low-effort ways (e.g., on the drive home from work). Some companies, like McDonald\u2019s, are testing technology to help customers order-ahead via their App, and then using \u2018Geofencing\u2019 (similar to GPS) technology to predict the customer\u2019s arrival time to ensure the customer receives a freshly-made order<sup>7<\/sup>.<\/p>\n<p>On-site carry-out creates value because it outsources last-mile delivery to the consumer, who is often able to perform this task at a lower cost than the delivery company.<\/p>\n<h2><strong>Final Thoughts<\/strong><\/h2>\n<p>Delivery platforms, either by restaurants or aggregators, are driving new innovations in the restaurant industry, including dark kitchens, virtual assistants, and geo-fencing. In predicting the industry\u2019s future, the following questions will be critical:<\/p>\n<ul>\n<li>Will customers embrace dark kitchens, or prefer to use established restaurant brands?<\/li>\n<li>Is the future of restaurants on-premise, carry-out, or delivery?<\/li>\n<li>How will autonomous vehicles impact delivery\u2019s economics and usage?<\/li>\n<\/ul>\n<p><strong>\u00a0<\/strong><\/p>\n<p><strong>Bibliography<\/strong><\/p>\n<ol>\n<li>National Restaurant Association, \u201cRestaurant Industry Facts at a Glance,\u201d <a href=\"https:\/\/restaurant.org\/research\/restaurant-statistics\/restaurant-industry-facts-at-a-glance\">https:\/\/restaurant.org\/research\/restaurant-statistics\/restaurant-industry-facts-at-a-glance<\/a>, accessed February 2019.<\/li>\n<li>Cheng, Andria, \u201cMillennials are ordering food for delivery but are they killing the kitchen too?,\u201d <em>Forbes<\/em>, June 28, 2018, <a href=\"https:\/\/www.forbes.com\/sites\/andriacheng\/2018\/06\/26\/millennials-are-ordering-food-for-delivery-more-but-are-they-killing-the-kitchen-too\/#7de8a3fd393e\">https:\/\/www.forbes.com\/sites\/andriacheng\/2018\/06\/26\/millennials-are-ordering-food-for-delivery-more-but-are-they-killing-the-kitchen-too\/#7de8a3fd393e<\/a>, accessed February 2019.<\/li>\n<li>Meyersohn, Nathaniel, \u201cWhy Uber Eats and Grub Hub partnerships are risky for restaurants,\u201d <em>CNN Business<\/em>, March 28, 2018, <a href=\"https:\/\/money.cnn.com\/2018\/03\/28\/news\/companies\/uber-eats-grubhub-delivery-apps\/index.html\">https:\/\/money.cnn.com\/2018\/03\/28\/news\/companies\/uber-eats-grubhub-delivery-apps\/index.html<\/a>, accessed February 2019.<\/li>\n<li>Liem, Emma and Littman, Julie, \u201cQ1 delivery report: Brands doubling down on off-premise,\u201d <em>Restaurant Dive<\/em>, February 8, 2019, <a href=\"https:\/\/www.restaurantdive.com\/news\/mcdonalds-chipotle-yum-and-dunkin-double-down-on-delivery\/547941\/\">https:\/\/www.restaurantdive.com\/news\/mcdonalds-chipotle-yum-and-dunkin-double-down-on-delivery\/547941\/<\/a>, accessed February 2019.<\/li>\n<li>Butler, Sarah, \u201cHow Deliveroo\u2019s \u2018Dark Kitchens\u2019 are catering from car parks,\u201d <em>The Guardian,<\/em> October 28, 2017, <a href=\"https:\/\/www.theguardian.com\/business\/2017\/oct\/28\/deliveroo-dark-kitchens-pop-up-feeding-the-city-london\">https:\/\/www.theguardian.com\/business\/2017\/oct\/28\/deliveroo-dark-kitchens-pop-up-feeding-the-city-london<\/a>, accessed February 2019.<\/li>\n<li>Boulton, Clint, \u201cCasual dining chains counter sagging sales with virtual assistants, AI,\u201d <em>CIO,<\/em> October 1, 2018, <a href=\"https:\/\/www.cio.com\/article\/3309398\/digital-transformation\/casual-dining-chains-counter-sagging-sales-with-virtual-assistants-ai.html\">https:\/\/www.cio.com\/article\/3309398\/digital-transformation\/casual-dining-chains-counter-sagging-sales-with-virtual-assistants-ai.html<\/a>, accessed February 2019.<\/li>\n<li>Baertlain, Lisa, \u201cMcDonald\u2019s, late to mobile ordering, seeks to avoid pitfalls,\u201d <em>Reuters,<\/em> March 14, 2017, <a href=\"https:\/\/www.macrumors.com\/2017\/03\/15\/mcdonalds-mobile-app-ordering\/\">https:\/\/www.macrumors.com\/2017\/03\/15\/mcdonalds-mobile-app-ordering\/<\/a>, accessed February 2019.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"<p>Delivery aggregators have driven immense innovation in the restaurant industry. As the space grows, we examine new innovations including Dark Kitchens, Virtual Assistant ordering, and Geofencing technologies. <\/p>\n","protected":false},"author":10351,"featured_media":8863,"comment_status":"open","ping_status":"closed","template":"","categories":[671],"class_list":["post-8862","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-restaurants","hck-taxonomy-organization-ubereats","hck-taxonomy-industry-food-and-beverage","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-digit\/assignment\/dig-it-blog-post-assignment-i-innovative-platforms\/","yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>UberEats, DoorDash, Grubhub: Innovations in Restaurant Delivery - Digital Innovation and Transformation<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-digit\/submission\/ubereats-doordash-grubhub-innovations-in-restaurant-delivery\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"UberEats, DoorDash, Grubhub: Innovations in Restaurant Delivery - Digital Innovation and Transformation\" \/>\n<meta property=\"og:description\" content=\"Delivery aggregators have driven immense innovation in the restaurant industry. 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