As food-delivery companies like DoorDash and Louisiana-based Waitr are taking their race for market domination to the far reaches of the U.S. they are struggling to adjust to the nuances of different markets, The Wall Street Journal reports.
The challenges they face in smaller cities and suburbs include finding drivers new to the gig economy in a tight labor market, and the expense of carrying restaurant meals and groceries over greater distances at prices consumers are willing to pay.
Additionally, many suburbanites and small-town residents are used to driving to pick up meals and groceries, making them less inclined to pay someone else to ferry their food, says Bob Goldin, co-founder of consulting firm Pentallect Inc.
Delivery executives, however, say they expect food consumption at home to rise over time and need to build as wide a network as possible to stand out in a crowded field of competitors. There is also growing pressure—including from investors in delivery companies—to capture as much market share as possible. Some see opportunities in cities and towns where pizza and Chinese food are the only delivery options available.
Executives at Instacart and Grubhub Inc. say operating in suburbs and smaller cities ends up being cheaper in the long run than in big cities like New York—where, according to Grubhub finance chief Adam DeWitt, labor, advertising and materials are generally pricier. Read the full story.