The rise of third-party food delivery companies like Louisiana’s Waitr and national companies like Uber Eats, GrubHub and DoorDash have created a $10 billion industry, changing the landscape for restaurants in the modern era.
CNBC reports third-party delivery apps have led to a spike in takeout and delivery orders, now rising to $10.2 billion worth of orders in 2018 alone. The annual number of online orders has risen from 1.72 billion in 2014 to 2.04 billion in 2019, the report notes. Yet, nationwide, restaurants are still adapting to the change.
Despite the extra sales, many restaurants are struggling with lower profit margins and big operational changes. Some have started exclusive partnerships with third-party delivery companies. McDonald’s had an exclusive contract with Uber Eats until earlier this year when it announced partnerships with DoorDash and GrubHub after reportedly pushing for lower commission fees from Uber Eats.
With so much competition in the market, commission fees have started to decline, though they still range between 15% to 30%.
These third-party providers are also now facing financial trouble. GrubHub reported a third-quarter net income of $1 million, a $22 million drop from the previous year. Meanwhile, restaurants are being advised to not rely too heavily on online sales. If an economic downturn hits, consumers will be less likely to spend the extra money for delivery.
Read the full report here.
