Famed restauranteur and Netflix’s Ugly Delicious host David Chang was on the Bill Simmons podcast this week. And while Chang was there to promote his new book, he and Simmons actually spent a lot of time discussing food delivery and its impact on the restaurant industry.
You should listen to the entire episode, but here are a few highlights.
Chang said that the biggest story in restaurants right now is the rise of delivery. “That’s going to be the story of the next ten years,” Chang said before adding, grimly, “It’s going to decimate the business.”
Basically, as Chang pointed out, because of delivery, restaurants now aren’t just competing with other neighborhood restaurants, they are competing with restaurant across an entire city. So restaurants now find themselves in even tougher environments when it comes to standing out from competitors.
Additionally, Chang suggests the math doesn’t really add up. If a restaurant is only eking out a 5–10 percent profit overall, what happens when they pay 30 percent commissions on deliveries through a third party like DoorDash, and customers are ordering 3 – 4 meals per week through delivery? Chang worried that this could turn restaurants into a form of indentured servitude, saying “The model has to improve for actual restaurants,” and “The 30 percent fee of delivery services is a model that’s not going to work long-term.”
Having said that, Chang also admitted that if DoorDash asked to be the exclusive delivery partner for his restaurant, he’d have to say yes “because they are driving so much traffic.”
Our own Jenn Marston has written quite a bit about this Faustian bargain that restaurants strike with third-party delivery services. And how that model is starting to change as restaurants begin to bring delivery in-house or create some kind of hybrid of in-house and third-party delivery.
Chang doesn’t think that eating at a restaurant will go away entirely, “They’re just going to be a specific kind of restaurant,” he said “They’re going to be the shit you can’t deliver, ultimately.”
In a fun aside, Chang actually ranked food that’s best for delivery. Pizza was the best followed by Chinese food and fried chicken. Host Bill Simmons lamented that “they have not been able to figure out fries.” Perhaps he should check out Smart Kitchen Summit Startup Showcase winner Soggy Food Sucks.
Chang’s opinions, of course, come during a global pandemic, where people are being encouraged to practice active social distancing and avoid large gatherings. In Jersey City, the mayor has asked bars and restaurants in that town to take attendance in an effort to minimize the impact of the coronavirus. And in Seattle, restauranteur Tom Douglas said that he is temporarily closing 12 restaurants for up to three months after seeing a 90 percent drop in business since the outbreak.
You should listen to the whole Simmons podcast. Chang is a great interview who doesn’t pull any punches. And while “decimate” is kind of a pejorative term, Chang is right, delivery will cause fundamental changes to the restaurant biz. How it does so, remains to be seen.
In Asia, the 30%fee is built into pricing. So food delivery prices are 30% higher than dine in.