The food delivery craze will normalize at some point, but not soon. Right now, it’s a segment projected to be worth $365 billion by 2013, and even companies with inherently undeliverable foods are delivering. All of which is to say, food delivery holds a well-earned spot on the list of 2019 hot topics.
Major delivery services — Uber Eats, Grubhub, DoorDash, etc. — will continue to compete for your appetite. At the same time, there are some developments currently discussed less that will get a whole lot more attention over the next 12 months. They’ll even impact who gets first place in the race to be America’s top delivery service.
A New Battleground for Third-Party Delivery
To quote the wizard Saruman, “a new power is rising.” Only this one’s not bent on destroying the world; it’s actually trying to help build up the economies of small- to mid-size U.S. cities by introducing more food delivery services to them.
While the major third-party delivery services cater to the major cities, a smaller service called Bite Squad has been quietly expanding across the rest of the country. In 2018, they did a 100-city expansion that included acquiring over a dozen companies. And just last month, Bite Squad was acquired by Waitr, another smaller delivery service that had previously focused in the Southeastern U.S.
Together, the duo’s reach spans from Honolulu to Virginia and everywhere in between, with a focus on smaller towns and cities where third-party delivery services have yet to set up shop. That’s not an automatic guarantee they’ll win the smaller markets — folks like Grubhub are still aggressively expanding — but it does give us the underdog story every good competition needs. And it’s possible these smaller cities will be key battlegrounds in the war to win the delivery market.
More Ghost Kitchens
Food delivery is projected to grow 12 percent over the next five years. But as we often discuss here at The Spoon, the demand means restaurants are having to change the way they do business, and many struggle with the disparate order channels, lack of space, and general operational hell that happens when you try to accommodate all those new orders.
One answer to the problem is the ghost kitchen. Also known as virtual restaurants, these kitchens exist solely for the purpose of getting delivery food made and into the hands of delivery drivers everywhere. There’s no storefront branding or front-of-house space, and often they’re shared by multiple different restaurants.
There are plenty of restaurants that exist only inside these ghost kitchens. But where the concept could really shine in 2019 is by taking on delivery orders for existing businesses, so the brick-and-mortar locations of those restaurants don’t have to shoulder the entire burden. Kitchen United is one such company. Having secured a $10 million investment this year, the company plans to expand its ghost kitchens to NYC, Denver, Seattle, and several other cities in 2019. A similar endeavor, Cloud Kitchens, was started by Uber’s ex-CEO Travis Kalanick this past year. In Hong Kong, third-party delivery service Deliveroo just opened a food hall, which is part of the company’s network of virtual kitchens. And Indian delivery startup Swiggy just closed $1 billion in funding.
Delivery Via Drones
Aside from the much-publicized Slurpee stunt in 2016, food delivery via drones has remained more or less a fantasy for most of us. That’s starting to change, though, as new companies join the game (of drones) and third-party services like Uber Eats experiment with the concept.
The latter wants commercial drones available in multiple cities by 2021, and is moving aggressively to accomplish that goal. Meanwhile, Amazon’s filed a patent for energy-generating drones, which would solve the battery issue that’s hindered development up to now. And in Reykjavik, Iceland, Israeli tech company Flytrix is already delivering food from the sky.
So it seems fairly obvious who will win the prize of being at the top of the ongoing competition for delivery dominance: whoever can cook up an order in a virtual kitchen and deliver it, preferably via drone, to little-known spots like Boone, North Carolina. It’s at least something to strive for.