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Report: 70 Percent of Delivery Orders in 2022 Will Come From Third-party Services Like DoorDash

by Jennifer Marston
December 9, 2019December 9, 2019Filed under:
  • Business of Food
  • Delivery & Commerce
  • Featured
  • Restaurant Tech
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Restaurant food delivery from third-party services like DoorDash and Grubhub will account for 70 percent of all delivery orders by 2022, according to a new report from CBRE Group.

It’s a surprising prediction — said no one ever. CBRE’s new report, the third in the firm’s U.S. Food in Demand series, is one of many, many pieces of research confirming the central role third-party food delivery services now play in the restaurant industry. Off-premises ordering is expected to be the major driver of restaurant sales over the next decade. An undeniable part of that growth is delivery, which according to the CBRE report reached $34 billion in sales last year, up 13 percent from 2017.

DoorDash, Grubhub, and other third-party services remain an important — and obvious — element of this growth, and for good reasons. As CBRE points out, there are many elements of the delivery stack restaurants need to meet today’s demand, whether it’s technical logistics to process orders, marketing services to widen a brand’s audience, or couriers and drivers that place the actual food in customers’ hands. “Restaurants often lack the infrastructure for direct delivery and the customer reach that third-party delivery operators like Grubhub, Seamless, Eat24 and DoorDash provide,” the report notes.

However, these services are also expensive for restaurants to use. Controversial commission fees eat into restaurants’ overall profit margins, which are already thin. The third-party delivery model itself is also currently under fire from multiple angles — how it treats workers, what it does to the environment, and the increasingly important question of profitability. 

None of those issues mean third-party delivery services are going away any time soon. Instead, the model will evolve, so that by 2022 it will look substantially different from the one we use today.

Already, we are seeing clues as to what direction that shift will take. A growing number of restaurants are now adopting hybrid strategies, where customers place orders and pay for them through the restaurant’s own mobile app or website, which handles the technical logistics around processing and fulfilling that order. Third-party delivery companies, meanwhile, supply the last-mile logistics, including drivers and couriers. Some restaurants, notably Panera, work off an inverse version of this, with customers placing orders via the third party’s app and the restaurant handling that last mile itself. 

Both approaches have pluses and minuses. The general consensus is that the hybrid concept will continue to gain popularity over the next year, even as it too changes and evolves alongside the way third parties process, fulfill, and deliver our restaurant orders.


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Little Caesars Is Finally Delivering Its Pizzas, Thanks to a Hybrid Strategy With DoorDash

Little Caesars — a chain best known for its pickup-only model for pizza — announced today a partnership with DoorDash to deliver from Little Caesars stores in the U.S. and Canada directly to customers' doorsteps.  Here’s the catch: Little Caesars will not actually be listed on DoorDash’s website. Instead, the…

Grubhub, DoorDash, and Other Delivery Services Are Getting Sued Over Restaurant Prices

A class action lawsuit filed Monday alleges that third-party delivery companies DoorDash, Grubhub, Postmates, and Uber Eats are using their market power to push menu prices higher during the coronavirus pandemic, according to Reuters.  The three consumers who initiated the suit allege that third-party delivery companies dictate in their contracts…

Reports of a Grubhub Sale Fuel Talk of Consolidation for Third-party Food Delivery

Grubhub has hired financial advisors and is “considering strategic options including a possible sale” according to a report published by the Wall Street Journal yesterday.  The news comes on the heels of a rough few months for Grubhub that started when the third party delivery service reported lackluster Q3 results…

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Tagged:
  • delivery
  • DoorDash
  • GrubHub
  • hybrid delivery
  • Postmates
  • third-party delivery
  • Uber Eats

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