Close Ad

The Spoon

Daily news and analysis about the food tech revolution

third-party food delivery

Indian Delivery Service Zomato Launches Relief Fund for Restaurants

Zomato, one of the largest third-party food delivery services in India, announced this week it has launched a fund to support restaurants whose business is impacted by COVID-19. All sales of Zomato Gold memberships in April will go into the Zomato Gold Support Fund, according to a blog post from the company. Proceeds from the fund go towards “restaurant housekeepers, cooks and servers in these uncertain times.”

Zomato Gold is the service’s premium membership pass that gives customers “buy one get one free” deals on purchases. For the month of April, customers can purchase a one-year membership to Zomato Gold for ₹1200 (~$16 USD) or extend an existing membership another year for the same price. Those that do, get an additional year of Zomato Gold for free.

The company notes that anyone receiving these funds will not be required to pay them back (something that’s not been the case with every third-party delivery service’s COVID-19-related offers).

India is currently in the midst of a three-week-long lockdown — the world’s largest — with all factories, markets, shops, houses of worship, and other public spaces closed for the country’s 1.3 billion people. Like other countries around the world, restaurants can continue operating for delivery, but that puts many in-house employees out of work for the time being. 

“Restaurant workers face a twofold setback, many have modest backgrounds, and coming from small towns, are stranded away from their homes,” Gaurav Gupta, the cofounder and COO of Zomato, wrote in the company’s blog post. “And a cash-strapped industry is struggling to provide sustenance for them and their families as business comes to an abrupt halt.”

Gupta recently noted that the Zomato Gold fund is currently happening in India and the UAE. 

Cuboh Raises $1.6M CAD for Third-Party Restaurant Delivery Integration

Cuboh, which helps restaurants integrate and streamline orders from third-party delivery services, announced this week that it has raised $1.6 million CAD (~$1.2M USD) in seed funding.

The Victoria, Canada-based Cuboh offers a hardware/software combination meant to replace the tablets supplied by third-party delivery services. It also integrates directly with a restaurant’s POS software, eliminating the need for an employee to manually input the order into the restaurant’s main system. When a delivery order comes in from external third-party delivery service like Door Dash or Uber Eats, Cuboh’s software intercepts the order, processes it and relays straight to the kitchen.

The result is supposed to save restaurants from the so-called “tablet hell,” which happens when restaurants have to juggle multiple tablets as a result of partnering with more than one delivery service. (Though, you can use Cuboh’s tablet to run the service.)

“We’re really focused on the aggregation,” Juan Orrego, Cuboh’s Co-Founder and CEO told me by phone this week. “We have taken the order management process. We can promise restaurant that they don’t need any other tablets.”

Cuboh runs a straight up SaaS business model, $80 a month for restaurants doing less than $20,000 in delivery per month, $140 a month for those doing between $20,000 and $30,000, and $200 a month for those doing more than $30,000.

The company was part of the Y Combinator program last year and already has more than 1,000 customers around the world in countries like the U.S., Canada, Australia and Hong Kong.

As my colleague, Jenn Marston has noted, tablet hell is something that a number of startups are looking to solve. Ordermark, Chowly and Olo are all taking different approaches to integrating and streamlining third-party delivery orders for restaurants.

But third-party delivery is itself going through a bit of an existential crisis. Whether it’s shady business practices, or gouging restaurants with high fees, restaurants are taking a hard look at exactly how much benefit they are getting from third-party delivery and whether those operations should be taken in-house.

That’s a much bigger question for the industry however. In the meantime, perhaps Cuboh will help keep third-party delivery services in restaurants good grace by taming that tablet hell.

Uber Eats Loses Exclusive Contract With McDonald’s in the UK

Uber Eats took another competitive hit this week when it lost its exclusive rights to deliver McDonald’s orders in the UK. Rival delivery service Just Eat announced on Tuesday it had struck a deal to become the QSR chain’s second delivery partner in Britain, according to a report from CNN Business.

Joseph Barnet-Lamb, an analyst at Credit Suisse, told CNN that orders from McDonald’s account for about half of the 30 million deliveries Uber Eats does in the UK each year. “This is all part of Just Eat taking back control of the competitive landscape,” he said. 

Just Eat is already a leader in the UK food delivery space, and its planned merger with another European food delivery heavyweight, Takeaway.com, could give the company even more competitive muscle that players like Uber Eats and Deliveroo will have to fight. (British antitrust watchdog the CMA certainly thinks so, as the deal with Takeaway.com is currently under investigation, though it’s still expected to go through.)

This is the second time Uber Eats has lost an exclusivity contract with the Golden Arches. In July 2019, McDonald’s added DoorDash as a second delivery partner in the U.S., then later added Grubhub, too.

Elsewhere, Uber shut down its Eats service in South Korea, laid off staff, and, this year, just sold its India business to rival service Zomato.

None of this is particularly surprising. Uber is under pressure from investors to prove it can be more than just a cash-burning business — in other words, profitable. Part of that process includes shutting services down in markets where they don’t perform well or fall behind the local competition.  

That doesn’t mean Eats is leaving the UK anytime soon. However, Just Eats processed over 123 million orders in the UK in 2018. If its deal with Takeaway.com goes through, it will create one of the largest food delivery services in the world, and a competitive threat that goes far beyond the question of who’s delivering Big Macs.

Amazon Has 5 Days to Save Its Controversial Investment in UK Food Delivery Service Deliveroo

Amazon’s investment in Deliveroo — and its stake in UK restaurant food delivery — remains in doubt after British regulators said this week that the deal could mean higher prices and lower quality services for customers. Amazon and Deliveroo have five days to submit proposals that counter these concerns, which were raised by UK competition watchdog the Competition and Markets Authority (CMA). Failure to do so would mean a an in-depth investigation of the deal that could take six months, according to an article published in The Guardian.

Amazon first announced the investment in Deliveroo in May 2019, when it was meant to be part part of a larger $575 million funding round. Though the investment would form a minority stake, about 16 percent, the CMA flagged it in July, saying it presented “reasonable grounds” to suspect that Amazon and Deliveroo would “cease to be distinct.” Deliveroo was then prohibited from any activity that would lead to Amazon’s integration with the restaurant food delivery service, including changes to senior management or big contracts. 

In a statement released Wednesday, the CMA said the investment could “damage competition in online restaurant food delivery by discouraging Amazon from re-entering the market in the UK.” Amazon previously ran its own restaurant delivery service in the UK but shuttered that business after just two years. As regulators have stressed, the Deliveroo investment would give Amazon a path back into the market and immediate access to Deliveroo’s existing customer base. That in turn would undercut competition from other food delivery services in the UK such as Uber Eats and Just Eat.

“There are relatively few players in these markets, so we’re concerned that Amazon having this kind of influence over Deliveroo could dampen the emerging competition between the two businesses.” Andrea Gomes da Silva, executive director of the CMA, said in the statement.

There is also the concern that the deal would damage competition in the UK grocery delivery sector. Amazon and Deliveroo are both two of the strongest players in this area right now. A major investment like this could reduce the competition.

According to The Guardian article, Amazon could be forced to sell its stake in Deliveroo, as previous companies have had to do in similar cases over the years. 

WoodSpoon’s Soon-to-Launch Service Aims to Bring Home-cooked Food Delivery To NYC

Someone else’s kitchen could be the next place cooking up your food delivery order thanks to a soon-to-launch service called WoodSpoon. Set to begin service on September 16 in NYC, the service is an on-demand delivery marketplace for homemade meals as well as a platform for local cooks.

WoodSpoon CEO and co-founder Oren Saar, who moved to the U.S. from Israel to do a Masters degree at MIT four years ago, got the idea for WoodSpoon in 2016 after a roommate said he preferred Saar’s cooking to any option he might find on Grubhub, Caviar, or other food delivery services. Speaking over the phone this week, Saar told me he had a “white light” moment then as he realized there could be serious demand for people wanting to order homemade meals from local cooks.

He’d be the first to say the idea wasn’t completely original — plenty of companies have tried over the last several years to launch delivery businesses for home-cooked food, including Danny Meyer’s Umi Kitchen, HomeFood in the UK, and FoodByUs in Australia. Saar says he reached out to these and others to better understand the business he was trying to break into: what worked, what didn’t, why these companies eventually shuttered or pivoted towards other directions, and how he, along with his WoodSpoon cofounder and company CMO Merav Kalish Rozengarten, could do things slightly different. “We really based our entire product on the experience that others had before us,” says Saar.

The WoodSpoon platform is made up of two different apps, both developed in-house and available on iOS and Android platforms. The customer-facing app functions like most food order and delivery apps out there: users search for meals, order, and pay within the app. What’s available in terms of food depends on which cooks in the area are working at that moment, which means options for users change on a daily basis.

Currently, WoodSpoon has 30 cooks signed up to its platform, a mix of professional chefs with culinary degrees those who hold other jobs but enjoy cooking for others in their off hours. Saar himself is one of the the latter.

To find cooks, WoodSpoon relies on both those who apply directly to the company and channels like Instagram. “We’re looking for people that have really good rankings with good reviews,” says Saar. Anyone is welcome to apply; all are carefully vetted through a rigorous process that includes interviews, an evaluation of the food itself, and a kitchen inspection to ensure cooks are properly equipped and licensed to meet restaurant safety standards in New York. With legalities around home-kitchen food businesses in NYC somewhat nebulous, many of WoodSpoon’s cooks actually use their own commercial kitchen facilities to make the food.

Cooks manage all orders via a separate app and can decide to accept or pass on an order much the way an Uber driver takes passengers. Once an order is accepted, an onscreen timer tells the cook how much time they have to complete the order and package it up. (WoodSpoon provides packaging materials.) As that’s happening, the system talks to a delivery person (right now, WoodSpoon contracts its own drivers), who will know when to arrive at the cook’s space to retrieve the order and take it to the customer. Cooks set the price of each dish as well as the delivery fee, and WoodSpoon takes a commission on each order.

According to Saar, the hope is that users develop an affinity for a certain cook or type of food and re-order with the same loyalty they might have for a favorite local restaurant. “Our entire mission is to empower local cooks to share their food with others,” he says. “Once you get to the know them, you [will] want their food.”

The home-chef-as-a-business model may not be new, but it is only just starting to gain traction here in the U.S. Even in a densely populated metropolis like NYC, WoodSpoon won’t face a ton of competition when it launches in a few weeks. How quickly the concept catches on will depend on each state’s individual regulations around selling home-made food commercially. California, for example, green-lighted a home food bill in 2018, but in other states the practice is still illegal.

To start, WoodSpoon will be available in Manhattan’s East Village and West Village neighborhoods, with expansions planned for the near future, both within NYC and to other parts of the country.

Call for Grubhub Antitrust Investigation Suggests Deep Scrutiny of Third-Party Delivery Is On the Way

DoorDash may have knocked Grubhub out of the top spot overall for U.S. market share of third-party food delivery, but in NYC, the latter is still king. And a growing number of parties are starting to take issue with that. Case in point: Grubhub took another blow at the end of last week when a New York City council member called for an antitrust investigation into the company.

In a letter dated July 2 and obtained by the New York Post, Mark Gjonaj, head of the City Council’s Committee on Small Business, asked New York Attorney General Letitia James to open the investigation and revisit the 2013 settlement agreement that allowed Grubhub to purchase Seamless.

“While I am not accusing any entity of committing unlawful acts, I do believe that Grubhub’s outsized market share and heavy-handed tactics could lead to artificially reduced competition which in turn may drive up the commissions paid by struggling locally owned restaurants,” Gjonaj wrote.

Currently, Grubhub controls 69 percent of the food delivery market in NYC, according to Gregory Frank, an antitrust lawyer who testified at the June oversight hearing in NYC that addressed concerns over the commission fee Grubhub and other third-party delivery services charge restaurants.

The call for an antitrust investigation comes on the heels of a report that Grubhub has been buying website domains by the thousands and creating so-called shadow sites without those restaurants’ knowledge. At the same time the New York State Liquor Authority is creating new rules that could cap the fees Grubhub can charge its participating restaurants to 10 percent. Currently, those fees range anywhere from 15 to 30 percent. Grubhub has denied those accusations.

Grubhub isn’t the only player in the third-party delivery space currently under scrutiny. Earlier this month, the UK government’s Competition and Markets Authority put the brakes on Amazon’s minority investment in Deliveroo while it investigates potential breaches of competition rules.

Third-party food delivery apps were recently predicted to have 44 million U.S. users by 2020. More lawmakers are stepping in to regulate the market, combined with others questioning the economics of third-party food delivery, and still others urging brands to pull their delivery programs back in house suggest the honeymoon period for third-party is over. Massive players like Grubhub aren’t going anywhere anytime soon, but they’ll likely be operating under far more scrutiny from government bodies and civilians alike going forward.