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CONSUMER TECHNOLOGY TRENDS 2020
Image: Taster
Food The new restaurant stack
T
he shift to food delivery is a multi-decade consumer trend, as one of the largest spending categories moves online. Top-line growth remained explosive in 2019. Uber Eats is now equivalent to around 25% of Uber’s ride business and growing 70% year-on-year, three times faster than rides. The popular view is that twosided network effects make for a ‘winner-takes-all’ dynamic in food delivery, with access to capital key to success. Hence, we’ve seen all major aggregators either raise mega-rounds of funding (Postmate, DoorDash, Deliveroo, Glovo, Wolt) or go public (Uber) and the platform war further intensified. As is often the case with ‘blitzscaling’, the flipside is deteriorating underlying
profitability. Looking ahead, there is no sign of improvement. Consumers increasingly regard delivery platforms as interchangeable and loyalty is low. Restaurants are breaking away from exclusivity deals and seem to have the upper hand in negotiations. Google is also entering as a meta-aggregator (think Google Maps for ride-hailing) and whitelabel networks are starting to work directly with restaurants that have enough brand awareness to attract consumers directly. We expect margins to compress further, and to see significant horizontal consolidation to unlock economies of scale (think of the €6.9bn deal between JustEat and Takeaway); or vertical integration to
capture more of the value creation in the entire stack (see Delivery Hero’s acquisition of Honest Food, for instance). Long term, it remains to be seen whether the capital markets will deem that these platforms are meant to be standalone businesses, or bundled within larger consumer offerings. Will we ultimately see an Uber + UberEats + Jump allinclusive subscription, for instance? Or Deliveroo as part of Amazon Prime? The rise of delivery platforms was the ‘app-store moment’ of food delivery. By building driver networks, they provided the rails for the restaurant industry to scale online. Between 2017 and 2019, an entirely new value chain emerged in the food delivery ‘stack’ as companies
