UberEats vs. Grubhub vs. DoorDash: The Battle for Online Food Delivery

There’s still plenty of room for growth in the online food delivery market for Uber Eats, GrubHub, and current leader DoorDash, along with numerous smaller competitors. It’s easy to forget, but outside of tier one markets like New York, Chicago, and L.A., there are huge portions of the country that remain unfamiliar with online ordering.

A Rapidly Changing Industry
The online food delivery space has seen significant change since I started my company, DASHED, in 2009 (it was acquired by GrubHub in 2017). Back then, the market was more fragmented, with more local and regionalized players. Uber Eats, Postmates, and DoorDash opened for business about four years ago, changing how people interacted with eateries by simplifying orders to a touch within an app.

This year, DoorDash took the lead and now has the largest market share, with about 27.6% consumer spend of the food delivery market, according to a report from Edison Trends. GrubHub trails slightly behind at 26.7%, Uber Eats with 25.2%, and Postmates – which confidentially filed for an IPO in February – holds a little more than 12% of the market. However, UberEats currently leads competitors in market share of food delivery orders and offers the lowest prices to consumers. Amazon, who played in the space for a short time, exited the restaurant delivery space in June 2019.

Edison Trends wrote that this shakeup happened after GrubHub suffered an 11-percentage point loss in market share from the analyzed period of March 2018 to February 2019, while Uber remained flat. DoorDash, meanwhile, became the first third-party delivery app to do business in all 50 U.S. states.

Obstacles to Growth: Drivers
Signing up new drivers remains one of the biggest obstacles and drivers of growth for these companies and it remains to be seen how California’s new law dictating that contractors be treated as employees will affect their businesses.

No matter how it all shakes out, it is in the best interest of delivery companies to ensure that drivers stay on board and make between $10 to $17 an hour depending on the time of day. This is vital. Drivers are somewhat agnostic when it comes to who they’re working with. They typically hop between different platforms and can have multiple apps or phones laid out on their dashboards. They are powering through different online delivery apps and will work for whoever provides the most business.

Obstacles to Growth: Restaurant Relationships
The other big issue for food delivery companies is the fees they charge restaurants, with the standard falling between 15% to 20% for simple marketing and listing services, or between 20% to 30% when delivery is included. Other fees, including processing and delivery, typically don’t exceed 3% to 4% a transaction.

Restaurants have pushed hard to bring down those fees and depending on the platform and the market, some can be negotiable. But still, the number one concern for restaurants is how the delivery platform will represent their food, brand, and product. However, that’s been a decreasing concern to restaurants as delivery becomes more popular and more quality control is in place.

Obstacles to Growth: Customer Loyalty
Looking to the future, the biggest hurdle for the leading delivery platforms’ growth, other than new regulations and laws, is local and regional incumbents, as customers tend to stay loyal to platforms they’ve previously ordered from. Customers, so long as it’s providing a good experience, will stay with that company. It’s easy to see more companies entering the space, turning food delivery into something that resembles the hotel booking industry.

For now, delivery companies must place an emphasis on customer service. That means that the hundreds of thousands of drivers working for these companies are doing more than delivering food as fast as possible. They must be courteous and professional if they’re to earn customer loyalty.

Until there are drones delivering our food, this is still a people business. That human element is vital for any company looking to carve out a piece of the market.

Phil Dumontet
Co-Founder and Former Chief Executive Officer at Dashed (Grubhub)

Phil Dumontet is the former Chief Executive Officer of Dashed, the largest independent restaurant delivery platform in the northeast. The business was bootstrapped from day one and grew to one of the leading restaurant delivery service in the country, with operations in eight cities before being acquired by Grubhub in 2017. Phil was named to the Forbes 30 under 30 in 2017, and is a contributor to Forbes Magazine, The Washington Post, Huffington Post, and Fox Business, and speaks regularly at leading universities in the northeast. He is knowledgeable about all major food delivery platforms, including Postmates, Uber Eats, Grubhub, Delivery.com, Eat24, DoorDash, Favor, LABites, Waitr and Caviar. Phil serves as a Board Member of the Downtown Boulder Partnership and advises a variety of start-ups, including Sweet Origins.

This post is adapted from the GLG teleconference, UberEats vs. Grubhub vs. DoorDash: The Battle for Online Food Delivery. If you’d like access the full transcript or talk to Phil (or any of our more than 700,000 subject matter experts), please submit the form below.

 

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