Extreme Competition in Food Delivery Market


The IPO of Lyft and the impending launch of Uber have focused attention on home delivery of food. Uber has applied funds and corporate resources to its Uber Eats subsidiary in an attempt to obtain a larger proportion of the $250 billion market. Uber Eats intends to grow at the expense of competitor GrubHub. Concurrently, DoorDash is also expanding capability, recently raising $400 million to expand complement of delivery personnel.

Despite growth in revenue, it is questioned whether food delivery is profitable. A second factor of concern is that consumers do not develop brand loyalty and appear to be using any number of providers based on convenience and whims.

Optimistic projections from analysts may not be realized as there are technical problems with transport of many food items from restaurant to consumer. Demand is heavily concentrated in high-density urban areas catering to Millennials. The novelty of entering an order on an a I-Phone with a meal delivered to the doorstep may soon wear thin given cost and quality issues.