Food Fight! Meal Delivery Companies Vie For Tech Talent
Say goodbye to the pizza pie. You’ve grown up. And so has your take-out. Now you can get pan-seared maple glazed salmon with teriyaki quinoa. As tech spreads its tentacles into every area of contemporary life, it’s no surprise that food delivery service is now on the app menu. Add to that the trend in foodie-style eating that has even kids opting for sushi and bubble tea over burgers and shakes. And what we’ve got is a bumper crop of restaurants in all major cities partnering with app software companies to get their menu offerings into the mouths of consumers and consumers’ dollars into their coffers.
Of course, the software companies creating and running the delivery apps take a bite out of the bottom line. But hey, that’s the cost of doing business.
And it’s a $10 billion dollar business and growing according to a recent Morgan Stanley estimate quoted in Business Insider. That means a lot of meals likely being delivered to busy but well paid Silicon Valley and San Francisco tech workers.
Many Companies Competing to Deliver Mobile Meals Via Apps – And Soon Robots
Growth for meal delivery services has been on a healthy double digit uptick since 2012 states market research firm NPD. Although still relatively small, with six million meals delivered last year, that number is expected to grow. And unlike pizza with 73 percent of orders going to homes mostly in the evening, 25 percent of digitally-ordered non-pizza restaurant meals are delivered to people at work during the day. That’s a previously untapped segment that is expected to increase.
The appetites of office workers for delivered restaurant meals so huge that a couple of companies, San Francisco-based delivery startups DoorDash and Postmates are going to start testing robots to deliver food orders in Redwood City, California, and Washington, DC. The rolling robots will handle only small orders within walking distance of restaurants to the offices – orders that are too small for most human delivery workers to want to bother with.
Current food frontrunners include DoorDash, Munchery, GrubHub/Seamless, Caviar, Yelp Eat 24, Delivery.com, and Postmates. But that too may change as giants Uber and Amazon leverage their reach and brand recognition to gobble up market share.
Amazon got in on the food delivery act with its Amazon Prime Now service which launched in 2015 in Seattle, its home base, and New York. It quickly spread to other cities, including Los Angeles where it now has over 500 restaurants on tap.
Uber debuted UberEATS last March. Uber told Wired that it has a separate driver base handling UberEATS deliveries that is different from the Uber drivers who give people rides. But Uber’s drivers can opt to toggle between driving tasks by logging into and out of the apps.
Amazon, Uber and Other Companies Beef Up Staffing For Meal Delivery Service
Amazon’s announcement about its new restaurant meal delivery service was followed by online job listings on LinkedIn and Amazon’s own jobs site which noted that the company was seeking employees for a dedicated division called Amazon Restaurants in Seattle and New York, according to Tech Crunch.
Amazon had posted about 15 job openings for a division called “Amazon Restaurants,” based in Seattle and New York, according to a Reuters search on LinkedIn and Amazon’s own jobs site.
But now more competitors are looking to stock their ponds with tech talent to help grow their companies. Postmates is looking to hire 34 software engineers right now, according to current Paysa jobs data. The average total pay package is $190, 578 and 84% of Postmates jobs are in San Francisco.
Doordash currently is trying to recruit 10 new software engineers at an average salary of $137,827, according to current Paysa data. Fifty percent of Doordash’s jobs are in San Francisco and 30 percent are in Palo Alto.
And Uber is poaching employees from top companies like Google, Facebook, Amazon, Apple and Microsoft. Although it is difficult to sift out EATNow from other Uber divisions, overall Uber’s average tech salary is $279,000 according to Paysa data and it ranks the top company in the nation in Paysa’s proprietary rankings.
Eater – and Employee – Beware of Fake Restaurants
One caveat before you order that caviar and blini or pumpkin curry – maybe do a quick online search for the restaurant to make sure it exists? In 2015, GrubHub which had merged with Seamless, was discovered by NBC’s New York City team to be sending out orders from phony “ghost” restaurants. The restaurants had names and phone numbers but their addresses were found to be fake. Food arrived as ordered but there was no way to know whether it had been prepared in a professional kitchen up to health codes.
GrubHub currently has 109 tech positions open – 55 in New York City and 54 in its Chicago offices – with an average salary package of $142,509, according to Paysa. The company also claims to have partnerships with 44,000 restaurants across the U.S. But if the fake listings persist, eater beware and maybe employee beware too?
Meal Delivery Offers a Lifeline to Struggling Restaurants
As many restaurants struggle, opting to join forces with food delivery services can give them a much needed boost. High rents, high labor costs, scarce labor and talented chefs being lured to work in tech company kitchens – these have all added to restaurant woes in the Bay Area.
Over 60 Bay Area restaurants have closed in the past few months amid economic struggles and challenges to the traditional full-service dining experience, as reported in local media. Restaurants have to compete not just with company cafeterias providing discounted or free meals but also with supermarkets that offer a smorgasbord of fresh prepared foods and services like Blue Apron and Munchery that deliver meal preparation kits. (Although media reports on Munchery’s struggles, with the liability of more than $1.9 million of wasted food, show that all is not smooth sailing for these types of food businesses either.)
Putting the menu out on a digital app can be a good way for restaurants to give the bottom line a much needed boost.
“Restaurants no longer need drivers, vehicles, and insurance in order to offer their customers a delivery option. Multiple menu aggregators provide this service,” stated market research firm NPD.
Some mobile delivery services charge the restaurant. Some charge the customer. Some split it between both.
Uber declined to provide details to Wired during its Uber Eats launch on how it and participating restaurants split the revenue they bring in. Wired noted, “But one can imagine how agreeing to be listed on Uber’s app wins these restaurants some high-tech local advertising.”
Dominos Still Dominates Mobile Food Orders
Like the Ninja Turtles, lots of folks still crave pizza. Especially with Super Bowl around the corner, it’s likely there’ll be a lot of pizza delivery kids ringing doorbells as they heft those big insulated carriers filled with the traditional flat pizza boxes. And more than half of those boxes will bear the Domino’s logo.
According to Morgan Stanley’s recent analysis, more than half of digital delivery orders are for pizza. Domino’s dominates with 24% of total digital delivery market share with GrubHub a close second at 23%. But adding Pizza Hut’s 19% market share and Papa John’s 9%, it adds up to a lot of mozzarella.
“Online food delivery is still in its nascency as, by our math, only 5% (or $10B) of the ~$210B core addressable restaurant spend is done through online delivery, and more than half of that is pizza,” Morgan Stanley analysts noted in Business Insider.
But, the analysts are quick to add, that is likely to change in the near future.