Think Food, Think Tech

The food delivery space is getting competitive, and competitive doesn’t necessarily mean saturated. The “foodtech” sector continues to grab the attention of venture capitalists and tech giants like Uber and Square who are starting to venture into this market. From an end consumer perspective, we tried our best to classify the foodtech sector into various categories with names of a few startups in those categories (we still would be missing several though).

  • Mobile / Online Platforms B2B – ChowNow, NetWaiter, MenuDrive etc..
  • Commerce – Boxed, NatureBox etc..
  • Online Grocery – Instacart, Fresh Direct, Amazon Fresh etc..
  • Restaurant Discovery, Search and Review – Yelp, Foursquare, Zagat, Chowhound, etc..
  • Reservations – OpenTable, Reserve etc..
  • Recipes search – Yummly, Super Cook etc..
  • Mobile and Online Ordering – Door Dash, Delivery, Grubhub, Sprig, Hello Fresh, etc..

Out of these various categories, the most exciting and competitive is the Mobile and Online Delivery space. Or so do we think. And with that said, we believe we are going to witness a lot of consolidation taking place in this space or under this category in the near future – specifically because of the space getting so competitive. It’s definitely going to be fun! So what really differentiates these food delivery startups? We think it’s the model! So there are food startups which have built their business model around doing everything themselves! Yes, they “do-it-all” - right from preparing gourmet meals, sell recipes and dinner kits, to delivering it, and building out all the enabling technology. Then there are those that focus “only” on the software that allows them to deliver food to an end consumer by tying up with restaurants.

Now of the two which model is scalable is hard for us to say. After all, we are no experts at it! There are pros and cons to both the models. We believe that the startups that follow the “do-it-all” model can control the cost more – be it raw material, or the delivery cost, so to say - resulting in higher margins! So are we saying this model is easily scalable? Well, no! But is it scalable? Definitely, yes! This model also has room for new players, who can create a niche of any kind. Be it health food, be it organic, or be it vegan etc. It’s more like creating a “food cult!” Whereas, the “only” food delivery business is far more easily scalable given a much lower capital (than the “do-it-all” model) to scale the business. However, here the margins will be thin since the revenue model is mostly in the form of commissions from tied-up restaurants and delivery charges. Hence, the growth will purely rely on increasing volume through consistent delivery - constantly acquiring new customers and retaining the existing one’s for repeat orders. This model will see players who have the best logistics and extremely sophisticated data-driven software take the market share. The winners would leverage technology to gather the best data insights, reduce delivery times by mapping the best route, allow customers to track their orders in real time with accurate estimated delivery time, and enable restaurants to increase sales. Well, with all that said – the least that can be said is – it will be an interesting space to watch and follow! So here we have a list of few (and not all - as there are many) food delivery startups to look out for. In no particular order though!

So will they make it or break it?! We don’t know yet! Let’s just stay tuned for the next unicorn!

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