Yesterday I came across a TechCrunch post about yet another food delivery service starting up in San Francisco, PlateJoy. The post said that this was a crowded market, but I had no idea just how much. “There are at least 12 food-delivery services in San Francisco, and it seems like another one pops up in some US city every day.” In addition to delivery, there are services TechCrunch called the “make-a-meal-at-home-with-delivered-ingredients space.” Curiosity piqued, I thought that there couldn’t possibly be so many companies that try to conquer this space – how are they differentiating themselves? Let’s take a look, shall we:
In the delivery of already prepared food space there are two categories, delivery from restaurants and startups that have their own, in-house chefs that deliver complete dishes.
- Postmates: deliveries by an on-demand workforce from any restaurant (also other businesses.)
- DoorDash: deliveries in certain neighborhoods only, own drivers.
- Seamless/GrubHub: deliveries in limited cities only.
- Caviar: deliveries in a wide range of cities.
- Waiter: San Francisco Bay Area only.
- Uber: launched this week in New York, with on-demand Uber drivers.
The in-house chef services:
- Munchery: complete meals, on-demand or scheduled delivery. Limited locations.
- SpoonRocket: complete meals, 15 minute on-demand service. Limited west coast locations.
- Sprig: complete meals, 3 menu options, changing daily menu, 15 minute on-demand delivery. Limited locations.
- Maple: complete meals, changing daily menu, 3 menu options only, delivery within 30 minutes. New York only. Interestingly, Maple plans to cook the final steps of a meal in satellite kitchens throughout the city, so that food arrives “hot and fresh.” It will certainly be an operational challenge!
Make-your-own meal services, listed from least ingredients to finest, just mix and heat:
- SimplyCook: only the dry ingredients, depend on users getting other ingredients in their “weekly shop.” UK only, but I added it because it was different.
- Blue Apron: all the raw ingredients with recipes that take about 45 minutes to prepare. Delivered nation-wide with 3 meals in one, weekly shipment.
- Plated: all ingredients for a “chef-inspired” recipes at home. Weekly delivery.
- PlateJoy: (the service that inspired this post) delivers all ingredients with a focus on healthy recipes. Includes options for Paleo, vegetarian and weight-loss menus. Weekly deliveries from local Whole Foods of all ingredients in one shipment.
- Forage: recipes from restaurants, specially procured ingredients, with anything taking more than 20 minutes (such as marination and special sauces) done by the Forage chefs. Weekly delivery of ingredients for four recipes. Forage seems to do a lot of the tedious prep work yet leave the enjoyable part of cooking to customers.
The question seems to be how much people are willing to pay for a service, how much they are willing to wait to eat, and how much of the meal they want to make themselves, or how much time they want to invest. The make-your-own services seem to provide very similar services, all with weekly deliveries of ingredients and trying to differentiate by menu options. I have yet to see a service that doesn’t say their ingredients are fresh, locally-grown, sustainable and responsibly-sourced.
The category I see as most intriguing is the first one, where the companies seem to provide a missing link. For restaurants, who know how to prepare food, are in the business of preparing food, and have take-out containers on hand, these services allow them to offer deliveries without managing delivery logistics. All they have to do is to prepare the food in a timely manner. If they charge identical fees for in-house dining and take-out, every take-out order is a bonus. These services also save diners time and effort by making dish selection easy, ordering online or via an app (as opposed to a phone call, which takes more time and leads to misunderstandings) simplifying reorders, and, well, getting a meal as quickly as possible. These services can also facilitate loyalty programs, help restaurants learn more about their repeat customers and how to best serve them. If done well, they offer a valuable service to both customers and restaurants and go beyond being an interchangeable middleman.
Finally, I have a feeling that the make-your-own meal services might have a hard time growing outside of the urban markets where customers have more disposable income, are more inclined to spend money on services that save them time and are conscious about what they eat, how it’s prepared and the quality of ingredients. Can these services expand to other markets? Where sourcing quality ingredients can be harder and clients might not value the time spent in curating recipes and procuring ingredients for them? Will customers in existing markets tire of the service, preferring instead to just order a prepared meal? How difficult will it be to grow while scaling operations?
My conclusion? On one hand, there are a lot of services in this space but on the other hand, as PlateJoy’s investor stated “people eat four to five times a day.” Indeed.
Update: yesterday, a few hours after I published this post, Marketplace on NPR talked about the prevalence of Seamless/Grubhub in New York and provided a few interesting stats:
- Seamless “so dominates online ordering that many restaurants feel they’re forced to do delivery by Seamless’ rules.”
- Restaurants pay up to 20%(!) of each order to Seamless, which many consider excessive.
- Some restaurants get as much as a third of their business from Seamless, especially newer businesses. It helps new restaurants generate awareness upon launch. “When Burger Heights launched in Upper Manhattan last year, it quickly listed with Seamless and GrubHub.” said co-founder Mike Vinocur. “Maybe a third of our business could be through their service.”
- Seamless/Grubhub work with “ 30,000 restaurants, from Boston to Chicago to Los Angeles,” said spokesperson Abby Hunt, and “process more than 200,000 orders a day.”
Bottom line: customers like the Seamless experience and enjoy ordering via an app as opposed to paper/web menus and phone calls. As customers don’t pay a fee for using Seamless, they only see the benefits. Other competitors in the space, Yelp and Google among the numerous startups, will soon be able to offer an alternative to Seamless and restaurateurs will have a choice of services and can chose the one that has the best cost and feature set for their business. Interesting stuff.