The economic impact of the third-party delivery industry can be measured by two benchmarks: namely, before and after COVID-19.
In fact, a year before the pandemic hit, total restaurant deliveries were thought to be between 3–5 percent of total restaurant food traffic. In 2020, however, business exploded, and it was all due to the pandemic, which brought business as usual to a halt. According to New York-based consumer research company, NPD Group, Inc., digital foodservice orders increased to 20% in April 2020; and then by 138% in May.
For New York City, the Governor Cuomo’s shelter-at-home order, which began on March 29 and ended May 28, created an overnight demand for third-party delivery. Needless to say, companies like UberEats, DoorDash, Grubhub, and Postmates — to name just a few — expanded to meet an amazing amount of demands. If you were making deliveries during that time, you were probably amazed by the customer demand and response.
But now that third-party delivery is part of the “new normal,” the playing field is beginning to change with prospective mergers and acquisitions.
In July, for example, Uber agreed to buy Postmates for $2.65 billion, just as Netherlands-based Just Eat Takeaway.com NV has agreed to acquire U.S. Grubhub Inc for $7.3 billion. (Grubhub had already merged with Seamless.)
Demand is still huge, but market volatility — of which consolidation is only one aspect — could cause problems or opportunities for car sharers. Is it still a good way to make money? Here are some possibilities:
● Fewer companies may stop food fights. Customers order their food and products through apps, and restaurants or grocery stores prepare the order. But what if two people order a pepperoni pizza, and there’s only one left? Having fewer apps in the marketplace may fix this perennial service issue.
● Restaurants like having a “big reach.” New York City is a destination with a long history of food delivery. Before the pandemic, restaurants offered free local delivery and relied on tips to pay their employees. While some may return to their old ways, it’s likely that most, looking at the benefits of a long-distance market that’s offered by third-party delivery (after all, on May 1, 2020, the NY Post reported that demand had grown throughout the five boroughs), will opt to stay in the third-party game.
● Niche markets will increase. Food and groceries are popular, but specialty delivery items are on the rise. One example is Vireo New York offers home delivery of medical marijuana.
Whichever way you choose to work it, it looks like car sharers can regard third-party delivery as a viable side hustle for the foreseeable future.
Author: Kyle Freedman is COO at Digi Car focused on building a rental platform for delivery and ride share drivers in NYC