I am not sure how you make the numbers work when a lot of these guys work on 2 deliveries an hour as best practice!! ....Aivars Lode
DoorDash, Grubhub, others say seamless ordering and customer data make up for thin margins
Delivery companies are sharing more data and fusing technology more seamlessly with restaurants to counter the growing sense that sending food to customers can be more trouble than it is worth.
DoorDash Inc., valued at $13 billion after a May funding round of $600 million, is hiring more staff to build new services for restaurants and working with tech provider Olo to place orders directly in restaurant’s cooking queues.
“Merchants were asking for more. We are giving them more,” said Christopher Payne, DoorDash’s chief operating officer, in a recent interview.
The business of ferrying food from restaurants to diners is booming. But some restaurants say fees often make meals they send out for delivery unprofitable. Some, from McDonald’s Corp. to independent restaurant owners, have negotiated to lower fees and share marketing expenses. And the New York City Council and Senate Minority Leader Chuck Schumer (D., N.Y.) are scrutinizing fees charged by Grubhub Inc. and other delivery services to restaurants and customers, with lawmakers considering increased oversight of the sector.
“This model is leading to their slow death,” said Mark Gjonaj, chairman of the City Council’s Committee on Small Business, referring to restaurants, on Monday.
Now, delivery companies are responding with new capabilities that they say make delivery more worthwhile for restaurants.
That influx of orders has complicated restaurant operations. Delivery drivers pile up in crowds at registers of some restaurants. Some have built separate counters and kitchen lines to handle the delivery demand.
Portillo’s Hot Dogs LLC, a fast-casual chain in the Chicago area, installed tablet computers at some of its 60 restaurants to display Grubhub orders that were placed online. Restaurant workers read the orders and key them into Portillo’s own sales system. Drivers come in to collect the food when it is ready.
DoorDash agreed recently to place its orders directly into Portillo’s computers using a digital system made by New York-based Olo. That helped Portillo’s more often hit its goal of getting hot dogs from order to delivery within minutes. Portillo’s still has tablets for Grubhub orders, but orders via DoorDash are growing much more quickly due in part to the better system integration, said Nick Scarpino, Portillo’s vice president of marketing.
“The tablets are just unsustainable,” Mr. Scarpino said.
A Grubhub spokeswoman said the company is investing in ways to integrate orders directly into a restaurant’s software rather than relying on a provider conduit such as Olo.
Mobo Systems Inc., doing business as Olo, is among a number of technology platforms that have emerged to help delivery services work more closely with restaurants. The digital platforms promise to speed up the receipt of orders by the restaurants, and let the delivery services know faster when a driver can come pick them up. Olo, with $83 million in funding from investors such as the Raine Group, Tiger Global Management LLC and restaurateur Danny Meyer, competes with Tillster, NovaDine Inc., Onosys and other services doing deals with chains.
Grubhub acquired Boston-based startup LevelUp last year for $390 million to integrate more of its orders into restaurant sales systems, speed up payments and offer delivery through a restaurant’s own website.
Grubhub in the past year also started giving restaurants more insights into customer behavior, including complaints and order requests that fall outside of operating hours, said Sam Hall, the company’s chief product officer.
Uber Technologies Inc. ’s Uber Eats business in June reached a deal with Olo to place orders more seamlessly in a restaurant’s cooking queue. The number of U.S. restaurants with delivery integrated into their operating software has grown to about half of those that offer the service from practically none in 2015, according to Technomic surveys.
“Having an order directly zapped into your system means less labor effort. That’s a huge leg up,” said Liz Meyerdirk, head of global business development for Uber Eats. She said the deal with Olo helped Uber Eats win a delivery contract with Checkers Drive-In Restaurants Inc. and an expanded partnership with the Subway sandwich chain.
A Checkers representative said the technology was a key element in helping its online business.
Postmates Inc., a food-delivery company that earlier this year filed paperwork for a public offering, said it is telling restaurants which of its shifts generate more delivery problems and how to run better online promotions. Order accuracy has since improved, chief operating officer Vivek Patel said.
Justin Rosenberg, founder of Philadelphia-based stir-fry and salad chain Honeygrow, recently struck a deal with Grubhub based on the company’s willingness to tailor marketing, data sharing and order-software integration to his company’s needs.
“We want delivery to be as frictionless as possible,” Mr. Rosenberg said.
By Heather Haddon at Wall StreetJournal
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