business news in context, analysis with attitude

Fast Company has a story about how, while three companies - DoorDash, Uber Eats, and Grubhub - dominate on-demand restaurant delivery, there are more than 500 smaller competitors all over the country.  They have names like GrubSouth in Alabama, Meals Now in Arkansas, Phoodiis in Tennessee, and Takeout Central in North Carolina, and what they have in common is the challenge of gaining name recognition and market share in an environment where the big three can suck up all the oxygen.

But now, the story says, "these companies are uniting into a nationwide effort called LocalDelivery, with iPhone and Android apps and a website that provide national coverage, providing an experience more like that of meal delivery’s giants. When users open the app or go to the site, they’ll be paired with the nearest delivery service, or services."

Fast Company notes that the program is being spearheaded by "the Restaurant Marketing and Delivery Association (RMDA), a trade group of about 550 local food delivery companies in the U.S. that was founded in 1990, when hungry people ordered meals via landline phone, not an app. Together, these companies do about $550 million in business annually."

The story notes that "local providers stake the moral high ground in the food delivery wars. In addition to keeping money in the community, they claim to offer better terms for restaurants. Meals Now, for instance, charges restaurants just a 10% fee on the cost of the order. Phoodiis charges 15%.

"If you order from Grubhub’s app or website, the restaurant will pay a marketing fee of about 5 to 15%, plus a delivery fee of 10%, says the company. So, the hit could potentially be higher. DoorDash and Uber each have tiered programs for restaurants that start at 15%."

KC's View:

One advantage that you'd think these independents would have compared to the big guys is that they are loess likely to embark upon strategies that would bring them into competition with their clients.  That alone would be enough for me, if I were a restaurateur, to give the independents preferred placement.