Restaurants Shrink as Food Delivery Apps Get More Popular (bloomberg.com)

People are still eating restaurant food -- they're just not doing it at restaurants as much. From a report: Delivery apps from DoorDash, Postmates, GrubHub and UberEats have made ordering in easier, and have changed the way food chains think about their business. The number of food delivery app downloads is up 380 percent compared with three years ago, according to market-data firm App Annie, and research firm Cowen and Co. predicts that U.S. restaurant delivery sales will rise an average of 12 percent a year to $76 billion in the next four years. At Firehouse, revenue has increased 7 percent this year, mainly from orders placed online and through delivery apps, Fox said. More than half of his sales are for food eaten elsewhere.

[...] Some new restaurant owners are skipping tables and chairs altogether and just leasing kitchen space to prepare food for couriers. Those are called cloud kitchens or virtual restaurants because they have no dining rooms or wait staff and sell their meals through the internet and mobile apps like DoorDash or UberEats. Mark Chase, the founder of Restaurant Real Estate Advisors, a consulting group that helps restaurant entrepreneurs find space and negotiate leases, said that the majority of his clients are interested in the kitchen-only business model. "There is a general scaling down on seating space and scaling up on kitchen space, as people just want to eat at home, on the couch," Chase said.

Comments

hidden behind the tech, restaurants suffer

[supernova87a]

I am no liberal sympathy-monger riding on the bandwagon of local / artisanal / anti-gentrification / etc that thinks that all technology is bad. But the issue of how local restaurants are surviving is one that has hit home more than others. Specifically, how a lot of small restaurants, "mom-and-pop" to shorthand it, are at the mercy of middlemen, essentially who are extracting the profit out of the industry.

Small restaurants have never been great at marketing, being super efficient in delivery, or getting rewarded with outsized profits for the service they provide, and now this layer of tech middlemen has come in to squeeze out the profit even more.

I read the story about how Doordash and their ilk (I forget the specific service mentioned in the story exactly, but similar ordering service) basically takes over a restaurant's phone number, publishes it and diverts and monitors their calls to make sure they're paying an agreed % cut of every order. Even if Doordash did essentially nothing value adding for that order. The customers don't know anything different -- they're just ordering from their favorite restaurant using a convenient method.

So basically the restaurant and its workers become a labor slave to Doordash because customer traffic has been channeled through Doordash, even though the restaurant has enough patrons to exist on its own. They pay a cut for people being able to press a button and have food appear, rather than walk down to the restaurant, or call the legit restaurant's phone number.

So, how is the small guy ever to overcome the power of tech companies in a situation like this? Or how can you ever turn a profit as a small company when tech talent is out there to squeeze you as soon as you do?

Pretty soon, I could imagine that we'll just become a country of order takers from some tech overlords, and be dominated by flavorless food dictated by corporate efficiency recipes. It's a little disturbing.

Re:hidden behind the tech, restaurants suffer

[Cajun Hell]

"mom-and-pop" to shorthand it, are at the mercy of middlemen, essentially who are extracting the profit out of the industry.

Something is better than nothing. When my wife and I have had a few beers and bong hits, we simply are not going out, period. It isn't going to happen. No way. Your sit-down restaurant's best case scenario is $0.00. Zip, nothing, nada. Restaurant loses, unconditionally.

But if neither of us feel like cooking, you still might get a sale. However many pennies profit that middleman got you, was more profit than you were going to get. Restaurant wins.

And OMG, these days we can finally have something other than pizza. So we win too.

how can you ever turn a profit as a small company when tech talent is out there to squeeze you as soon as you do?

Sell food. Grubhub doesn't have food. Uber doesn't have food.

I could imagine that we'll just become a country of order takers .. dominated by flavorless food dictated by corporate efficiency recipes

McDonalds and Walmart convenience meals have been a thing for decades. Yes, some customers are into it, but some aren't.

Re:That would be relative

[jellomizer]

It is also not a good idea to base a business on a lowering trend as well.

However it is difficult to determine what is a fad and what is a trend.

A lot of people didn't get Color TV's because they though it was Fad, but it was a trend.
A lot of people bought 3d TV's because they thought it was trend, but it was a Fad.

Mail Order was a fad which got killed by Box Stores, while Online Shopping (nearly the same thing) is a trend which is killing Box Stores.

The big Grocery Stores took over the Mom and Pop corner shop, but didn't do much against the convince stores.

Now Restaurants are pushing the idea of the experience, while Millennials just want the food. Especially for the low - mid range restaurants (Think many of the chain restaurants). Where the food quality is OK, but not worth the hassle of going to a restaurant, waiting for your turn, getting bugged by waiters. Having to sit and wait for your food, be sure you behave so you don't get kicked out...
Now this could just be a fad, as Millennial get older and more mature, will want to go for more of the experience. Or it could just be a trend, of wanting the restaurant food, at the home experience. Where you can just be relaxed.