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Five companies now control over 90% of the restaurant food delivery market

marketsaintefficient.substack.com

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Re: Five companies now control over 90% of the restaurant food delivery market

#11

Post by hn_throwaway_99 »

This is essentially the story of tech companies across nearly every industry where they have come to dominate.

This is one reason that I see most tech companies as essentially a net negative for society at large, as the goal is nearly always to control a large monopoly (and this is fully admitted by many tech leaders, e.g. Thiel) which the Internet makes possible. Pre-Internet you would see the same dynamics, but usually on a much smaller regional scale. I think that many of the growing problems in society today are fundamentally attributable to the extreme concentration of wealth and power that modern tech enables.

Re: Five companies now control over 90% of the restaurant food delivery market

#12

Post by Reason077 »

Less competition would certainly be bad for consumers and drivers. But has that actually happened here?

Doordash and Deliveroo do not operate in the same markets, so their merger would not reduce competition in any given market.

Prosus is a big conglomerate with its fingers in many different industries. But unless it starts buying multiple delivery companies that operate in the same markets, its acquisition of Just Eat also doesn’t appear to be reducing competition.

Re: Five companies now control over 90% of the restaurant food delivery market

#13

Post by andybak »

I still tend to discover a takeaway or restaurant and then figure out how to get them to deliver.

I've never not ordered from somewhere I was keen on based on their choice of delivery service.

If the consolidation results in price hikes and poor service, what's the lock-in? Why can't the takeaways just go rogue and offer independent deliveries?

Re: Five companies now control over 90% of the restaurant food delivery market

#15

Post by ks2048 »

ro_bit wrote: post #3

The title scared me a bit before I opened the article and realized it was talking about restaurant->consumer food delivery services. While that isn't great, I was initially thinking was that the companies that facilitate the food delivery supply chains around the world were massively consolidated (I sure hope they aren't)

I'm pretty sure the food supply sources are massively consolidated. I don't know about the delivery part or why that would matter more than the actual food production.

A quick search will lead to quotes like "Four companies now control more than half of the market in chicken processing (Tyson, JBS, Perdue, and Sanderson), close to 70 percent in pork (Smithfield, JBS, Tyson, and Hormel), and nearly three quarters in beef (JBS, Tyson, Cargill, and National Beef)"

Re: Five companies now control over 90% of the restaurant food delivery market

#16

Post by spacephysics »

andybak wrote: post #13

I still tend to discover a takeaway or restaurant and then figure out how to get them to deliver. I've never not ordered from somewhere I was keen on based on their choice of delivery service. If the consolidation results in price hikes and poor service, what's the lock-in? Why can't the takeaways just go rogue and offer independent deliveries?

Lots of their infrastructure for handling orders (iPads, software integration into their payment system) was done around Covid, and some have started to integrate in-person orders through the same “single unified system” creating a higher and higher cost to switch delivery systems.

AFAIK there’s no well-supported open source order/delivery management software. The companies that were ready during covid took all the extra, enormous demand for building delivery and order online systems built atop a typically antiquated order management system and have stuck around since

Sometimes i’ll get a cheaper delivery/food cost calling vs ordering online, but now some places are just raising their other prices to match online

Re: Five companies now control over 90% of the restaurant food delivery market

#17

Post by tptacek »

mattmaroon wrote: post #5
tptacek wrote: post #2

I would care a lot more if this market had even existed as recently as 15 years ago, but most of what this article is making a case for is that the next 5 years in this space are almost completely unpredictable.

And the alternative to restaurant delivery service is really the way we get the other 98% of our food. Anything I can ignore without being at some sort of disadvantage I don’t really get worked up about consolidation. I wish we had more than 3 cell phone networks, this could all be one and I’ll just drive to the restaurant.

There was a discourse prior to the last election about how cost of living was out of control based on people sharing delivery bills from their "burrito taxi". I do get that this article isn't "about" that discourse, it's about an investment thesis, but my real point is just: there is no reason to believe any part of this market has settled to the point where you could make reliable predictions. Everything is very new.

Re: Five companies now control over 90% of the restaurant food delivery market

#18

Post by Reason077 »

ro_bit wrote: post #3

The title scared me a bit before I opened the article and realized it was talking about restaurant->consumer food delivery services. While that isn't great, I was initially thinking was that the companies that facilitate the food delivery supply chains around the world were massively consolidated (I sure hope they aren't)

The food service industry certainly has some major global players too. Names like Bidfood, Sysco, PFG, etc. In some cases, these same companies cater/supply everything from prison, school, and hospital kitchens through to fancy airline lounges and high-end restaurants!

Re: Five companies now control over 90% of the restaurant food delivery market

#19

Post by morsch »

tptacek wrote: post #2

I would care a lot more if this market had even existed as recently as 15 years ago, but most of what this article is making a case for is that the next 5 years in this space are almost completely unpredictable.

I don't understand, are you saying the market was so small that it might as well not have existed? I don't have the impression that it's gotten magnitudes bigger here in Germany, maybe in China it did (what hasn't), in the US...? People just use the web instead of using a phone. AT&T didn't charge a commission.

Re: Five companies now control over 90% of the restaurant food delivery market

#20

Post by JumpCrisscross »

hn_throwaway_99 wrote: post #11

This is essentially the story of tech companies across nearly every industry where they have come to dominate. This is one reason that I see most tech companies as essentially a net negative for society at large, as the goal is nearly always to control a large monopoly (and this is fully admitted by many tech leaders, e.g. Thiel) which the Internet makes possible. Pre-Internet you would see the same dynamics, but usu…

It’s the story of most mature industries. Food delivery also remains cutthroat enough that this is a strange place to launch this complaint from.
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