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Supply Chain Graphic of Week: Rapid Rise of Delivered Meals

 

Delivery Costs can Wipe Out Profits, but Restaurants have to Chance eCommerce Growth

 

March 14, 2019

 

Delivering restaurant meals is an expensive proposition, as SCDigest reported earlier this week (see Cheap Deliveries Very Costly to Restaurants, Grocers).

 

Cost elements include: special meal packaging and effort, driver time, car expenses, etc. Plus, time is of the essense, so consumers get a fresh meal.

 

While these costs - rarely fully captured in delivery fees - eat into margins, and may wipe out profits altogether for smaller orders - restuarants can't afford to miss the ecommerce wave and perhaps put themselves out of business in the process.

 

That wave is well captured in the graphic below, published by the Wall Street Journal based on data from financial firm William Baird:

 

 

Source: Wall Street Journal

 

As can be seen, growth for meal delivery is strong, expected to rise from about 7.5% of total US restaurant sales last year to over 10% by 2022, an increase of some 33%.

 

Interestingly, the share of third-party meal delivery services (GrubHub, DoorDash, Uber Eats, etc.) is rising versus restaurents trying to perform the delivery service themselves, as Panera Bread is doing.

 

Under those third-party services, consumers order from on-line menus on the delivery firm's web or mobile site, and the service then takes a share of the check - allowing them to subsidize the cost of delivery.

 

Any Feedback on our Supply Chain Graphic of the Week? Let us know your thoughts at the Feedback section below.

 

Your Comments/Feedback

 


 
 
 
 
 

Cheap Deliveries Very Costly to Restaurants, Grocers

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