Mobile Payments Based Food Delivery Market Experiences Ups and Downs

January 24, 2019         By: Steven Anderson

We’re already off to a bang-up year when it comes to food delivery services. In literally the same day, news arrived about Starbucks stepping up its delivery options and one entire firm exiting the market altogether. It’s starting to look like a maturing market, and that means big ups and downs alike ahead.

First, Starbucks added six more cities to its delivery radius thanks to a connection with Uber Eats. Over the next few weeks, some surprising overlooked locations will add the service to their lineup, including Washington DC, Boston, Chicago, San Francisco, New York and Los Angeles. Back last year, testing began in Miami, and the service proved to have “strong demand” behind it, including a wide range of customers who came back on a daily basis. San Francisco will be first to land the service, with the rest of the major cities following suit in a few weeks.

Second, Munchery, an on-demand delivery service, folded up. Given that, back last May, the company laid off just shy of a third of its workforce, the ultimate shutdown didn’t come as that big a shock. Munchery pulled a reverse Starbucks, pulling out of New York, Los Angeles and Seattle to focus on San Francisco in a bid to become profitable. Yet with reports that Munchery tried several different versions of its operations, and wasted an average of 16 percent of the food involved, it’s clear that Munchery couldn’t make the leap.

There are several such firms which shut down in recent days. Names like Doughbies, Josephine, Maple and Sprig never really became household names, but all of these actually shut down in recent months. This is odd, especially given that the market should be welcoming this service with open arms. Who doesn’t like the thought of having food from almost any restaurant brought to their homes for a small surcharge? Maybe it speaks to a greater economic weakness than expected; even that small surcharge is a bridge too far for some homes.

Still, in the end, it’s clear something’s not working the way it should. Convenience is a major concern for a lot of users out there, and Starbucks’ service shows that this concept can work if it’s done right. So what’s going on in the rest of this market?