Instead of bowing out under pressure from national competition, local food delivery services in smaller markets across the U.S. are seeing sales lifts and renewed restaurant partnerships as Grubhub and Uber Eats show up on their scene.
— Erika Adams
When Sonya Ward left her part-time job as a blackjack dealer at the Hollywood Casino in Toledo, Ohio, she didn’t know that restaurant delivery entrepreneurship would be her next gig. She only knew that her son was hungry, she had just had surgery, and there were no food delivery options — outside of pizza — anywhere nearby.
The gap needed to be filled, and now, four years later, Ward is the owner of her own restaurant delivery company, Dine In Delivery Bedford – Toledo (D.I.D. for short). The company services a range of towns in the upper northeast corner of Ohio and across the border into Michigan, and currently has partnerships with 11 restaurants.
Ward went into the business knowing that, on a national scale, the competition was extreme. She recalled attending a restaurant delivery conference in Orlando two years ago, where conversation around Grubhub and Uber Eats’ market domination hung heavy over smaller delivery businesses.
“I was scared to death of those guys,” Ward told Skift Table. “I was petrified. It felt like, ‘Oh, here I go, I barely got off the ground and I’m over.’” But, instead of sinking, Ward’s sales have shot up by 30 percent since Uber Eats entered the Toledo market five months ago. On top of that, several restaurants have recently approached her about expansion and catering opportunities.
Ward attributes the rise to the advertising that Uber Eats has spent on her market, raising awareness for food delivery in general. “We’re getting a lot more popular,” Ward said. “And Uber Eats might be the one I should thank for that.”
Local food delivery companies that operate in smaller, more rural markets shared similar, cautiously optimistic sentiments about their competition. Uber Eats and Grubhub may have the funding and the reach, but smaller food delivery services are counting on more personalized service, stronger restaurant relationships, and a wave of welcome food delivery marketing campaigns to help them not just hang on, but to gain boosts in business as the delivery giants sweep through their regions.
Joshua Railton joined DineIn as a delivery driver in 1998. DineIn, a delivery service located in a suburb of South Bend, Indiana, was five years old at the time and had just launched a company website. (Vestiges of the pre-Internet food delivery era still linger at the company: the printed delivery menu book is no longer around, but DineIn still receives 15 percent of its delivery orders by phone.) Railton now owns the company, which partners with 85 restaurants and covers a delivery area of approximately 260 square miles in northern Indiana.
Uber Eats, DoorDash, and now Grubhub have all recently entered DineIn’s area. “It’s definitely a new thing for us to have national companies playing in the same market,” Railton said. “But we’re finding that we have good relationships with our restaurants, we have the proven longevity, and we’re profitable, so we’ve proven that our business model works.”
Grubhub’s Local Partnerships
DineIn actually partnered with Grubhub for four years, from 2013 to 2017, before Grubhub began expanding into new markets on its own. Users in South Bend could download the Grubhub app, put in delivery orders, and DineIn would fulfill those orders.
However, problems with the partnership began to mount. Grubhub was slow to update local restaurant pages with menu changes, and when Railton asked for pages to be taken offline until menu items were updated, Grubhub would update the restaurant’s page to say that it had closed instead. The misinformation created headaches for both the customer and the restaurant, and DineIn’s ability to keep good relationships with its restaurants took precedence.
Grubhub maintains that the company updates restaurant information as quickly as possible. “When there are pending menu updates to a restaurant’s Grubhub listing, we temporarily show the restaurant as closed until the matter is resolved,” a company spokesperson said in an email. “We also offer a self-service portal through our Grubhub for Restaurants technology that gives restaurants and delivery company partners control over menus, which reduces back and forth about updates.” (Railton noted that, at least from the delivery side, the tech was often buggy and required more time and energy than his staff could reasonably devote to it.)
Competition Heats Up
In November 2017, Railton broke off the Grubhub partnership. Three months later, DineIn restaurant partners received letters from Grubhub saying that it had been the one to end the partnership with DineIn. Now that Grubhub was entering the same market independently, it was coming back to those restaurants, urging them to sign up directly with Grubhub and citing sales figures generated from the DineIn partnership to bolster the proposition. In at least one case, Grubhub cited sales figures from December 2017, a month after DineIn ended the partnership.
“It’s common practice to reach out to local restaurants as we expand into new markets with our Grubhub delivery network of drivers, but we do not contact restaurants that work with our restaurant delivery company partners unless that partnership with Grubhub has ended,” the Grubhub spokesperson said. “We want to build a trusting relationship with restaurants from day one, and the language cited differs from how we recommend our employees communicate with restaurant partners.”
Grubhub entered into a number of these partnerships as a growth mechanism before it doubled down on its own expansion efforts. The company declined to share the number of partnerships it held with Skift Table, but there are still some partnerships in operation. The company has confirmed that it has moved away from these partnerships in favor of its own expansion efforts, which focuses heavily on chain partnerships (preferably exclusive ones) that offer more reach in many markets across the U.S.
Looking to Scale
Dinner Delivered, based in Chattanooga, Tennessee, broke off its own partnership with Grubhub two years ago. Aaron Maynard, Dinner Delivered’s general manager, has watched Uber Eats and Waitr enter his area within the past two months, and Grubhub just set up shop as well. However, Dinner Delivered, which covers 1,200 square miles and works with 300 restaurants, logged its second busiest day as a company after the competition moved in.
“We thought they would take a little bit of the market share but it really hasn’t affected our numbers all that much,” Maynard said. He was careful to stipulate that it was still too early to say that there wouldn’t be any sales impact overall, but the initial reports have been encouraging.
Dinner Delivered does, on average, between 2,600 and 2,700 deliveries per week and it has multiple offices across the Tennessee-Georgia region. It’s a large operation, and even as it continues to invest in the things that set it apart (the main office in Chattanooga, the vast array of food handling equipment), Dinner Delivered did stop accepting cash in some areas, and it no longer offers drinks and utensil packs for sale in drivers’ cars. There are some aspects of the national food delivery business model that make a lot of sense at a high volume, and Maynard is continually weighing the balance of scale and authenticity as the business expands.
“I don’t want to say if you can’t beat them, join them, but at some point, it’s not worth as much to have [all those add-ons] as it is to be able to reach more people and do more business,” Maynard said.
Acquisitions Aren’t off the Table
Food delivery is a huge growth market, and while the largest players fight for chain partnerships first and foremost, there are others in the space who are rapidly expanding through local delivery acquisition. Bite Squad, a food delivery startup based in Minneapolis, bought 17 smaller, regional delivery services last year and will continue to consider that strategy going forward.
“When we’re interested in a market, we are going to look at all options to enter that market,” Bite Squad’s chief marketing officer Craig Key told Skift Table. “Sometimes that means an organic launch into the market, and sometimes that means acquiring another company. All of those options are on the table.”
None of the local delivery services that I spoke with said outright that an acquisition was on the table. “If someone says, hey, here’s 10 million dollars, it’s hard to take that off the table,” Mike Bolduc, the owner of Portland, Maine’s 2DineIn, joked. “But it’s not really something that we’d entertain.” However, the way that the field is structured right now makes it ripe for consolidation. (Just a month ago, Recode reported that Postmates considered both a merger with DoorDash or a possible sale to Grubhub.)
In the immediate future, local delivery services aren’t dropping like flies. They are shoring up restaurant relationships, leaning on deep connections in their communities, and riding the sales increases that come with the free wave of advertising and heightened visibility around food delivery rolling in alongside the national competition.