Doordash, Uber Eats, Grubhub and other food delivery services saw a sudden spike in usage when COVID hit. In-person dining wasn’t an option, and the fear of the outside world led to a lot of people ordering to-go. Food delivery services continue to be popular today, but will their prevalence in the market be sustainable?
It is very convenient to have your food delivered to you, especially now that you are free from the reigns of Jimmy Johns and various pizza chains. Naturally, people are drawn to the convenience of delivered food and are willing to pay the upcharge for it. While Doordash may not be as popular as it was during the peak of the pandemic, it is still garnering a lot of business. The pandemic might have opened people’s eyes to the availability of such services.
This past year, I actually worked as a Doordash driver. I’ve experienced the app from both ends of the spectrum. As a customer, the price displayed after everything is tallied up gives me a small heart attack. As a driver, the small amount of money I would make per order was disheartening. The minimum amount you can make on an order is $3 base pay, it took me on average around thirty minutes to complete an order, so if nobody tipped me I would make less than minimum wage.
As a customer, the high price point deters me from wanting to shell out a few more dollars for a tip, but it is so essential for the sustainability of the company. If these food delivery services did not have drivers, they would not have a business.
Doordash at least recognized this possible occurrence, so they offered promotions to incentivize drivers to work as much as possible. If I worked during dinner rushes they would add one or two dollars to each of my orders, and if I completed a certain amount of deliveries over the course of a few days they would provide me with a bonus of a hundred dollars. The only problem is, you must be able to work during these times to make that decent amount of money.
Food delivery services have seemingly constructed a sustainable market of consumers. Workers are not paid amazingly, but Doordash does provide opportunities for them to make up for any lost tips from their high service fees. However, I would not say that food delivery services will last forever. I think they will eventually be driven from the market in the same manner that Netflix is.
At first, Netflix entered the streaming market with no competition, and a lot of networks sold them their shows and movies. After seeing the amount of success Netflix had, other networks began making their own streaming platforms (Paramount+, Peacock) after pulling their content from other platforms to profit privately. Netflix must now increasingly rely on its original content to attract subscribers.
Chick-fil-a, McDonald’s, Taco Bell and many others have caught a whiff of food delivery sales and are testing delivery services right now, but at a more affordable rate. Unless Doordash and the others can make their own restaurants, they may be run out of the market.
