With the news that Just Eat just beat out Uber to buy Grubhub, we at Highland Math figured we would focus this Insight on how external data in the food delivery industry can help grow efficiencies and drive new opportunities.
Overview of Market
According to data from Research and Markets, the global online food delivery services market is expected to grow from $107 billion in 2019 to 154 billion in 2023. The increase in the overall market will bring more restaurants into the space, more money flowing through delivery apps, and ultimately increased competition. In addition, the space will continue to innovate with more food options, faster delivery methods, and alternative business models like Cloud Kitchens – more on that to come. Ultimately, as the complexity rises in the industry, more and more data will be available. This data will be increasingly important to leverage to keep up with demand and competition in the industry.
The industry has a huge amount of competition and alternative options for consumers. In the same report by Research and Markets, they mention over 30 players in the space. Of course some of the largest in the US are Doordash, Uber eats, Grubhub / Just Eat, Postmates, and Seamless. One of the first ways external data in the food delivery industry can make an impact is helping these companies understand more about the purchasing decisions outside of their app. External purchase data from companies like Drop Technologies allow for these platforms to make these insights. As an example, how do my customers use my app with other delivery apps or services, and how do these decisions change by locations & customer demographics?
Additionally, they’ll be able to understand KPI’s relative to their competitors like average order value, order frequency, and more. At a higher level, they can understand customer wallet share or overall market share by certain customer attributes or location. Leverage this data to make targeted marketing campaigns or other strategic business decisions.
Are Cloud Kitchens the Future? QSR magazine asks as they speak to the benefit of these stripped down commercial cooking spaces. Usually located in a more remote location than your typical downtown dining spot, these online delivery hubs have no option to dine-in and therefore remove some of the more expensive parts of the restaurant industry. No hard costs from a storefront and branded materials (signs, menus, atmosphere) means that kitchens can quickly pivot their offerings. A Mexican restaurant on Friday can change into a Burger spot on Saturday. Similarly speaking, both can be operating at the same time in the same kitchen.
As the industry becomes more agile, the ability to leverage external data in the food delivery industry becomes increasingly more obtainable and valuable. External data like foot traffic, weather, and social media activity can all make an impact on business decisions. The data can optimize how and when to spend marketing dollars, what restaurant menu items promote that day, and more.
More Sources of Data
We already spoke to the potential that POS Systems have to grow revenue and supply external data for these players. It’s easy to envision the potential for Restaurant POS systems like Toast to help supply more external data to both restaurants and delivery services, helping them optimize their offerings. Toast could potentially take their order history, aggregate that to a Zip level to protect individual restaurants, and share that data out to business intelligence teams. These teams will be able to understand restaurant tastes and preferences, trends in the market, and more. Similarly, companies like Chowly, who power the integration between 3rd party delivery apps and POS systems, can take this a step further. With the ability to understand what orders are actually placed through these delivery apps, restaurants can tailor their offerings to what should be made available through delivery. Similarly, Cloud Kitchens can leverage this data to create offerings not yet available in the market.
New transportation methods for the delivery industry continue to gain traction. Companies like Uber are starting to test aerial drone delivery, and demand is increasing for ground delivery drones like Starship. It’s not hard to imagine a world where delivery apps are dealing with the supply and demand of numerous delivery channels. The ability to correctly decide between the number of drivers, aerial drones, ground drones, etc will become increasingly important. External data will play a huge role in the ability to make these decisions. Strong historical and forecast weather data from companies like Accuweather will allow players to understand how to best make these decisions. As an example, what was the optimal number of drones/drivers that would have minimized costs and delivery times the last time we had similar weather? Couple this with internal sales data to further optimize decisions. Similar analysis can be done with all different types of scenarios and datasets.
How we help
Highland Math helps businesses create revenue from their data. This means leveraging data to grow revenue internally and sharing that data to create a company “data dividend”. Read more about the differences between internal and external data monetization here. Similarly, we help companies manage the complexities of the external data ecosystem, helping them source external datasets to improve business processes.
Interested in monetizing your data? Contact us for more information.