Which food delivery apps are best in Springfield?

This is what makes apps like Uber Eats and DoorDash so popular — you can order from a list of restaurants in town that are still open, and the food is …

There are quite a few choices when it comes to fast food around campus. But restaurants like Burrito Bowl only stay open until 7:30 p.m. on most weekdays.

This is what makes apps like Uber Eats and DoorDash so popular — you can order from a list of restaurants in town that are still open, and the food is brought straight to your door.

But which apps do people in Springfield actually use?

Lauren Creek, freshman psychology major, said DoorDash works well with their customers, has the most options and has the most accurate service for their customers.

Creek said she uses it for convenience.

“I live on campus so cooking really isn’t an option,” Creek said. “I (also) hate losing my parking spot.”

Creek also suggests giving specific directions when navigating drivers to campus because they have difficulty finding specific residence halls.

Gaby Farabee, senior cell and molecular biology major, said the main difference in these apps is the restaurant choices — and even some overlap.

Farabee said she has used Uber Eats the most and likes to order food from Bairs about once every couple of weeks.

Megan Craven, senior international business major, said she prefers Uber Eats because she likes being able to see where her driver is in real time.

“I like the options that Uber Eats has and I’ve had cheaper delivery fees compared to GrubHub,” Craven said.

Some people have not had good experiences with these apps altogether.

Peyton Nordin, freshman, said Uber Eats and Postmates tend to mess up her order, GrubHub takes a long time and her food arrives cold from DoorDash.

Nordin said the best one to order from is Uber Eats because they have the best selection.

“I’ve also had issues with all of them not picking up my order but making me pay for it,” Nordin said.

Uber Eats’ delivery costs are between $3-$10 and delivery times are estimated at 30-40 minutes, according to their app.

Some restaurants available through Uber Eats include Sonic, McDonald’s and Fuddruckers.

DoorDash’s delivery costs are between $2 and $5, and delivery times are between 25-40 minutes.

Restaurants available through DoorDash include McAlister’s Deli, Moe’s Southwest Grill and Springfield Family Restaurant.

Restaurants available through Grubhub include Taco Bell, Bambino’s Cafe and Red Lobster.

So, is it worth it to drive for these apps?

Sophia Passantino, senior public relations major, said she enjoys driving for Postmates because she gets to choose when she wants to work.

Passantino also said Postmates offers “bonus” shifts during certain time periods so drivers can earn an additional $3 on top of the standard $4 per delivery.

Overall, there is no “one size fits all” delivery app for Springfield. It’s probably best to try these apps and decide which one is worth paying for.

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Behind DoorDash’s Zero-Dollar Delivery Subscription Service

Six months ago, to stay competitive, DoorDash launched its subscription service DashPass, which offers zero-dollar delivery for a monthly fee.
Posted onMarch 27, 2019

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Fees have long plagued meal delivery service users, and lowering or eliminating these costs has become a sticking point for players like Postmates and Seamless as they compete to gain and keep customers. As competition heats up, though, others like DoorDash are turning to subscription models and offering zero-dollar delivery options.

In order for delivery services to leverage subscriptions to keep their services competitive, they must offer models that benefit customers as well as restaurants and merchants, according to Jack Ruth, head of subscription for DoorDash’s subscription service, DashPass.

DoorDash’s main challenge has been building a loyal consumer base that regularly taps into its service, especially as it sought to enter a market that already featured established providers. To gain a robust user base and drive immediate daily usage, Ruth said DoorDash has married zero-dollar delivery, a vast selection of participating restaurants and low monthly prices.

“With DashPass, they know that every time they open the DoorDash app, they’re going to get a zero-dollar delivery,” Ruth said. “So, that combination of making a thing more affordable and more predictable was the best way we found to make this a daily habit.”

The service, which is available via mobile app for $9.99 per month, offers zero-dollar delivery from a broad selection of restaurants, and also comes with other perks. Ruth said DashPass users save an average of $4 every time they place an order through the service.

The Math Behind DoorDash’s Subscription Service

Building an economically viable subscription service presented a number of hurdles, however, and Ruth said it was tricky to make DashPass sustainable yet profitable.

“We spent about eight months testing DashPass to make sure this was a sustainable model,” he noted. “We wanted to make sure the economics did work, that we were profitable on every single delivery. What really makes the model work is that users are ordering so much more after they subscribe.”

DashPass users tend to order more items from a larger variety of restaurants rather than sticking to their favorites, Ruth explained. This further adds to the service’s profitability by driving customer retention and making the subscription partnership more profitable for restaurants.

Working with more restaurants also helps give DashPass an edge over similar programs in the delivery space, which are eager to capitalize on zero-dollar delivery options of their own. Rival firm Postmates, for example, is testing its Postmates Unlimited subscription program, which offers zero-dollar delivery on orders over $15.

DoorDash currently works with more than 310,000 stores across all 50 U.S. states. On the other hand, Postmates’ website claims it works with 350,000 restaurants, but is only available in select states. Ruth said this focus on availability has directly affected DashPass’ growth, with approximately 30,000 new users joining every week.

Subscriptions’ Future as Online Food Delivery Expands

Ruth said DoorDash plans to bring DashPass to all 50 states over the remainder of 2019, and its ultimate goal is to provide the service across all of its current markets. He said it’s also likely that subscriptions will become only more crucial to the company’s success as food delivery competition heats up.

“For a while, it was a question of if restaurants would offer takeout through third-party providers,” he explained. “Now it’s just a question of when.”

As more and more meal delivery platforms consider ditching their fees, subscriptions could be just the ticket to helping them expand their services and cater to more customers.

Grubhub Investors Shouldn’t Ignore DoorDash

… backers include SoftBank (NASDAQOTH:SFTBY), Sequoia Capital, and Singapore’s Temasek Holdings. Last year DoorDash claimed that its service …

Shares of Grubhub(NYSE:GRUB) plunged about 50% over the past six months due to concerns about the food delivery service’s decelerating growth, rising expenses, and market share losses to aggressive rivals like DoorDash and Uber Eats.

KeyBanc analyst Andy Hargreaves also recently warned that Grubhub’s “diner retention, initial diner spend, and peak diner spend all appear to be deteriorating, which suggests lifetime value in newer cohorts is declining.” Hargreaves also warns that Grubhub’s active dinner growth could decelerate significantly, and that DoorDash is “gaining significant share” in the market.

A DoorDash "Dasher" riding a delivery scooter.

Image source: DoorDash.

That dire warning caused Grubhub’s shares to tumble, and that pressure could persist unless it proves the bears wrong. Unfortunately, it could be tough for Grubhub to allay investors’ concerns about DoorDash, which is reportedly gearing up for an IPO.

How fast is DoorDash growing?

DoorDash was founded in 2013, and subsequently expanded to over 3,300 cities across the US. It was valued at $7.1 billion after its latest funding round, and its big backers include SoftBank (NASDAQOTH:SFTBY), Sequoia Capital, and Singapore’s Temasek Holdings. Last year DoorDash claimed that its service was used by 90% of the largest U.S. restaurants chains, including IHOP, Wendy‘s, and The Cheesecake Factory.

DoorDash charges customers service fees of $6 to $8 per order, along with a default “Dasher Tip” of 10% (which can be modified), and makes an average commission of 20% from restaurants. Grubhub lets restaurants set their own delivery fees, which generally range between $4 and $8, optional tips, and anaverage commission of 5% to 15% from restaurants.

DoorDash’s share of the U.S. third-party food delivery service market rose from 13% in Jan. 2017 to 31% in Jan. 2019 according to Second Measure. During the same period, Grubhub’s market share plunged from 87% to 43%. Uber Eats claimed 26% of the market in January.

Grubhub's mobile app.

Image source: Grubhub.

Unlike Grubhub, which grew its market share through acquisitions, most of DoorDash’s growth was organic. Its only major purchase was that of delivery and logistics start-up Rickshaw in late 2017. This means that DoorDash isn’t spending much money integrating smaller businesses or worrying if all of its subsidiaries are on the same page.

Doordash claims that it tripled its annual sales in 2018, but it hasn’t disclosed any exact sales or profit figures yet. Those figures will be revealed if DoorDash files for an IPO — which could enable it to compete much more aggressively against Grubhub.

Is Grubhub worried about DoorDash?

Grubhub’s long list of mergers and acquisitions include Seamless, MenuPages, Allmenus, DiningIn, Delivered Dish, LAbite, Eat24, and Tapingo. Those acquisitions boosted its top line growth, but they’re not preserving its overall market share. Over the past year, Grubhub’s growth in Daily Average Grubs (meals), gross food sales, active diners, and revenue all decelerated:

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Daily Average Grubs

34%

35%

35%

37%

19%*

Gross Food Sales

39%

39%

39%

40%

21%

Active Diners

77%

72%

70%

67%

22%

Revenue

49%

49%

51%

52%

40%

Year-over-year growth. Source: GrubHub quarterly reports. *22% excluding Eat24 from both periods.

During last quarter’s conference call, Grubhub CEO Matt Maloney didn’t mention DoorDash, and declared that the competition “really hasn’t slowed our growth” or increased its customer churn rate.

However, Grubhub’s slower growth in active diners indicates that it’s struggling to grow its customer base (and is possibly running out of smaller companies to acquire), and its forecast for 31% to 42% sales growth this year would represent a significant slowdown from its 47% growth in 2018.

Furthermore, Grubhub’s heavy spending on big marketing campaigns, acquisitions, partnerships, and the expansion of its logistics network caused its net income and EBITDA levels to plunge during the fourth quarter.

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

GAAP net income

293%

74%

104%

75%

(110%)

Non-GAAP net income

68%

88%

99%

72%

(47%)

Adjusted EBITDA

45%

51%

61%

41%

(26%)

YOY growth. Source: GrubHub quarterly reports.

Grubhub expects its EBITDA to rise just 1% to 3% this year, compared to 27% growth in 2018, so we should assume that tougher competition is forcing Grubhub to ramp up its spending to prevent further market share losses. However, the expansion of certain services, like loyalty and payment services, could also lock in its existing restaurants.

Will investors get a nasty surprise in May?

Grubhub’s stock tumbled after its fourth-quarter earnings in February, and it could disappoint investors again with its first-quarter report in May. Grubhub’s management is oddly dismissive of the competition, but investors should identify DoorDash as a disruptive threat that could steal away its customers and restaurants.

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In the delivery race, DoorDash and Uber Eats are charging hard

Most of the growth in third-party delivery over the past year has come from just two companies: DoorDash and Uber Eats. They’ve joined market leader …

the-bottom-line

Is third-party delivery becoming a three-company race?

It appears that way, at least for now.

Most of the growth in third-party delivery over the past year has come from just two companies: DoorDash and Uber Eats. They’ve joined market leader Grubhub to form what appears to be a “big three” in the delivery and online ordering business—though a fourth company, Postmates, is also growing.

Source: Technomic

If such trends continue, the result could have major implications for restaurant companies and especially smaller chains that might be forced to accept less favorable deals just to get in front of the providers’ customers.

“The real estate on the customers’ phones is limited,” said Nick Mazing, director of research for financial services firm Sentieo. “Will the land-grab only benefit the largest existing players, and then strategically disadvantage smaller brands who are now forced into a relationship with an order-and-delivery company just to be in front of customers?”

There’s no question that delivery is growing at a breakneck pace, as venture capital-backed providers quickly expand, and restaurant companies scramble to add the service with a belief that more customers will want their food that way.

But much of the recent growth has been concentrated with Uber Eats and DoorDash.

According to Technomic, Grubhub was the dominant delivery provider in the fourth quarter of 2017, accounting for $1.1 billion of the $1.9 billion market—or nearly 60% of the sales generated by the five largest companies, which also include Postmates and Caviar.

Sales had increased 45% by the fourth quarter of 2018—when delivery providers generated $2.8 billion in revenue.

Uber Eats and DoorDash together combined for 82% of that growth. Their share of the revenues generated by the five largest players rose dramatically over the past year alone, from 30% of that market to 46%.

It’s easy to see why. Uber Eats’ growth has come largely thanks to its landmark 2017 deal with McDonald’s Corp. that today stands as one of the most important industry deals in recent years: It essentially put the delivery race into hyperdrive.

DoorDash, meanwhile, has aggressively inked deals with numerous companies such as Wendy’s, Dunkin’ Brands and Chipotle Mexican Grill and, backed by well over $1 billion in investment, has marketed those firms heavily while expanding into more markets.

Grubhub hasn’t exactly sat idly by and watched all of this happen. It had a landmark deal of its own with Yum Brands, which last year agreed to invest $200 million in the online ordering service. Grubhub is now providing delivery for Yum’s KFC and Taco Bell brands, which receive favorable delivery rates.

But restaurant companies might be ceding too much power over to the delivery providers.

Restaurant company executives clearly view delivery with a certain sense of priority—even though such orders still represent a tiny fraction of their overall business.

In general, restaurant companies rarely mention vendors in their earnings calls with investors.

According to a search of transcripts on Sentieo, mentions of DoorDash on company transcripts increased five times, from just 12 mentions in 2016 to 62 last year.

Uber Eats, which was created in 2016, saw an even bigger jump, from just four mentions that year to 62 in 2018, according to a search of Sentieo. Grubhub, the market leader, saw mentions increase from 13 to 63 over the same time period.

By contrast, we found few mentions of giant food distributor Sysco in earnings call transcripts.

Restaurant companies are giving delivery providers a lot of power—essentially handing the relationship with their customer over to an intermediary that might not have the chains’ best interests in mind. “No other vendor has that kind of power,” Mazing said. “Sysco can’t take the relationship. The payment processor can’t. So this is a new threat.”

To be sure, the delivery business is still quite early in its history. At just under $10 billion, the five largest providers wouldn’t even be a top-five restaurant chain, based on Technomic’s Top 500 Chain Restaurant Report.

In addition, these companies have to make a profit, something that has yet to happen. It’s still possible that the business can’t quite make it work.

But it’s clear that a certain segment of the population loves delivery, despite its cost. It’s also difficult for restaurant companies to start their own services and do so profitably.

The four largest players own the most popular food and drink mobile apps right now, setting up a future in which they are becoming the mobile marketplace of choice for food orders.

As such, the market is setting up to give major advantages to large chains that can negotiate better rates with these companies, leaving smaller companies with lower profits—or forcing them to merge with other smaller restaurant chains in a bid to improve their own negotiating leverage.

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Papa John’s serves up new digital delivery option

Papa John’s is partnering with DoorDash to obtain a bigger slice of the on-demand delivery market. The pizza chain is now offering digital order …

TECHNOLOGY

BY Dan BerthiaumeMarch 13, 2019

Papa John’s is partnering with DoorDash to obtain a bigger slice of the on-demand delivery market.

The pizza chain is now offering digital order delivery from DoorDash at more than 1,400 locations across the U.S. By working with on-demand delivery platforms like DoorDash, Papa John’s is attempting to reach out to new customer segments and expand its off-premise offerings through delivery and takeout.

“This partnership extends our continued commitment to meet customers wherever they are and provide simple, easy ordering for guests in addition to our own world-class Papa John’s mobile app,” said Anne Fischer, senior VP of customer experience, Papa John’s. “More than 60% of Papa John’s transactions occur online. With this in mind, we are dedicated to exceeding our customers’ expectations when it comes to ordering and delivery convenience.”

To celebrate the launch, participating Papa John’s stores will provide free delivery on any order more than $10 delivered through the DoorDash website or mobile app from March 15-17.

Other fast-food and quick-service retailers are also expanding their delivery options for digital orders in conjunction with third-party specialists. In February, Taco Bell made nationwide delivery available via online food delivery platform Grubhub. And in January, Starbucks initiated a program to expand its pilot of Starbucks Delivers, a digital delivery service offered in partnership with Uber Eats, to one-quarter of U.S. company-operated stores by spring.