What your RDS can learn from the Big 3—and why profitability is more accessible than you think.
At this point, it seems to be fairly common knowledge that the big food delivery companies still aren’t profitable. Some may find this baffling, given the fact that DoorDash and UberEats are both approaching ten years in business.
However, the food delivery business may be turning a corner. According to Quartz, in 2022, “Uber reported it was cash-flow positive last quarter for the first time in its 13 years of operation.” Of course, that’s Uber as a whole, not specifically its food delivery arm, UberEats. But this may be a bellwether for restaurant delivery as a whole.
As we’ve discussed before, there are a few key reasons why the Big 3 have struggled to achieve profitability. But today, we want to talk about what these businesses have done right—and what your RDS can learn from them.
Here are the Big 3’s smartest strategies for growth and—eventually—profitability:
DoorDash focused on suburban markets.
UberEats may be a close second, but DoorDash is the true leader of restaurant delivery in the United States. Of course, there are probably many reasons for this. But much of DoorDash’s status as top dog is the result of an early strategic move.
DoorDash was the first of the big restaurant delivery businesses to start investing heavily in suburban markets. That’s because, on average, suburban delivery customers place larger orders than their urban or rural counterparts. DoorDash recognized this early on and made moves to become the household name for restaurant delivery in the ‘burbs. According to Quartz, “DoorDash’s share in US suburban markets was estimated at 58% in 2020.”
What your RDS can learn from this: It’s simple. Figure out where your big orders are coming from, then figure out how to grow your audience there. Big orders are more profitable for you, plus they mean bigger tips, which will keep your drivers happy.
Uber leveraged its existing assets.
Uber’s rideshare service has been around since 2009 and started experimenting with restaurant delivery in 2015. When the COVID-19 pandemic began in 2020, the company saw a dramatic drop in demand for rides. This could have been a disaster for the business and its many drivers.
But Uber had an alternative revenue source in its back pocket: UberEats. Many of the company’s existing drivers simply started delivering food rather than people. As a result, both Uber and its drivers were able to keep making money until rideshares picked up again.
What your RDS can learn from this: It’s not quite as simple as copying Uber’s homework on this one. But you can learn from its core principle: What else can you do with the assets you already have?
Your drivers already deliver meals to individual people and families. Could they deliver team lunches to offices? What about catering orders? Groceries? Flowers? Don’t limit yourself to one-off meals.
Both Uber and DoorDash got smarter about routing, batching, and efficiency.
In the words of Uber’s CFO, “the cost per transaction is just improving.” This is because the big guys keep getting better at making their routes more efficient and batching their orders. Less time is wasted, and every driver can complete more orders in less time. As a result, the business keeps getting more and more profitable.
What your RDS can learn from this: There’s no secret here. Here’s what one expert told Quartz: “The thing about these companies is they do not have any kind of technological base that gives them a big advantage over competitors. It’s just their size.” In other words, your RDS can leverage the exact same technology as DoorDash, UberEats, and the other major players.
DataDreamers is a restaurant delivery software that uses AI and other tools to match the routing technology of the Big 3. For a monthly subscription and a flat fee per order, that technology is yours. What’s more, DataDreamers is packed with other features to ensure a great experience for your customers and your drivers.
At the end of the day, the Big 3 don’t have access to any special technology. They’re not necessarily offering better service. They’re just big. And because they spend so much money on advertising, their size isn’t even translating to profitability.
If you can win over some loyal customers and keep your spending in check, you can avoid their troubles. Your RDS can be truly profitable.
To learn more about DataDreamers, talk to a member of our team >