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The food delivery space is quietly being disrupted by technology and voice

Really, it’s only been about 15 years since all this started and many actually believe online ordering and particularly delivery, is still an immature industry. But, it is also maturing quickly and change is imminent. Any pop-up industry becomes the driving force for how a $863 billion industry works is maturing. It is transformative with 1 million different opinions and I certainly have my opinion. First, voice is not a feature unless it’s included as part of a core product that can work without it. Features generally can’t stand on their own. By definition, A product feature is a slice of business functionality that has a corresponding benefit or set of benefits for that product’s end user. Voice applications don’t need a portal to operate. Moreover, if the voice or conversational commerce product is really a voice-enabled restaurant marketplace, and it offers the user a easy, multimodal experience, then it’s clearly not a just a feature, it’s a stand alone, disruptive, and competitive product with far greater reach that leverages the current infrastructure. This means far greater profitability faster with less investment. 

Delivery and Fees. The current order and delivery fees that portals charge restaurants is  unsustainable. It’s already starting to show signs of a collapse, with at least giant brands like McDonald’s negotiating better deals. These service fees have no where to go but down, along with their valuations. But I also believe their business models will likely morph into a major competitive threat to restaurants by investing in their own virtual (Dark/Ghost) restaurants for delivery only, regaining those reduced fees. They already believe restaurants are really just mini on-demand food manufacturing plants that produce a product their customers want.

Operators are starting to find an alternative. There are plenty of local and regional upstarts (eg: Relay and Habitat to name two) that offer operators a more affordable solution. Third-party, order origination platforms and portals, like Orderscape, have a choice of where to send the order for processing and integration to the POS, and who gets to delivery it. My prediction is that beginning in 2020, the over-capitalized giant portals will have pissed off enough restaurant operators that the upstarts will organize their own independent driver marketplace as a competitive threat to the current group of three. Then, operators will be able to negotiate better terms and delivery as a channel will actually start to make sense for them. I believe the tech-enabled, AI supported universal driver marketplace will be a great solution to a lot of pain, where customers, restaurants and drivers all benefit mutually. 

Online Ordering Platforms. Middleware software vendors that currently have a lock on the branded food ordering business as SaaS, particularly those who have integrations with a wide array of POS manufacturers, will start to struggle, as consumers can order from any number of channels including voice portals like Orderscape, that can easily and seamlessly send the food order to the POS. The customer doesn’t care. They just want a good user experience and their food as soon as they can get it. E-POS vendors know this and universal API vendors, while playing a role here today to enable access to POS by third-parties, will also see their opportunity begin to collapse. Third-parties like Orderscape won’t need to use a conduit like Grubhub or Olo to get an order from buyer to the restaurant POS. They can just go direct. Or, agree to pay a small revenue share with the portals to access their pipe, and restaurant menus, because the brand tells them too.

Third-Parties. New connected and integrated third-party commerce Channels are a boon to the restaurant industry. They charge less than the big three portals and many are willing to address the other elephant in the room – customer data. Brands want these data but the Portals won’t share. It’s their customer remember? And, the restaurants are just product.

Take Orderscape as a multimodal third-party use case: Orderscape operates independently (a) as a B2B Software as a Service offering operators custom branded conversational commerce Skills and Actions on Amazon Alexa and Google Assistant (“Alexa, open Bills Deli”) and also (b) operates independently as a B2C portal with billions of order access points multiple gateways to tens of thousands of restaurants and millions of menu items already available in all 50 states. Restaurants are charged 7% (instead of 25%+). Delivery is negotiated separately, because Orderscape offers demand generation only. But, it can integrate with a growing number of regional delivery services and soon, the universal driver network. Voice may look like a feature of a portal if the voice marketplace uses the portal menus. But, Orderscape is an independent third-party portal, offer a multimodal (voice and text on voice first and mobile) experience on far greater access points than the three giant portals combined. 

Delivery Drivers. Drivers have no loyalty to UberEats, Doordash or Grubhub, or any other logistics company. If a driver gets a ping to deliver something originated on Orderscape in their area and can make $3.25 in 15 min, do you really think they won’t take the order just because they are loyal to Doordash? Hell no. Drivers are accessible by any restaurant. Jimmy John’s employs 2,800 of them and Panera, what, 10,000? Portals do not have a lock on delivery. It just looks that way. And, they tap into local and regional driver networks too. It’s anyone’s game and I believe an independent confederacy of drivers will be the back-bone of the Driver Marketplace that any third-party and any restaurant can access. Then, maybe even UberEats will make money by being part of the Marketplace. According to their S1 filing, UberEats lose $0.51 per deliver but makes money with their on-demand commissions. 

While it may be a least partially true consumers don’t switch portals they also don’t have any real loyalty to any portal. And, consumers really don’t care which delivery service brings their dinner. They’re thinking restaurant, and really, food the crave, because restaurant loyalty is waining too. They just want their meal ASAP and in good shape. If newer third party portals – multimodal restaurant marketplaces like Orderscape – maybe a better or easier user experience with access to as many restaurants as the portals do.

Operators want more sales, cost reductions, more customer data, access to a driver marketplace and better terms so they can actually make money on delivery sales. Then the restaurants will still get the order but pay less, the customer get their food fast in a competitive bid and driver rated marketplace, and the big three will stop considering voice and third-parties as a “feature” and a “necessary evil”.

The biggest threat here is that restaurants will be competing with extremely well-funded, smart, aggressive, technology and data companies that have access to millions of customers. But, if I’m right, and there is a (a) large indy AI supported driver marketplace that integrates with any third-party sales channel, and (b) integration with middleware software companies is unnecessary to access the POS, then third-parties will thrive, restaurant margins will improve and the grip the Portals currently have today will be gone.

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Michael L. Atkinson

Michael L. Atkinson

CEO & Founder, Orderscape. Restaurant operator, technology visionary, investor, restaurant technology advisor and corporate development executive.

Michael L. AtkinsonThe food delivery space is quietly being disrupted by technology and voice

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