In a few months it is 2 years ago I left mighty JUST EAT and the online takeaway industry. I have not spend much time on the industry since I left, it’s important for an old CEO to let his old company move on. But now it is a while ago I left, and I have been thinking a bit on, where this industry is heading.
In some ways a lot has happened in the industry, i.e. more consolidation, a couple of impressive IPO’s and continued uptake of mobile usage. In other ways, the industry is very much it’s own self, i.e. same business model, same service and same issues scaling such a market place. It is therefore relevant to think about, what is the next big thing that can really disrupt this industry in the next 5-7 years. And it’s not mobile, because mobile already happened and is just fueling more growth for everyone now that all the big players have managed to make mobile a core part of their product road map and service offering. It’s the same service wrapped in a more accessible format. Great, will make penetration go faster and longer, but not upsetting anyone except those smaller players that didn’t adopt.
There are a couple of other areas where I think disruption could come from, and one of them I have been talking about at such an early stage, that most of my old colleagues believed I was joking or just mad. It’s distribution – the logistics of getting the food from the restaurant to the consumer. As anyone involved in the takeaway trade will know, the main operational hassle of running an online takeaway market place is not cooking food, running the website or running marketing campaigns. The hassle is to make all the moving parts work together, and the cog in the wheel that causes most trouble is distribution.
The big chains have their own logistics departments, that often does a very decent job, but in most countries the sector is completely dominated by small, independent takeaway restaurants that are struggling to operate small, sub-scale and inefficient delivery operations without technology, focus or professional management. This causes lots of pain for the consumers, and their main complaints are mostly related to exactly delivery, e.g. “where is my food?”. Too often great food entrepreneurs/restaurant owners get into trouble because of the logistics, and that also mean that too many restaurant owners decide not to do delivery food at all. In some cases, this has been spotted as a business opportunity entrepreneurs, who have build RDS’s (Restaurant Delivery Services) who have slowly build out to some scale, but none has become really big.
JUST EAT has for quite a few years operated a RDS in Denmark. I used to argue, that this operation was not core to the JUST EAT Group strategy at the current time, but that it could be in the long run. The Danish example should learn the company all the tricks on how to run such an operation, what technologies could drive efficiencies, what management processes would support scaling, etc. The idea was, that the day a market place had received lots of scale in a country (like JUST EAT did already a few years ago in Denmark), then the time was to take the service to restaurants and consumers to the next level. Restaurants would love to get rid of the logistics challenge, and would get happier customers because a professional RDS would do better. The consumers would love to get a more consistent delivery. And on top of that, well-known technologies could be used to create much more transparency on the infamous question “where is my food”, since a technology based RDS would always know where what delivery vehicles were with what food to what customers, and this information would be available to all involved incl. the consumer. Most consumers are ok if there is some delay in delivering the food on a busy evening, but the lack of information on what level of delay is causing frustration. And adding lots of costs to the market place in terms of extra customer care calls, loss of customers, frustrated restaurant owners, etc.
So, my basic thinking is, that the combination of taking charge of logistics at scale + technology + integration with market place + professional management will create a much better experience for both restaurants, market place and consumers, and it would also drive more restaurants onto the market place, which again drives more scale, etc. Furthermore, this has to be taken into the perspective of companies like Über having insane valuations by disrupting local logistics with an innovative, crowd-sourced model. Imagine a company, that in the period from 16.00-21.00 had hundred of cars in a city like London busy deployed to deliver takeaway food in an efficient way, and then used the same cars as logistic assets for other stuff at other periods of the day – some cars could be owned by the company, other were crowd-sourced. It could be used as taxis (many taxi rides are single rides, so the classic delivery van would still be good for that), groceries (check out e.g. Hubbub), or maybe as part of the massive delivery infrastructure now being set up by the big e-commerce players like Amazon, Rakutan and eBay. Everybody in the now huge e-commerce space knows, that one of the key battle grounds in the future is physical distribution, and the online takeaway market places are very well positioned to build an infrastructure that has all kinds of synergies both with the existing core business as well as other even bigger industries thirsting to add logistics infrastructure. And if the online takeaway companies doesn’t build the infrastructure, then maybe Amazon is coming to their business from another angle – or maybe startups basing their RDS on technology, crowd-sourcing, professional management processes, etc., for example Index backed Deliveroo who are using some of these tools.
JUST EAT already has the skills and technology, so they already have a solid base if they pursue this vision. Apparently, Grubhub is testing how to build a delivery network in the USA, and there are rumours on other European players testing the waters as well. If the two big guys in the next couple of years decide to build out this part of their business to be part of their core, they have the scale, financial muscle and expertise to take the industry to the next level, and gain a competitive edge that will be much appreciated by restaurants and customers. My guess at least.
On top of this, I believe the longer term perspective (which is what really made people believe I was crazy back in 2009 – and probably also a bit in the years after) is that “delivery technologies” is changing. Google Cars to supplement delivery drivers and Amazon drones to deliver small packages is happening, and it is moving much faster than what most people realize. Yes, there are a few legal issues, etc., etc. (details, details!) but the technology is almost there today, and as (almost) always technology will prevail in the long run – and the forward looking and bold will reap the benefit.
Everything for those that are hungry and lazy!