Ruthlessly competitive and exploding in popularity, the food-delivery app market is a fascinating landscape of high-stakes corporate combat. Their rising popularity assures the combatants will be bigger players in business travel in 2020. The nature of their fight, however, isn’t quite so clear.
Far more clear is the impact these companies are having on dining experiences. Millions of users throughout the world in the past few years have begun to rely on these services as part of their dining routines. And they’re growing rapidly: Uber Eats’ 2019 revenue through September increased 74 percent year over year to nearly $1.8 billion, for example. Grubhub’s 2019 revenue through September increased 35 percent to nearly $971 million.
Those two services, along with DoorDash and Postmates, comprise the vast majority of the U.S. delivery-app competitive set. They’re quite competitive. According to a report from data analysis firm Second Measure, DoorDash was responsible for 37 percent of November 2019 of such U.S. food deliveries, with GrubHub at 30 percent, Uber Eats at 20 percent (though Second Measure warns that figure could be low) and Postmates at 10 percent.
In a time when room-service meal availability from hotel restaurants is waning and late-night searches for a bite might not be advisable, how might the business travel market be positioned in the food-delivery app war? Recall that the incorporation of sharing-economy stalwarts like Uber, Lyft and Airbnb into the business travel industry wasn’t a top-down introduction from buyers or executives, but rather a bottom-up reactive strategy led by the inclusion of these services on business travelers’ expense reports. That’s already happening, so a broader strategy seems inevitable, even in the very short term.
In 2020, consider two ways in which these services will broaden their footprint in business travel.
Apps will sign preferred deals with corporate clients, offering reduced service and delivery fees in return for preferred status. The service fees charged by these apps can be a bugaboo for buyers—36 percent of 210 business travelers in a 2016 BTN survey indicated they’d run into reimbursement problems over these fees. A low, flat service and delivery fee in a particular city in exchange for preferred or even exclusive app would ensure travelers eat safely even at hotels without meal service. The apps’ competitive position varies significantly by U.S. location, which might make a nationwide deal tricky, but smaller-scale deals could work. Buyers would need to document and prove they can influence travelers’ app choices, but there seems a real opportunity for formalized use. Uber Eats already offers corporate controls around price caps and delivery times through its parent’s Uber for Business offering.
Hotels will strike deals with apps for lower fees for guests. This is already happening: Wyndham Hotels & Resorts in May 2019 began offering guests no delivery fees on DoorDash orders, with an additional discount for first-time users, at all participating properties. Should other chains follow suit, business travelers could benefit from lower service and delivery fees.
However it plays out, the food-delivery battle bears close watching as a costly convenience with strong and growing appeal to business travelers. It’s not going away, so better suit up.