clock menu more-arrow no yes

Filed under:

How Delivery Apps Are Joining Forces to Expand Their Market Share

The food delivery industry continues to grow

Thanks to a new partnership between ChowNow, UberRUSH, and Postmates, ordering delivery via a mobile app — from almost any restaurant, anywhere in the U.S. — is about to get even easier. ChowNow, an online ordering and payment platform for restaurants, announced today its delivery options will be expanded, thanks to its new Flex Delivery service.

ChowNow has been in partnership with UberRUSH for some time now, but Flex Delivery allows restaurants to expand their delivery zones — so consumers can order food from more restaurants, and restaurants can sell food to more consumers.

ChowNow's new delivery platform includes Zone Control, a feature that allows restaurants to simultaneously run deliveries with their in-house staff as well as Postmates or UberRUSH couriers.

Here's how it works: Customers themselves can still order directly from the restaurant. If the delivery is nearby, the restaurant can utilize its own, in-house staff to make the delivery. But if it's outside a certain radius (in the company's parlance, the "Flex Zone"), ChowNow's system will auto-assign either a Postmates or an UberRUSH courier to deliver the meal.

ChowNow CEO Christopher Webb says the service is a win-win for both his company and the restaurants that deliver via the new platform."One of the beauties of the system is that there's no overhead," he says. "If you don't get a single delivery order in a month, you still pay nothing. But if, on Friday night, you get slammed, you have access to 50 couriers that can deliver the orders for you."

Of course, it's a win for delivery services, too. When asked how he managed to get two competing delivery companies — Postmates and UberRUSH — to agree to essentially work alongside one another, Webb jokes that he did so by "making friends."

recent report by Morgan Stanley analysts suggested that both Uber and Postmates were "trailing" behind their competitors in terms of restaurant selection and sales. Though they are technically competing against one another, it serves the best interest of both companies to partner with ChowNow.

"It was a little bit of a challenge," says Webb. "But both want the business. Our platform is used by thousands of restaurants in every major market. Uber and Postmates both want access to those restaurant clients. What we can do for either company is give them volume, to fill in their networks."

Morgan Stanley report delivery

Not only does delivery via a third-party courier allow restaurants to unlock an entirely new stream of revenue, Webb says it helps them stay afloat in an increasingly competitive industry.

"We've found that restaurants that offer delivery do two to three times as much to-go business as those that just offer takeout," notes Webb. "On the flip side, delivery has historically been a huge pain point for restaurants."

Delivery staff is notoriously unreliable in the restaurant industry, says Webb, who himself worked as a food delivery driver for a year and a half when he was younger. "Restaurants will overstaff on Friday knowing that many on the delivery staff simply won't show up."

The food delivery industry is currently estimated to be worth some $30 billion. Still, some say the full potential of the market lies relatively un-tapped. Morgan Stanley analysts, for one, say the market could be worth as much as $210 billion. For restaurants, earning a share of that $210 billion pie might not even require hiring more workers.

Restaurant staffing — particularly for those who do show up — is a theme of much debate at the moment, thanks to rising minimum wages in many major cities. "When minimum wage goes up to $15, it's not easy to staff a restaurant," says Webb. "You also have to think about insurance rates for delivery drivers."

So will restaurant owners eventually outsource their delivery staff in an effort to combat rising wages? Webb says subtle changes are already taking place. "So far, we haven't seen restaurants lay their delivery staff off," he says. "But there's pretty high turnover at restaurants. So what we've begun seeing is that some restaurants are just not replacing the delivery workers that leave."

Instead, says Webb, those restaurants are shrinking their in-house delivery zones and expanding their flex zones — meaning their own employees are no longer making the bulk of delivery orders.

Sign up for the Sign up for the Eater newsletter

The freshest news from the food world every day