Judging from the twitter DMs, several of my points from my previous post have gone over the head of some investors, particularly the one around Signature (white label delivery). Thinking of Nando’s before going to Deliveroo Deliveroo is at risk of getting disrupted because a large proportion of its orders/sales are from a small selection of chain restaurants — 10 chains represent 35% of ALL UK orders. Some of such chains include Nando’s, Wagamama, and McDonalds. The top 100 chains could easily be more than 50% of the UK business, if not much more. This is the case (if not moreso) for Uber Eats, and less the case for $TKWY.
Very interesting take. A lot of valid points, but maybe also feels a little one-sided. A few that I would challenge:
- % of customers at risk: You argue people will download multiple restaurant apps if they are given discounts. Maybe. But what % of delivery platforms users do you think will do this? You make the argument that a high % of orders are from big chains, this is true but these customers also order from multiple restaurants and value the discovery UX. They have 3-5 brands they like, but are not sure which to order from. So they might order from Nandos, but they also order from 3-5 other stores, and that variety changes over time. The delivery platforms will probably incentivise store variety (trying new stores), which will de-risk their business also. The real risk is probably only those 10-20% of customers who are super brand loyal and order only from 1-2 stores - these customers might now search on Google or download the Nandos app instead of search on the delivery platform (even if delivery platform UX is better)
- B2B logistics e.g. Doordash Drive: B2B couriers will get commoditised. I agree this is probably the case but it will take a long time. You need scale in individual cities to operate couriers efficiently and it is not that easy to get the operations right - hence why players like Stuart, Shargo or Mox have not got a super competitive product. It is a chicken/egg problem - either white label platforms integrate with delivery platforms to give cost effective delivery, or they massively reduce the quality of their delivery service. Hence, why most white label platforms are taking share from Just Eat, not Deliveroo e.g. Order Yoyo, and Flipdish mainly target restaurants with their own logistics
- Delivery plaforms have loyalty programs too: Delivery platforms will not stand still and are increasingly creating switching costs for users and improving their product e.g. loyalty programs. Wouldn't a loyalty program from a delivery platform be more attractive from one from Nandos? e.g. order 10x and get discount from any store, vs. order 10x and get discount from Nando's only
- CAC amortisation: Delivery platforms are developing more multi-category services which allows them to ammortise the CAC over multiple purchase occasions which restaurants can't do in the same way (see the recent Acquired podcast on Meituan)
Very interesting take. A lot of valid points, but maybe also feels a little one-sided. A few that I would challenge:
- % of customers at risk: You argue people will download multiple restaurant apps if they are given discounts. Maybe. But what % of delivery platforms users do you think will do this? You make the argument that a high % of orders are from big chains, this is true but these customers also order from multiple restaurants and value the discovery UX. They have 3-5 brands they like, but are not sure which to order from. So they might order from Nandos, but they also order from 3-5 other stores, and that variety changes over time. The delivery platforms will probably incentivise store variety (trying new stores), which will de-risk their business also. The real risk is probably only those 10-20% of customers who are super brand loyal and order only from 1-2 stores - these customers might now search on Google or download the Nandos app instead of search on the delivery platform (even if delivery platform UX is better)
- B2B logistics e.g. Doordash Drive: B2B couriers will get commoditised. I agree this is probably the case but it will take a long time. You need scale in individual cities to operate couriers efficiently and it is not that easy to get the operations right - hence why players like Stuart, Shargo or Mox have not got a super competitive product. It is a chicken/egg problem - either white label platforms integrate with delivery platforms to give cost effective delivery, or they massively reduce the quality of their delivery service. Hence, why most white label platforms are taking share from Just Eat, not Deliveroo e.g. Order Yoyo, and Flipdish mainly target restaurants with their own logistics
- Delivery plaforms have loyalty programs too: Delivery platforms will not stand still and are increasingly creating switching costs for users and improving their product e.g. loyalty programs. Wouldn't a loyalty program from a delivery platform be more attractive from one from Nandos? e.g. order 10x and get discount from any store, vs. order 10x and get discount from Nando's only
- CAC amortisation: Delivery platforms are developing more multi-category services which allows them to ammortise the CAC over multiple purchase occasions which restaurants can't do in the same way (see the recent Acquired podcast on Meituan)