Which company is winning the food delivery war?

Delivering America’s meals has become very big business. Sales across the industry have exploded in the past year, and in May, DoorDash inched past longtime leader Grubhub and snatched the U.S. crown.

DoorDash earned 32 percent of U.S. consumers’ meal delivery sales last month, while Grubhub and its subsidiaries, which include Seamless and Eat24, took in 31.7 percent. (Purchases made through Tapingo and LevelUp, which Grubhub acquired in late 2018, are not included in our analysis.) DoorDash’s sales overtook Uber Eats’ in October 2018.

Another big player in the industry, Postmates, recently announced expansion plans and confidentially filed for an IPO in February. Due to the way Postmates bills purchases made through its subscription program, Postmates Unlimited, Second Measure is not always able to track them. So Postmates market share is likely even higher than our analysis shows.

DoorDash is gobbling up market share because its sales are growing so fast. In May, the company saw a staggering 189-percent year-over-year jump, compared to 32 percent at Uber Eats and 6 percent at Grubhub. Besides diners, the company also brings investors to the table. Last month, DoorDash announced raising $600 million in its fourth funding round in 14 months.

No other meal delivery service comes close to DoorDash’s growth, but nearly all of them are growing. In May, sales for the industry as a whole rose 52 percent year-over-year, as more Americans realize how much they like eating restaurant meals at home. In fact, 23 percent of Americans have ever ordered from one of the services in our analysis, up from 17 percent a year ago.

Grubhub, DoorDash control different parts of the country

The top two food delivery services may be neck and neck in U.S. market share, but their strongholds are in different regions. Grubhub is the most popular service in many Northeastern metro areas, including New York, Boston, and Philadelphia. DoorDash rakes in more than half the sales in the two biggest Texas metros, Dallas-Fort Worth and Houston. But neither is DoorDash’s biggest region in terms of dollars. That distinction goes to the San Francisco Bay area, where DoorDash is headquartered.

New York is best-selling metro for Grubhub and Uber Eats

The New York City area is America’s most populated, and Grubhub dominates there. The company earned 69 percent of residents’ meal delivery sales in May and took in more money there than anywhere else in the nation. Surprisingly, the region also generated the top sales for Uber Eats, even though it controls just 14 percent of the New York market. It’s a testament to just how many diners—and restaurants—are hungry for delivery in New York, and proof that even a small slice of the Big Apple’s pie is worth big bucks.

Restaurant delivery partnerships pay off (for the restaurants)

As meal delivery services look for new ways to grow in cities big and small, one popular answer has emerged: exclusive delivery partnerships with the nation’s top chain restaurants. In late 2017, DoorDash struck a deal with Wendy’s, and Uber Eats nabbed exclusivity with the biggest fast food chain in the country: McDonald’s. (And it will start delivering Big Macs via drone in San Diego later this year.)

Recently, Uber Eats added Starbucks to its partners. DoorDash now boasts the likes of Chick-fil-A, Chipotle, and Chili’s, while Postmates has Pei Wei and Popeyes. Grubhub teamed up with Yum Brands restaurants Taco Bell and KFC, and it also integrated with Yelp’s platform, allowing users to order from Grubhub’s network of restaurants directly on Yelp.

As Uber Eats and Grubhub public filings show, these partnerships don’t always lead to revenue. Often, partners pay the delivery services lower fees, decreasing their take rates or even causing them to lose money. But the partners often have huge customer pools, many thousand locations and impressive advertising reach, all of which have delivery services betting that joining forces will pay off in the long term.

The partnerships are paying off for many of the restaurants. The Cheesecake Factory and Chipotle have publicly credited DoorDash with boosting their revenue. In May 2019, Second Measure data shows 7 percent of The Cheesecake Factory’s sales came through DoorDash (before subtracting DoorDash’s cut or the delivery tip). The delivery service accounted for 6 percent of May sales at Chipotle and 5 percent at Buffalo Wild Wings.

Fewer customers are loyal to a single service

Whether by forming partnerships with restaurants or expanding into new cities, companies are proving there’s room for everyone in this market to keep growing. But the battle for customers is likely to intensify. That’s because fewer of today’s diners are loyal to just one service. For example, in the first quarter of 2017, 88 percent of Grubhub’s customers didn’t use other meal delivery services. Two years later, it’s fallen to 62 percent, as competing services woo customers with different restaurant offerings and promotional prices.

Caviar, which does a lot of its business in Grubhub territory, has the lowest percentage of exclusive customers (33 percent). Waitr, a service that mostly operates in the South, has the highest (69 percent), but all the services in our analysis have seen their percentage of loyal customers fall over time.

Not surprisingly, the biggest meal delivery services are also the most likely to share customers. Market leader Grubhub attracts at least 20 percent of diners from every company besides Waitr. DoorDash and Uber Eats aren’t far behind.

As more restaurants form exclusive delivery partnerships, more diners are going to have to hop between apps to cover all their favorite takeout spots. The least loyal customers, it seems, will also be the most well fed.

Check back monthly for the latest updates in the meal delivery wars, or request a product demo to see the data for yourself.

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