The “online pizza paradigm”

According to a theory called “the lipstick effect”, consumers cheer themselves up with small luxuries during downturns. Add to this the “online pizza paradigm”. Food delivery is proving so addictive in world cities that the companies seem confident of growth even in economic slowdowns. That should be excellent news for Grubhub, owner of Seamless and one of the first online takeaway delivery companies in the US. It has about a third of the market there. Revenue is forecast to rise by more than a third this year. Yet competition is dragging up costs. In 2018, sales and marketing spend jumped 40 per cent… Blame rivals like UberEats, Postmates and DoorDash… Delivery services earn revenue by charging restaurants a cut of the orders made online. Competition makes it a low-margin business. This might change with the rise of so-called cloud kitchens. These are often shipping containers with kitchens inside, which are cheaper to run than restaurants in prime locations… Food is cheaper to prepare, but customers pay the same fees. Delivery companies take a bigger cut… Across the US, delivery is used by less than one in 10 households. Yet in China, changing habits mean one quarter of the population now orders food from their phones. The food delivery market is far from satiated.
 
Lex.

Food4Brains

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