It's a competitive industry, but it's also still early. Some restaurants, like Pizza Hut, do their own delivery. For others, though, there's a competition about who delivers the food in the end.
Pizza's early lead for online means it still dominates ordering today, Morgan Stanley says. GrubHub's close behind it, but a lot of the Silicon Valley startups still lag behind. Amazon doesn't even crack into the top of the charts.
If you take pizza out of the equation, Grubhub clearly dominates compared to the other delivery startups. "From our previous work, we have found that GrubHub is the largest player in this space at ~$2.4b in annualized gross food sales, nearly 5x as large as nearest competitors Eat24 (owned by Yelp) and Postmates," Morgan Stanley analysts wrote.
But that doesn't mean GrubHub's the only winner. Even though Amazon and Uber might be small players today, Morgan Stanley notes that they "must be watched given their brand loyalty." Amazon could offer free delivery to all Prime members and theoretically price it aggressively to undercut other players. If it can drive down the price, it would solve the number one reason people don't order delivery.
Companies like Amazon and Uber could undercut the competition if they go for cheap delivery — most customers don't want to pay above $5 for a delivery fee.
Uber and Amazon are both following the GrubHub model of a fee structure, splitting the burden between the restaurants and customers. Postmates and DoorDash though shift it entirely to the consumer. This has helped the startups strike high-profile relationships with chains like Chipotle and Starbucks since they don't have to discount their products, Morgan Stanley said. But, if delivery fees are too high as a result, the companies might struggle long term, since customers don't like to pay over $5 for delivery.
As the Morgan Stanley chart notes, this is for the general Postmates service. It's experimenting with programs like Postmates Plus that have fixed delivery costs.
