These businesses make money by reducing the overhead costs of hiring staff like waiters and hostesses and also by creating their own website for consumers to order their food hence avoiding large costs charged by firms in the first category. Munchery has succeeded in this sector especially in the West Coast area.
Here are two other ways to look at it, according to the Wall Street Journal:
“Delivery is not a fad,” said David Mell, managing director at RBC Capital Markets.
Some investors say the rush into these outfits is reminiscent of bets heaped on meal-kit companies in recent years. Many makers of meal-kits—boxes of pre-portioned ingredients and recipes mailed to customers or bought in stores—have struggled to retain customers or even to stay in business.
Shares of Blue Apron Holdings Inc., once the biggest U.S. meal-kit company, made its debut in 2017 at $10 per share and closed Tuesday at $1.18. Blue Apron is pursuing different strategies to cater to customers and its business continues to evolve, the company said.
Others say delivery companies don’t have the same hurdles as meal-kit companies, such as the need to build big warehouses to assemble meals or the challenge of sending those perishable parcels through the mail.
Still, there are other challenges. Customer loyalty largely lies with the food company, not the delivery service they use. Many grocery chains already run their own online pickup operations, and could eventually offer delivery services themselves. Meanwhile, many restaurant delivery services have been cutting into their profits by offering free delivery in new markets in an effort to undercut competitors. Some restaurant companies, including Olive Garden parent Darden Restaurants Inc., have said they don’t think delivery is a good business for small orders."