On-demand delivery is booming, and everyone wants a piece of the pie.
DoorDash nearly tripled its valuation in 2018, after securing $535 million from SoftBank Group Corp., Sequoia Capital, and Singapore’s GIC Pte sovereign wealth fund. Uber also had a prosperous year in the delivery category, buoyed by the success of Uber Eats and the company’s partnerships with Starbucks and McDonald’s. Those partnerships between on-demand technology providers and global restaurant brands are generating big bucks and creating buzz about what’s possible for the ever-evolving on-demand delivery industry.
Partnering with a brand name like Starbucks or McDonald’s can expand the audience of potential users for a growing on-demand startup. That’s certainly been the case for DoorDash, which supports Chipotle, Cheesecake Factory, IHOP, and Red Lobster. The company says its delivery volume had increased 250% in June 2018 compared to the same time the previous year.
But the real benefit of partnering with established restaurant brands goes beyond increased awareness and name recognition. Collaborations, like the kind forged between Uber Eats and Starbucks, provide technology companies with access to new streams of data, which they can use to maximize operations and run their businesses more efficiently.
“A huge advantage of brands’ cooperation is clients’ data exchange. Collected data means a more accurate service and better experience because you know your customer’s preferences in advance,” explains Stas Matviyenko, founder and CEO of Allset, a dining out on-demand startup that lets users order ahead when they eat out at restaurants.
If technology, in general, helps restaurant groups better understand their customers, then restaurants gaining access to even more detailed metrics and advanced technologies, available through on-demand vendors, will ultimately result in more personalized marketing strategies and improved customer service.
Matviyenko predicts that the partnership between Starbucks and Uber Eats—which launched as a pilot last September and is expanding to more than 2,000 Starbucks stores this year—will benefit both companies. Uber will get access to valuable feedback, and Starbucks will be able to craft more personalized offers and initiatives for its customers moving forward. The partnership will also help Uber Eats fend off competitors like Postmates as it attempts to establish dominance in the space.
“In the next few years, I expect a positive tendency of tighter interaction between tech and restaurant businesses,” Matviyenko says. “I think that success in the takeout and delivery space is bringing us closer to digitizing the dine-in experience.”
Uber has also found success through its partnership with McDonald’s, which offers deliveries powered by Uber Eats at more than 13,000 restaurant locations. Delivery sales now account for 10% of all food sales at McDonald’s locations that offer the feature, demonstrating the power that these partnerships can offer not just tech vendors, but also global restaurant and retail brands.
Although there are some retail heavyweights investing heavily in their own on-demand delivery services, including Walmart and Target, those brands could be missing out on the sort of mutual marketing that Matviyenko says makes partnerships between brands and on-demand providers particularly beneficial.
“Big collaborations like this help adopt new tech faster,” Matviyenko says.
Consumers who use Uber Eats to order food from McDonalds, for example, could see Starbucks listed in the Uber Eats app and be incentivized to place an order for coffee delivery, something that wouldn’t happen if Starbucks were going this road alone. The same goes for restaurants that have partnered with any of the most popular on-demand delivery apps. Being listed on the mobile ordering app is a form of digital marketing.
As more restaurant chains sign on to partner with on-demand delivery vendors, Matviyenko expects consumer preferences and habits to change as well. Fewer people might walk down the street to a coffee shop when they can have Starbucks delivered at a moment’s notice.
“We should see changes in customer behavior in favor of tech. More of everyday offline routines will be digitized, and restaurants are not an exception,” Matviyenko says. “For customers, that means a faster and more convenient way to get served. For businesses, it’s a possibility to grow their sales and receive valuable feedback.”
Stephanie Miles is a senior editor at Street Fight.