Restaurant Marketplace Lunchbox To Go Global
For years, experts in the restaurant industry have questioned whether a third-party aggregator’s delivery model would ever be profitable. Now, a year and a half after online orders surged in the wake of the first wave of COVID-19 lockdowns, it looks like no one is closer to finding a solution. Even DoorDash, the premier delivery service in the United States, continues to operate at a loss, as all major food delivery services have branched out into other delivery categories to supplement the narrow profit margins of meal delivery. at the restaurant.
See also: DoorDash sees record orders eaten by rising costs
Restaurants are looking for internal alternatives to third-party aggregators
Yet even as these aggregators struggle to make a profit on meal delivery, restaurants and consumers are also growing weary of the current model. Restaurants struggle to afford the costly service charges, while consumers are frustrated with price increases and additional charges levied on each order. For now, it looks like a system in which there is no winner.
That’s where Lunchbox, an online ordering engine that aims to be more restaurant-friendly, comes in. Earlier this month, the company announced the acquisition of Spread, a startup that offers a digital control option that charges a flat rate, rather than taking a large percentage of the profits from each sale. With this acquisition, Lunchbox creates a commission-free digital ordering platform.
“Consumers have become aware that markets like Uber Eats and others are not benefiting their favorite restaurants / brands,” Nabeel Alamgir, co-founder and CEO of Lunchbox, told PYMNTS in an interview. “With this acquisition, we intend to continue the mission that Andy [Wang, Spread co-founder and CEO] and the team already established – a market built for success and restaurant discovery, not against.
Everything in the delivery
Lunchbox describes the new market as a “commission-free delivery platform”, but when asked, Alamgir said: “Restaurants will leverage their existing relationship with couriers.” In other words, the platform will act as a marketplace and aggregator and power digital ordering, but restaurants will have to ensure their own delivery.
Online delivery orders have exploded over the past year and a half, and with this increase, the customer base of restaurant aggregators has grown significantly. For our study The Bring-It-To-Me Economy: How Online Marketplaces And Aggregators Drive Omnichannel Commerce, created in collaboration with Carat by Fiserv, PYMNTS researchers surveyed a balanced census panel of more than 5,000 U.S. consumers, finding that 61% of shoppers now order restaurant meals online and 58% do so more often than before the pandemic. Additionally, 46% order meals through a restaurant aggregator more often than before the pandemic.
As order volumes skyrocket, the economic weaknesses of the aggregator model become clearer, demanding new solutions. Even as major aggregators are launching tiered options and a limited range of discounted restaurant services, the problems persist. Lunchbox’s new platform aims to provide an online ordering option that will be sustainable for restaurants in the long run, as their digital mix continues to grow.
Read more: DoorDash Offers New Delivery Price Plans for Restaurants
Alamgir declined to comment on the economics of the platform, although Restaurant Business reports that the new platform will eliminate Spread’s existing $ 1 fee, adding that Spread’s revenue comes primarily from selling opportunities from marketing to its suppliers.
Make the law
Part of the value proposition that Lunchbox offers to restaurants is that it shares customer data with them, unlike many other third-party aggregators, which can block the restaurant from the customer relationship by withholding that data.
New York City recently approved a bill that requires third-party food delivery services to share this information with restaurants whenever they request it, but Alamgir says he does not view such legislation as a violation. threat to the core value of Lunchbox. Instead, he argues that it validates the model.
Related News: NYC Delivery Services Must Share Data With Restaurants
“[This law] highlights what has been problematic since the conception of third markets, which is that the relationship is one-sided and not designed to be pro-industry, ”he said. “The ridiculous commission charges are what everyone hears, but the silent killer is the lack of customer data these restaurants receive.”
The way to go
Looking ahead to digital ordering in the future, Alamgir believes companies’ ability to leverage consumer data will evolve, leading to a “super intuitive and easy” online ordering experience. Plus, he thinks we’ll continue to see more and more Ghost Kitchens emerge.
At this point, just last month, Grocer Kroger announced it would bring virtual restaurant brands to its supermarkets, Wendy’s revealed it will have 700 ghost kitchens by 2025, and DoorDash has doubled its presence from ghost kitchens (albeit a two-person location).
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By 2022, Alamgir hopes to bring the Free Lunchbox Market to a global scale. He said: “We plan to enter international markets by the end of the year. “