For food delivery apps, private label is the next battleground

@EQUITYMATES|21 September, 2021

Food delivery apps have been one of the biggest winners from the pandemic, as people around the world were locked down and ordering food from our phones become a staple of day-to-day life. Yet, even in a year like 2020, none of these companies have managed to turn an annual profit (DoorDash did turn a quarterly profit in Q2 2020). Now it seems some of these food delivery apps are following a path well-worn by food retailers before them, moving into private label.

Coles, Woolworths, Walmart, Costco, all of the world’s largest supermarkets have moved into private label in search of higher margins. Two food delivery apps – DoorDash and GoPuff – are now looking to do something similar. Both of these apps have created their own lines of ‘ghost kitchens’ (restaurants without storefronts attached, built solely to take orders via food delivery apps). DoorDash, for example, has its own mac-and-cheese brand called The Local Mac and a pho and ramen brand NoodleUp. The theory behind these moves is that the food delivery model is more profitable if the app is also the restaurant, rather than just taking a percentage for delivering from an existing restaurant. Between this move into private label, a big ramp-up in advertising revenue, and continuing work on route optimisation, we will be interested to see if any of these companies are able to turn a consistent, meaningful profit.

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