Groupon to Go: How Food Delivery Services Shape the Food Industry

Groupon to Go: How Food Delivery Services Shape the Food Industry

By Shehwar Ali

Food delivery is in and Groupon is now expanding on it. Five hundred restaurants participated in a pilot test for Groupon to Go in Chicago since March 2015, is planning to expand to other cities including Boston and Austin.

In the initial phase, Groupon to Go only offered their services to restaurants that already provided delivery, but Groupon’s Vice President and General Manager said in an interview that the company will soon be expanding its business to include restaurants that don’t currently offer delivery services. Groupon to Go is available in three cities including Chicago, Denver and St. Louis.

Though the food delivery service is expanding, Groupon to Go is hardly a unique service. There are other companies that offer food delivery and take out service including Yelp, Uber, Instacart and Amazon. So, what is it that makes Groupon stand out from it’s food delivery competitors?

Price could be one factor. Groupon takes a 10 percent cut on each food delivery order. They are planning on setting up a nationwide service. Apart from that, their future plans include real-time order tracking and group ordering so customers can request  a delivery/take out on a specific data and time.

Groupon’s strategy is to target restaurants that don’t have an online order system and customers who get delivery/take outs several times in a single month, so there’ll be exclusive deals so they can save money. Groupon to Go food delivery service will also have an order up facility.

When comparing Groupon to Go with other major companies like Amazon, Uber and GrubHub, it is difficult for Groupon to scale their business at such a massive level. Though economies of scale are at play, Goupon to Go can still contribute to the bottom line.

Overall, online food service delivery is rising. According to Quartz and marketing research company, NPD Group, there’s a substantial increase in number of customers ordering food because of the technological innovations and improved delivery menus. In a recent article, GrubHub realeased data about how online food ordering has not only increased, but the types of food ordered has branched out from pizza to specailized cuisinesuch as chicken, fries, Chinese, pasta, sushi, Mexican, and burgers.

While customer needs and purchasing decisions are shifting, there are many options for resturant owners to consider when implementing online food deliviery. Some have considered third parties like Goupon to Go, which can overcome the hurdle of implementing a stand alone delivery service.

“Roughly 70 percent of restaurant industry traffic is now off-premises … [and] 18- to 34-year-olds have a higher propensity to use off-premises meal solutions,” Hudson Riehle, Senior Vice President of Research at the NRA said.

According to NRA, if you aren’t going to do anything about this particular trend, then by 2020 you will only be covering 30% of consumers.

Primarily, what’s happening here is that by 2020 there’s a need to change marketing strategy, not because customers will not come to the restaurant, rather millennials don’t want to cook or they are too busy so they need fast, convenient ways through which food is readily available.  Consumer demand is the main reason this delivery model is considered to be the darling of the financial market and thought to be the future of food industry.

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