Fledgling food-delivery startups using new communications technologies are changing the dining experience.
Palo Alto, Calif.-based DoorDash, Berkeley, Calif.-based SpoonRocket and Chicago-based GrubHub Seamless each offer a different approach to delivering food fast and at reasonable prices.
“People are just very busy these days, so this is a way for people who don’t have time to go out to dinner, or pick up their meals, to get great meals delivered to them,” said Tony Xu, chief executive officer and co-founder of DoorDash.
“For people who don’t want to leave the house for an hour or two, they let us do the work. When people order through us, it’s as if they are at the restaurant already, placing an order.”
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A customer using DoorDash goes to its website and picks from a group of restaurants. Then the consumer selects a meal and places the order, which is transmitted to an iPad perched in the restaurant’s kitchen. The restaurant prepares the meal, and a DoorDash delivery person arrives to pick it up. Average time: 44 minutes from order to delivery.
Xu said DoorDash uses algorithms powered by the company’s proprietary software to figure out which driver is in the best location to pick up a meal and deliver it. DoorDash delivers in Palo Alto and neighboring cities.
Diners pay DoorDash the cost of the meal plus a $6 delivery fee for orders of $100 or less. For orders that exceed $100, the delivery fee is $12.
SpoonRocket provides a much different service. It prepares its own food and charges $6 per meal, including delivery. Customers are offered two choices each day, one meat dish and one vegetarian dish. SpoonRocket delivers in Berkeley and Emeryville.
“We think this is revolutionary,” said Anson Tsui, co-founder and chief happiness officer with SpoonRocket. “Never before have you been able to get a meal consistently delivered within 10 minutes.”
SpoonRocket keeps costs down by limiting the choices to offering only two dishes each day, but the dishes change daily, so customers can sample a variety over weeks or months. The company hired executive chef David Cramer, who led restaurants in Napa and Yountville, Calif.
Both DoorDash and SpoonRocket are challengers in a niche dominated by GrubHub Seamless.
GrubHub’s website offers customers a list of restaurants in their vicinity that offer delivery services.
The restaurants pay a 10 percent fee from each order to be listed on the GrubHub website. Restaurants that wish to be listed more prominently pay an additional fee to the online service. The customer pays the restaurant for the food.
“The availability of mobile computing and mobile apps and smartphones are really driving all of this,” said Allie Mack, a spokeswoman for GrubHub. “The new technologies are making these kinds of services really convenient.”
Several restaurants that use the new delivery services touted them as a way to drive more customers to buy their meals. Another appeal for restaurants is that the services free them of the cost of having a delivery driver on staff.
“It would cost us a lot to hire somebody to deliver,” said Mary Minoo Sadri, a co-owner of Vaso Azzurro Ristorante in Mountain View, Calif. “DoorDash leaves ample time for ordering. They always are on time.”
Mistie Cohen, a partner with Oren’s Hummus Shop, a Palo Alto restaurant, said when they began working with DoorDash a few months ago, the delivery service provided the restaurant with about $40 a week in revenue. Soon after, the revenue was up to $500 a week. “The last time I checked, we were getting $2,800 to $3,000 a week from DoorDash,” Cohen said.
DoorDash said it started out in mid-June with about 12 restaurants. Now it’s up to more than 50 restaurants, has made about 3,800 deliveries, and is generating revenue that works out to $1.5 million a year.
“We’re planning to expand further in the Bay Area,” Xu said. “There is a lot of interest from customers from San Francisco to San Jose, from all over the Bay Area.”
SpoonRocket also is planning to expand beyond its current Berkeley and Emeryville, Calif., territory. The company will need to find new facilities first and make sure its present business model has a solid foundation, Tsui said.
“There is clearly demand for this,” Xu said. “It is an underserved market.”