Wall Street Journal: DoorDash and Uber Eats Are Hot. They’re Still Not Making Money.
Food-delivery companies did record-breaking business during the pandemic, as millions of homebound Americans embraced the idea of ordering dinner via smartphone apps. Their valuations skyrocketed. They acquired reams of data that helped increase their efficiency. There was just one problem: Even at the height of their success, they weren’t making any money.
While early data show that consumers who embraced the apps during the pandemic may stick around as the health crisis fades, growth is expected to slow from the breakneck pace of 2020.
More than 70 U.S. municipalities or states, seeking to help local businesses, temporarily capped what apps could charge restaurants last year during the pandemic, according to the Protect Our Restaurants advocacy group. Major cities are considering making those changes permanent, a move that would squeeze apps’ already slim margins.
As road traffic increases and restaurant kitchens run at capacity again, operational efficiency may decline despite the measures app companies have taken. Some big chains are reducing their reliance on delivery already, raising menu prices on apps and investing in high-tech pickup services to drive more direct orders.