Why Food Delivery Platforms Don't Make Money (Yet): On the Economics of Platforms
The fast rise of food delivery has created a new powerful middle man in the form of delivery platforms, which are increasingly becoming a force to be reckoned with. Even though the sector has expanded very quickly, most platforms have been losing money for years.
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“The business model of delivery platforms has sparked discussion and criticism. Many delivery aggregators are struggling to make profits, with most of them losing money every year,” according to Marjolein Hanssen, Analyst – Consumer Foods.
“On the one hand, investors push them to start making these profits, while on the other hand, food delivery platforms are pressured to be lenient toward restaurants struggling with the commissions charged by the platform. Critics have even questioned the sustainability of the delivery platform model as a whole and doubt whether the sector will ever be profitable.”
Platform economics benefit from scale, but making delivery economics work remains a complex puzzle. As users of food delivery platforms might be price sensitive, consolidation in combination with the development of extra revenue streams seems to be the only way forward for food delivery platforms.
Where to go from here
Marjolein HanssenAnalyst – Consumer Foods Read more