As demand for restaurant and grocery delivery continues, businesses that rely on the channel face new challenges as ongoing labor challenges are compounded by rising food and commodity costs basic.
In addition to the most popular and well-known delivery channels, such as restaurant aggregators like DoorDash and Uber Eats and grocery delivery marketplaces like Instacart, there are a range of other food delivery companies. For example, unlike these on-demand options, there are subscription services such as the Nestlé-owned meal delivery service, Freshly, and Kroger-owned Home Chef.
Additionally, there are delivery options that deliver chefs and home cooks directly to consumers’ doorsteps, such as home food delivery marketplace WoodSpoon and the so-called “chef-to-customer platform” CookUnity. , which offers delivery of pre-programmed meals from award-winning professional chefs.
Akhtar Nawab, chef and restaurant owner in New York, New Orleans and Washington, DC, spoke with PYMNTS about the challenges and opportunities of the CookUnity home delivery model. He noted that by selectively choosing the markets in which to offer his items to platform customers, he can expose new consumers to his food and his business, the creative advisory and management group Hospitality HQ.
“I don’t think the pick-up and delivery business we’ve created [in the pandemic] will dissolve,” he said. “We are doing our best to maintain this level of execution through the delivery [and] Further fulfillment means at the same time continuing to develop our in-house catering business.
On the other hand, the economy of the chain is difficult. Nawab explained that the model is “very sales and volume driven”, which can become more difficult as prices increase. CookUnity provides the ingredients, supplies and equipment, while the chefs take care of the company’s workforce.
“There are a lot of moving parts that need to be very, very well aligned at all times for this to work,” Nawab said. “So it’s not always easy.”
He noted that as food and raw material prices increase on the one hand and labor becomes more expensive on the other hand, sales do not increase commensurately with these increases and cracks are starting to show in the revenue sharing model.
The consumer price index for all urban consumers (CPI-U), released by the U.S. Bureau of Labor Statistics (BLS) on Wednesday (July 13), found that food prices rose 10.4% year-over-year in June. In addition, the prices of non-food and non-energy raw materials increased by 7% year-on-year.
“I think it’s getting harder and harder in the current climate,” Nawab said. “That means the revenue share has to go up. … I think this conversation will come to light.
Specifically, he said he thinks the model could be more sustainable over the long term if it uses a rolling revenue share that offers a higher percentage to those with bigger sales and a lower percentage to those who whose volume is lower.
Ultimately, the demand for delivery is there. The July edition of PYMNTS’ ConnectedEconomy™ series, “The ConnectedEconomy™ Monthly Report: The Rise of the Smart Home,” which is based on a May survey of more than 2,600 U.S. consumers, found that 43% of consumers said they had ordered food for same-day delivery from a restaurant aggregator in the past month. Similarly, 40% said they ordered groceries online for home delivery.
Get the study: The rise of the smart home