Tech Check is a regular column on restaurant technology by Senior Editor Joe Guszkowski. It's also a newsletter.
The calendar tells me it's December somehow, which means the time has come to pick winners and losers from 2024.
And as I look back on this year, I can think of no bigger winners in the technology sector than DoorDash and Uber Eats.
The two giant third-party delivery companies gained ground from every conceivable angle in 2024, growing sales, notching some big policy victories and even showing signs of profitability.
The performance was all the more notable given the fact that restaurants generally struggled this year.
The best example of that divide was this crazy stat from Black Box Intelligence: In the third quarter, delivery traffic at fast-food restaurants increased by 14.7%, while drive-thru traffic fell 10.2%. That’s a gap of nearly 25%.
How did this happen? It’s pretty simple: Delivery apps made themselves indispensable.
They did this in part by addressing their biggest disadvantage: high prices. They began pushing discounts, such as generous buy one, get one offers, to soften the blow of costly markups and delivery fees. A secret shopper study by Intouch Insight revealed that 49% of delivery orders had a discount attached.
They have also lowered their delivery fees by about 15% since 2022, Intouch Insight found.
And in another stab at easing prices, the apps continue to aggressively promote their subscription programs, Uber One and DashPass, that give members $0 delivery and other perks for $10 a month.
In addition to making their services more affordable for customers, the apps rolled out new features that add value.
For instance, DoorDash gave DashPass members free access to HBO’s Max streaming service, a total package worth $240 that customers will get for $96. And it began offering members discounts on Lyft rides.
Uber Eats, meanwhile, partnered with grocery delivery provider Instacart to make itself an option within the Instacart app.
But maybe the biggest value-add of all is that the two apps continued to add lots of non-restaurant businesses to their marketplaces, completing their transformation from restaurant delivery services into on-demand hubs for all kinds of things, from daily essentials like shampoo and pet food to big-ticket items like TVs and wedding dresses.
Combine all of the above—reasonable prices, a growing feature set and a large selection—and you have the ingredients for a pretty useful consumer tool, something along the lines of Netflix, the New York Times app or even, yes, Amazon.
And, it must be noted, the delivery apps are doing a good job, at least in the eyes of consumers. That same Intouch Insight study found that 90% of customers said they were satisfied with their third-party delivery experience—an astounding approval rating for a complex service where a lot can go wrong.
All of this has left restaurants with little choice but to participate in third-party delivery: The apps have simply become too popular with customers to ignore. If you have any doubts about that, just go back and look at that Black Box stat above.
At the same time, restaurants still have a lot of frustrations with third-party delivery, and the list is getting longer: Chargebacks and fraud, batched orders, and the increasing pressure to discount all raised operators’ ire this year. That's on top of their existing gripes about commission rates and a lack of data sharing.
But in a sign of just how essential these apps have become, consider that 2024 was also the year in which Olive Garden, one of the last big restaurant chains not to use third-party delivery, finally caved.
As the old saying goes: If you can’t beat 'em, join 'em.