Tag: food delivery

OM in the News: The Pizza Delivery Guy Will Be a Robot

A Yandex rover at U. Michigan

Grubhub plans to roll out food-delivering robots across U.S. college campuses from this fall, as automation grows in a sector turbocharged by the pandemic. It will deploy the suitcase-size rovers built by Russian tech company Yandex to some of the 250 colleges across the U.S. that Grubhub already operates in. The 6-wheeled autonomous rovers have been tested on the snowy streets of Moscow, delivering food, groceries and documents. Since April, the robots have also been delivering orders from local restaurants in Ann Arbor.

The pandemic has boosted the food-delivery business, sparking interest from some companies to automate parts of their operations, reports The Wall Street Journal (July 7, 2021). The use of robots and drones is aimed at cutting labor costs, one of the biggest hurdles on the path to making delivery profitable. Earlier this year, DoorDash acquired robotics startup Chowbotics, whose technology can whip up salads and poke bowls.

Delivering food is an expensive and complex logistical undertaking. Apps typically earn money by charging restaurants a percentage of the value of orders, as well as by charging consumers a service fee. They then dip into those earnings to pay drivers, their biggest expense. Delivery bots now promise to limit the human element and lower some costs. “Robots don’t need lunch breaks, there are no high turnover issues, they are easy to manage,” said an industry expert. Grubhub expects the technology to deliver cost savings, both for the company and for consumers by charging a lower service fee than for a human delivery.

Yandex’s autonomous delivery robots, which have the capacity to carry as much as 44 pounds of goods, can navigate pavements, pedestrian areas and crosswalks slightly faster than the speed of an average pedestrian. After an order is placed, the rover makes its way to the restaurant, picks up the food and then delivers it to a specific location where the user unlocks its hatch through the Grubhub app.

Classroom discussion questions:

  1. Why are college campuses a good testing ground for rovers?
  2. How has the pandemic impacted the use of robots?

OM in the News: Let Restaurants Deliver Their Own Food!

A Just Eat delivery in the U.K.

In its $7 billion deal to buy Grubhub, Just Eat Takeaway, a Dutch food-delivery giant is betting on a strategy it has relied on for years in Europe– belief that the future of its business lies in having restaurants handle the delivery part themselves, avoiding the costs of building fleets of drivers and cyclists to transport meals to customers. For years, European consumers have contacted Just Eat to choose a restaurant for their evening meal and place their delivery order.

More than 3/4 of Just Eat’s deliveries globally are done by the restaurants themselves, writes The Wall Street Journal (June 28, 2020). That has allowed it to sidestep both the costs of building a fleet and the logistical and legal headache of managing workforces across national borders. It is a tack similar to that taken by Grubhub, which does about half of the deliveries it processes. U.S. rivals like Uber Eats, DoorDash and Postmates use their own drivers for almost all deliveries.

Delivery can be the largest expense in an online food order, amounting to 25% of an order’s overall cost. Independent restaurants, meanwhile, have criticized the delivery companies for taking cuts of up to 30% to handle their orders. Many restaurants—especially those only now exploring delivery—don’t want to hire delivery workers for the same reason Just Eat and Grubhub try to avoid them. Drivers can be costly, challenging to manage, and churn is high.

Just Eat’s strategy faces big challenges in the U.S.  DoorDash and Uber Eats have grown much faster than Grubhub. They can more easily coordinate orders across multiple restaurants and customers as they have a greater percentage of deliveries done by their own networks. DoorDash and Uber Eats, in particular, have established themselves in many American suburbs, building delivery fleets from scratch through on-demand networks of workers.

Classroom discussion questions:

  1. In Ch. 2, we discuss 3 ways to achieve competitive advantage through OM. Which applies to Just Eat Takeaway?
  2. How do the Just Eat vs. Uber Eats strategies differ?