How on-demand delivery has blurred the lines between foodservice and retail

Joanna Fantozzi

Before the rise of on-demand delivery, dining out and grocery shopping were two separate consumption occasions. In fact, the difference between how much Americans spend on groceries vs. restaurants is often noted as an economic health indicator by data scientists. However, as on-demand delivery culture has been standardized over the last several years, consumers want to make grocery and restaurant purchases simultaneously. Delivery services are becoming keenly aware of this growing need, so they have begun offering more retail purchasing options alongside restaurant delivery.

DoubleDash, for example, was launched by DoorDash in 2021, allowing customers to tack on convenience and grocery items to their regular prepared food delivery orders. Recently, this blurring of the lines between restaurants and retail has picked up speed: DoorDash began offering makeup delivery in March through partnerships with Sally Beauty and Mac Cosmetics, Grubhub customers can now order food through Amazon, and as of May, thousands of Uber Eats restaurants are now available on the Instacart app.

“People who order grocery delivery and restaurant delivery really value convenience: that’s the common thread,” Daniel Danker, chief product officer of Instacart, said. “There’s a ton of convenience in having both of these options available in a single app. Being able to pick up groceries for the week from your favorite retailer and something easy for dinner that night is a game-changer.”

Related:Customers can now order Grubhub delivery on Amazon

Although Instacart customers can’t put groceries and restaurant food in a single order at this time, there are advantages to having both in one app. For example, when customers place a grocery order of $100 or more via Instacart, they will get $5 off their next restaurant order (or $10 off if they are an Instacart member).

“In the ‘get it now’ era, more and more consumers simply expect a frictionless delivery option to get whatever they need from their favorite restaurants, stores, and brands – whether it’s breakfast or dinner, a last-minute grocery order, or sending a bottle of wine to a friend,” Sarfraz Maredia, vice president of US and Canada delivery for Uber Eats, said.

Some delivery services like GoPuff, have taken the “get it now” culture to heart from the beginning. While GoPuff originally started as a hookah delivery service, the company quickly expanded to convenience and alcohol delivery. In 2022, GoPuff began dipping its toes into foodservice by partnering with restaurants like BurgerFi and even starting its virtual food brands like Mean Tomato (a pizza brand) through GoPuff Kitchen.

Related:DoorDash adds grocers, liquor stores to alcohol delivery roster

These days, while the company has largely moved away from foodservice, GoPuff recently started partnering with Starbucks primarily to fulfill late-night beverage deliveries after most Starbucks stores close. Go Puff also recently launched digital storefronts in partnership with retail brands like Ben & Jerry’s and Oreo to bolster the retail side of the business.

“GoPuff was built around this idea of instant commerce,” Daniel Folkman, senior vice president of business at GoPuff, said. “The idea of having micro-fulfillment centers in every city and owning the inventory, was built around the consumer need for instant gratification….We went from being this hyper-focused convenience player to offering everyday items across multiple categories, including alcohol, ice cream, beauty products, and the Starbucks partnership fits in as a natural evolution of that.”

Folkman said that as a new dad, running out of diapers in the middle of the night could be a nightmare, but he could place an order for diapers through GoPuff, and then tack on a coffee order and receive it all at the same time. This naturally changes the typical Starbucks experience, which for many customers, involves placing a food and beverage order through the Starbucks app, and picking it up in person at your nearest café. Through this new partnership, Starbucks beverages can be delivered in the middle of the night in the same shopping basket as retail items (like diapers, for example).

“Customers want to be able to buy all of these things together, in the same place, at an affordable price,” Folkman said. “They want to log onto the platform, they want the stuff that they need to be in stock, and they want to get the products quickly. They’re being very vocal about that.”

These days, GoPuff is mostly a retail-centric delivery company with foodservice components. On the other end of the spectrum is Wonder: the Marc Lore-founded, New York City-based food delivery service with a brick-and-mortar foundation. Wonder’s unique operating model mixes elements of a traditional food hall with a delivery kitchen and shuns the “ghost kitchen” label by operating physical food halls, as well as offering delivery options for customers.

At the end of 2023, Wonder began adding retail to the mix with the acquisition of meal kit service, Blue Apron, with the goal of becoming a one-stop-shop platform for meals. In February, Wonder announced a partnership with Walmart, and opened its first food hall location inside a Walmart in Pennsylvania in a smaller footprint than Wonder’s usual physical locations. Although restaurants opening in retail stores is nothing new, Wonder’s unique operating model adds another opportunity for shopping to join together with foodservice.

“At Wonder, we’re building this ‘super-app of mealtime,’” Daniel Shlossman, CMO of Wonder, said. “If I’m ordering poke for myself and my wife, I’m not just thinking about dinner for tonight, but I’m also thinking about what I’m cooking tomorrow night, and make sure I have those ingredients, maybe through a meal kit. This is not something that’s being done right now.”

As Wonder begins dabbling in retail more, Shlossman said he sees opportunities for overlap between the two. For example, Blue Apron meal kits are currently for sale in Wonder’s retail locations, and also available for delivery. The company is currently testing the ability to add singular meal kits on to a Wonder foodservice order, even though typically, Blue Apron operates as a subscription model rather than a la carte.

“Our mission is really to make great food more accessible, and that can mean a lot of different things,” Shlossman said. “We built proprietary technology to create this seamless delivery experience on the consumer side that allows us to both produce [the food] and fulfill orders. It’s how we differentiate ourselves from individual restaurants, or food halls, or delivery services.”

Contact Joanna at [email protected]