Restaurant Tech War - aggregators vs technology enablers

UberEats, Doordash, and Grubhub among others are a household name today and perhaps rightfully so. In 2022, the cumulative revenue across meal delivery enablers was more than USD 62 billion – almost 3x of what it was in 2017. For most Americans, these players are a critical cog in fulfilling their meal needs, but they often take the limelight away from other players within the online food ecosystem. Let us try to unpack this for you…

Imagine this, you are visiting friends in Pennington, NJ and are in the mood for some good Indian food but are watching your budget as that’s the New Year resolution you made to yourself. You down select IndiGrill going by extremely favorable reviews on Yelp. You decide to go with your all-time favorites – Samosa, Chicken Tikka Masala, and Garlic Naan and prepare your order on UberEats. As you are staring at a receipt of $38 (including tips) you are reminded of the promise you made to yourself to keep your budget in check. Sensing your reluctance, your buddy nudges you to order directly from their website. As you unwillingly relent, you are pleasantly surprised by their intuitive interface to order a pick-up. You play along and guess what, the same order now costs you ONLY $27 (29% lower). You make the easy decision and enjoy a delicious meal – a win-win in the end.

The setting might be different, but it is becoming rather common for customers to order food directly from restaurants on days when you don’t feel like paying the premium for getting food delivered to your doorsteps. Restaurants are realizing this and looking to provide the right end to end experience for such customers to unlock revenues through an online D2C channel (vs. only being providers to an online marketplace). Underpinning this shift are technology players who are offering digital solutions like web-site management, digital POS payments enablement, inventory management etc. When we analyzed data from over 280,000 restaurants in the US that are listed on Yelp, we uncovered some interesting insights about these players who are enabling a change in customer behavior, away from the limelight. 

Let us look at a few prominent players in this space first (not an exhaustive list).

Priciest restaurants use Bentobox

As you process the data presented above, few things are clear:

• While there appears to be a sizeable addressable market for restaurant technology enablers, the current market is both crowded and underpenetrated – of the 270,000+ restaurants that we analyzed, less than 20% were evidenced to use restaurant tech. enablers 

• Certain cuisines use restaurant technology enablers more than others, for e.g., 26% of all restaurants predominantly serving Italian cuisine use one of the 8 enablers as compared to only 8% restaurants predominantly serving Chinese cuisine 

• Preference to use a technology enabler is also a function of average meal price at the restaurant, for e.g., average meal price across restaurants that use BentoBox is $33.0 as compared to only $23.0 for ones using Shopify

Similarly, more such insights can be gathered when we look at the distribution of these restaurant technology enablers across geographies (e.g., states, cities, localities). Let us expand on this by looking at Squarespace’s distribution across top US cities (by number of restaurants using Squarespace):

14% of NYC restaurants use Squarespace

• Clearly, the average meal price for restaurants that use Squarespace’s services is higher than the average meal price across all restaurants in that city, but the premium varies significantly by city – for e.g., while it’s less than 10% for New York City, it’s over 40% for Nashville 

• While the average rating of restaurants using Squarespace’s services is consistently higher than average restaurant rating in the city, Squarespace’s market penetration varies significantly – for e.g., with over 14% market penetration, New York City clearly appears to be a focal point of Squarespace’s business model. On the other hand, with under 3% coverage in San Antonio presents a clear opportunity for future growth

Interested in knowing how other enablers compare against Squarespace? Reach out to us via https://crustdata.com/contactus

About the data: The data is sourced from Crustdata’s Store Locations dataset which tracks the job listings of private and public companies in India and SE Asia. Crustdata tracks 1,000,000+ public and private companies in the world across 15 curated datasets.