# The unit economics of food-delivery apps

By [Brandon Donnelly](https://brandondonnelly.com) · 2021-10-13

food, food-delivery, food-delivery-platforms, mckinsey, tech, uber-eats, urbanism

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[Here](https://www.mckinsey.com/industries/technology-media-and-telecommunications/our-insights/ordering-in-the-rapid-evolution-of-food-delivery) is another article/report thing from McKinsey talking about the "fast-growing food-delivery ecosystem." In the US, the top food-delivery players are DoorDash, Uber Eats, and Grubhub (in this order).

What is clear is that these platforms are growing very quickly and that COVID-19 was of course great for the business of eating at home. The demand is there.

But what is also clear is that food-delivery is a low-margin business that depends on scale. Last-mile and single-point delivery is tough. This is despite the fact that consumers have shown to be willing to pay a fairly significant premium in exchange for the conveniences of on-demand meals.

Here's a chart from McKinsey that looks at the unit economics of delivery apps:

![](https://storage.googleapis.com/papyrus_images/1a70fcac4427e161b3a7b9c12ce38be5.png)

It is a race to capture "stomach share."

But surely this evolves and gets further optimized with the continued rise of things like ["ghost kitchens](https://brandondonnelly.com/2020/10/24/cloudkitchens-has-spent-more-than-130-million-on-property-over-the-last-two-years/)" and maybe autonomous delivery robots.

I remember driving home one night during the thick of the pandemic and placing an order on Uber Eats for pickup. When I arrived, I found a small food truck and one lonely guy in the middle of an empty (and wintery) parking lot on Lake Shore East. He handed me my poke bowls and I was on my way.

This is what is happening behind our apps and it's changing the way we eat.

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*Originally published on [Brandon Donnelly](https://brandondonnelly.com/the-unit-economics-of-food-delivery-apps)*