At SmallBusiness.com, we purposefully do not report news related to startups who are raising millions of dollars. Nothing against them, but they get plenty of coverage without our help. However, one startup segment embraced early by Main Street small businesses is food-delivery services. (It shouldn’t be surprising as pizza delivery helped create the concept decades ago.) Food delivery services show no sign of slowing, according to Steve King, a partner at Emergent Research and a regular contributor to SmallBusiness.com who shared with us the following:
$575 Million | Amazon is leading a $575 million funding round in the UK-based Deliveroo. If you aren’t familiar with the company, it operates in 14 countries and has 60,000 couriers that deliver from 80,000 restaurants globally. The current round of funding raises the company’s valuation to $1.53 billion.
$13 Billion | DoorDash is raising $400 million at a $13 billion valuation (up from a $7.1 billion valuation in February.
There are two key reasons food delivery is considered a big opportunity that is attracting these investments.
First, the potential is huge and the market is rapidly growing. Key stats from Manhattan Venture’s research report on Postmates (PDF), yet another food delivery company:
$30 billion | Estimated current U.S. food delivery market, 2019
$365 billion | Estimated value of U.S. food delivery market in 2030
5% – 10% | Fraction of restaurant sales that are currently delivered
20% | Fraction of restaurant sales set to grow to 20%
Second, investors believe food delivery business models can be profitable. (Based on the financial performance of the publicly traded Grub Hub.)
This marks Amazon’s renewed interest in this space. Amazon Restaurants pulled out of the U.K. last year and is only available in a limited number of U.S. cities. It is worth watching. It’s clear they see the delivery of anything and everything as being their target market.
But the consensus among investors so far is this: Food delivery is a big enough market with room for multiple players to be successful.
And with the growth of delivery services, new markets will continue to open up to the small and local food stores and restaurants who market to those who’d prefer to stay home for dinner tonight
Jack Taylor / Stringer / GettyNews