The past, present, and future of food ordering startups
Original version posted on January 10th, 2023 on Medium.
Put yourself in your parent’s shoes for a second.
A mere 30 years ago, here’s how you could order food: at a restaurant’s table, register, or drive-thru, or you could manually call the restaurant.
In the last 30 years, the number of options has exploded. The commercialization of the internet and the proliferation of smartphones has led to Uber Eats, apps for every fast food restaurant, websites, QR codes at tables, and even food ordering on TikTok.
We are living in the golden age of innovation in food ordering. Hundreds and hundreds of startups are examining the age-old rituals we participate in every day to order food. They’re rethinking everything — nothing is off the table.
In 20 years from now, our kids will laugh at how we ordered food today. If you disagree, think about how you ordered food 20 years ago… this space is RIPE for disruption.
But to examine that future, we must understand and contextualize the past.
In this article, we’ll examine the past, present, and future of food ordering and look at the cutting edge of innovation in food. Additionally, we’ll posture what models may be successful and what ideas we want to see in the world.
Let’s dig in.
Market definition
Before we start, let’s quickly align on the boundaries of this market.
In this article, we’re focusing on companies that enable food ordering and payments — aka any place where you can place or pay for food orders and the tech that enables those orders. This general realm also includes companies working to help restaurants manage their online presence and equip them with online ordering capabilities.
Adjacent to this space (not in the market definition) are companies that are focusing on other services for restaurants, such as:
- Restaurant & inventory management: Foodics, Odeko, Zak
- Marketing & loyalty: Fivestars, Thanx
- Order aggregation: Deliverect, Ordermark, Chowly, OrderNerd
Now, let’s take a look back at the history of startup attempts in and around food ordering to get a better perspective on where we’re at today.
History
Phase 1 (Pre-1994)
Pre-internet
The pre-internet phase can be defined by comparatively fewer ways to order food. On-premise ordering offerings were what you would think — ordering at the table, at the register, or at the drive-thru. Off-premise ordering offerings were calling the restaurant on the phone.
Delivery options were severely limited and were most often offered with certain cuisines that generally traveled well, such as pizza and Chinese food.
Phase 2 (1994–2006)
The Rise of Online Computer Ordering
Described as a “glorious” phase by the one of us who lived their adult life in this phase, this phase was kicked off by the first online order in 1994 via Pizza Hut’s Pizzanet.
Throughout the next several years, companies such as Waiter.com, Seamless, and Snapfinger formed with similar business models: they would enable restaurants to take online orders and add them to their directory of businesses that consumers (or businesses) could search online. These are called “restaurant aggregators” — basically the yellow pages of restaurants that do online orders.
The biggest company you would’ve heard of in this phase is Grubhub. They actually started by helping companies build menus online, before pivoting to eventually build the mobile 3rd party delivery app in 2010.
Phase 3 (2007–2015)
Mobile Ordering and the 3rd Party Delivery
With the release of the iPhone in 2007, a new wave of startups were created to help companies take mobile orders, both through web browsers and mobile apps.
The biggest trend in this phase was the rise of 3rd party food delivery companies. In the U.S., Grubhub (2004, mobile in 2010), Postmates (2011), DoorDash (2013), Uber Eats (2014) all took the yellow pages / restaurant aggregator model a step further by outsourcing delivery to gig workers.
By 2015, online orders would overtake call-in phone orders in terms of total volume.
Phase 4 (2016-present)
Neo-Innovation
Since 2016, innovation has occurred at every point of food ordering. Startups are taking bite-sized pieces of how customers order and building tech to make the ordering experience ten times better.
Notable examples of this have been with:
- Table ordering → QR codes at tables (Sunday, Mr Yum, Up ‘n go)
- Drive-thru → AI voice solutions (Presto, ConverseNow, SoundHound)
- Pickup → Curbside pickup and other models (Curbside — acq. by Rakuten, Swipeby, MealPal)
We’ll dive more into these cool startups later and the many, many other examples of innovation in this space.
This phase has also seen the proliferation of several new channels to place orders.
- First is social media, in which consumers now have the ability to order food through existing social media platforms (Facebook, TikTok), as well as some newer food-specific social media platforms, such as Mustard.
- Second is text-based ordering, which we are beginning to see in various ways. This area is still nascent and ripe for opportunity, but OhWaiter and Up ‘n go are trying interesting models here.
Food ordering market layout
Here is a market layout of the food ordering space, categorized by where the company focuses (e.g., drive-thru, table, website). A lot of companies do multiple things in this space, so there is a good amount of overlap between categories. Additionally, the POS and Restaurant Aggregation / Delivery sections are less exhaustive than others.
Novelty
At the studio, we celebrate novel ideas to tackle these problems in all their forms. Here are the categories of startup attempts that we have found particularly interesting:
- Social food ordering: A bunch of companies are exploring ways to increase word-of-mouth marketing for restaurants. Ritual, Snackpass, CHEQ, and Gobble are a few of the many examples of companies trying really novel ordering models. This feels like an area ripe for innovation.
- QR code ordering: Several companies are rethinking the table ordering rituals. QR codes at the table for ordering and payments have shown surprising benefits for restaurants (e.g., increasing table turns by 15–20 minutes and order value by 20–40%). Sunday and Mr Yum have raised the most to-date, but there are a ton of smaller players with promise, such as Orderli, Up ‘n go, and Cheqout. POS players are also starting to enter the fold.
- AR / VR Menus: Several companies, such as Menu3 and Appeteyes, are working to help you visualize the food you order ahead of time. These are cool, but seem like they may not be the last-movers in this space. What can this technology enable?
- Rethinking the drive-thru: A bunch of cool startups (Presto, ConverseNow, SoundHound, kea, Bensen AI) are working on Voice AI to replace workers at the drive-thru. Another startup, Bite Ninja, is taking a different but equally novel approach: they offer “cloud labor” to take your order at the drive-thru — like a remote worker on Zoom.
- SMS ordering: Text ordering is a channel that hasn’t seen significant proliferation, despite its usage in our regular lives. OhWaiter looks like it’s doing cool things in this space.
So what’s next in food ordering?
As a startup studio, we are always looking for what’s next in various hyperlocal spaces. Here are the parts of the problem we think are the promising to explore:
- MealPal for X: MealPal gained traction in New York after its founding in 2016, but has struggled since the pandemic. Could another pass at this in the new world exist? Could it focus on dinner ordering, despite its different characteristics?
- Focus on re-ordering: 3rd party food delivery apps were built to encourage consumers to explore (to recoup on advertising $$$), not for re-ordering. Could a product tailored for the re-ordering experience be a wedge to displace Uber Eats / Doordash?
- Social food ordering: Ritual, Snackpass, CHEQ, and Gobble have shown some of the potential in social food ordering, but these solutions feel 20% of the way to the answer. What’s the next model to break down barriers between inspiration → purchase intent → completed purchase?
- Coffee: Coffee is unique in food ordering, due to its ordering cadence, pickup preference, and back-end shop similarity. Tons of startups have gained traction in this space recently (Odeko, Cloosiv, Joe Coffee). What’s the next model here?
- Unbundling of TikTok: TikTok is starting to get unbundled as startups build better products behind popular use cases. Beauty and fashion are great examples, with the promise of Supergreat, Trendio, and Jamble. Food videos are some of the most common on TikTok — could a specialized product, such as Mustard, gain traction?
