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Restaurant tech startup Toast is reportedly preparing for an IPO. It’s part of a growing group of companies offering restaurants alternatives to DoorDash, Uber Eats, and Grubhub and their hefty fees.


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For restaurants in 2020, the economic impacts of the coronavirus pandemic have upended business models and sunk revenue and profits.  

But for third-party delivery operators like Uber Eats, DoorDash, and Grubhub, 2020 was a pretty good year.

Delivery orders more than tripled, representing 10% of transactions compared to 3% two years ago, according to market research firm The NPD Group. Revenue soared and at least one delivery operator, DoorDash, briefly turned a profit during a quarter when most US restaurants were forced to rely on delivery and carryout to survive.

The pandemic highlighted the importance of having a robust digital business and it opened the door for online ordering players to promote their services as an affordable antidote to third-party delivery companies.

New players know they’ll never truly beat the big delivery operators on market share, especially amid consolidation in a space that is expected to reach $61 billion in sales in 2023, according to Cowen. Instead, rival services are focusing on niche offerings such as delivering specialty cuisines and meals served by drivers trained like fine dining servers.

“Third-party delivery has their hands full because there are simply too many competitors,” said restaurant industry consultant Gary Stibel, founder and CEO of New England Consulting Group.

The competition comes as third-party delivery companies face other headwinds in 2021. 

Temporary commission caps implemented by city and state officials during the pandemic to protect restaurant profits remain intact and could be mandated even in a post-vaccinated world. 

In California, a new law went into effect on January 1 that bans third-party delivery companies from delivering meals from restaurants without consent. The controversial tactic is common among Grubhub, DoorDash and Uber Technologies-owned Postmates. 

Requiring signed agreements is likely to go national.

“We are working on model legislation that makes it very clear that before a restaurant is listed on a platform, there needs to be consent,” said Mike Whatley, vice president for state and local affairs for the National Restaurant Association.

The end goal for the NRA and startups like Toast and Lunchobx is to give restaurants a fighting chance to survive the aftermath of the pandemic.

Here are the companies helping restaurants own their digital sales:

Chowbus

Chowbus was founded by Linxin Wen in Chicago in 2013 after he grew frustrated by the lack of authentic Asian restaurants listed on various delivery apps. 

Wen, who moved to the US from China to study public administration at The Illinois Institute of Technology, did what many frustrated entrepreneurs do when they can’t find a product that suits their needs. He created his own company — Chowbus.

In the early days, Chowbus delivered bundled meals from 50 to 100 restaurants to a central point in Chicago. 

Two years later, Wen partnered with friend and software developer Suyu Zhang, who created a sophisticated mobile ordering platform. That allowed the company to expand and nab its first round of seed money in 2018.

Chowbus now has more than 4,000 restaurants on its app from 27 cities in the US, Canada, and Australia. 

Kenny Tsai, chief operating officer, said consumers turn to Chowbus …read more

Source:: Business Insider

      

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