CASE 1: Uber-izing Food Delivery Shows Limitations As the new millennium entered its second decade, the platform economy was the new world order, Uber one of its largest kingdoms, and Travis Kalanick, the crown prince. There were the TED Talks, keynotes, the life of a rock star, and the wealth of royalty. Especially after Uber, a company he co-founded with Canadian Garrett Camp in 2009, rocketed to almost $50 billion valuation 8 years later. However, by the time of the ride sharing company's 2019 IPO, Kallanick had been ousted as CEO. His apparent cutthroat/ take-no-prisoners mentality and obsession with winning had figured prominently in a corporate culture exposed in 2017 by the New York Times as being overrun by an "aggressive, unrestrained workplace culture." The IPO opened at $45 a share in May 2019, closed at $41 at the end of trading, and has spent more time below the initial valuation ever since. But this is not a story about Kalanick, Uber, or even the platform economy both were so instrumental in creating. No, this is a story about human behaviour and how understanding it is the most valuable knowledge a company can have. DoorDash, arguably the first company to launch an app connecting hungry customers with profit-hungry restaurants, together with UberEats and GrubHub command over 75 percent of the food delivery service space in the United States. Canada's first entrant, Skip The Dishes, began as a service for working professionals to provide quick and easy access to a wider variety of restaurants. This differed from the opportunity-need the American companies were tacklingfood convenience for customers (beyond pizza and Chinese food, which had been staples of food delivery since the telephone era). As well, food delivery services would connect restaurants without delivery services with customers looking for delivery, resulting in a new market category for restaurant owners. This would help everyone from quick-service restaurants, such as McDonalds, to fivestar restaurants, which would have previously shunned delivery and thus not even provided a delivery option for customers. As with Uber, the macro-opportunity was convenience, satisfying a time-starved market. In the beginning, it seemed to be working as convenience trumped all. Even at 20 to 30 percent commission rates, restaurants were quickly jumping on to the growing number of Copyright 2022 by Cengage Canada. platforms. If they didn't see the value in the service itself, they looked at it as a competitive necessity because everyone else was doing it. And everyone was doing it because customers wanted the convenience. Customers enjoyed this new platform that brought any food from any restaurant to their home, office, or school. In Canada's cold climate, the convenience went further. We could jump on to our favorite food delivery platform and choose a meal from our favorite restaurant then eat it in the comfort of our kitchen table. No warming up the car, driving through winter storms, or brushing snow off the windshield. You could also have more than one glass of wine with your meal without fear of impaired driving. By early 2019, the sky was the limit for the food delivery industry, with some analysts pegging the market value globally at as high as $3 trillion. Canadians ordered $1 billion worth of meals through delivery apps in 2018, and another $3 billion on meal kits such as Blue Apron. TOO MANY COOKS? Despite the sharp growth in market use and revenue, the food delivery space began taking on water almost as soon as it got off the ground. The central issue, as always, had to do with costs. Commissions were eating away at restaurant profits, while the major app platforms were also squeaking by on "very, very thin margins," according to Foodora Canada's General Manager David Albert. Some restaurants accepted the toll but opted out of the program due to reliability issues. These include infractions ranging from the predictable, such as late or neglected order pickups to the downright creepy, such as drivers nibbling on orders prior to delivery; a survey conducted by US Foods found that 28 percent of food delivery drivers admitted to this behaviour, casting a whole new meaning to the term distracted driving. On the other hand, perhaps drivers are merely trying to balance the books in terms of their remuneration. A class action lawsuit was filed in Winnipeg in 2018 by a former Skip the Dishes driver who claimed he and his counterparts were not being fairly compensated by the company. The lawsuit claimed everything about Skip's hiring, training, and fee processes smack of employment, and yet drivers do not receive minimum wage, vacation, Copyright 2022 by Cengage Canada. or overtime. The lawsuit in question was put on hold in November 2019 pending the outcome of a similar case brought up against Uber Eats by one of its drivers in Toronto. All of this brings us back to one rather unexpected consequence of food delivery services: teenagers. With dual-income households scrambling to get lunches into backpacks as kids scurry out the door, someone came up with the novel idea of having said child's meal delivered to them via the app instead. The problem became so great by the spring semester of 2019 that school districts across Canada were forced to create food delivery policies. Said James Johnston, principal at Semiahmoo Secondary School in Surrey, BC, after noting delivery drivers showing up throughout the day and traipsing through his school, "We started thinking about that as a bit of a safety issue." Finally, we end the discussion in the same place much of the food delivery packaging winds upin landfills. While not yet raising environmental alarm bells in North America, scientists estimate that food delivery in China resulted in 2 million tons of packaging waste in 2018. While it should be pointed out that China far exceeds any other country on earth in its use of food delivery apps, the US market is actually greater per capita. Either way, China, the United States, Canada or any other country where food delivery apps have entered into ubiquity will have to eventually come to terms with increased pressure brought to their already over-burdened sustainability programs.

QUESTIONS

1. Suppose you are a new intern for Skip the Dishes. On your first day on the job, your boss decides to see what you are made of and asks you to prepare a SWOT analysis of your new employer. Using this case, and any other resources available to you, make a simplified SWOT, showing what you consider to be, at minimum, three most important strengths, weaknesses, opportunities, and threats currently facing the company.

2. The case you have just read was written in early 2020. What opportunities and threats have entered into the food-delivery market that was not noted in the case? Use the CREST model for your responses. Copyright 2022 by Cengage Canada.

3. A growing trend in the food delivery industry is "ghost kitchens." This concept is made possible specifically because of the demand for food delivery and consumers' penchant for variety. Find an example of ghost kitchen operation within your community and elaborate.

4. Food delivery apps introduced a new way of accessing and consuming meals. Around the same time that these were showing up, meal-kit delivery companies such as Blue Apron and Good Food were penetrating the meal market as well. List the main differences between these two entrants into the food industry.