It’s been a big week in food delivery news.On Monday, we found out that UberEats would continue to operate even though regular Uber suspended its service after losing the Prop 1 vote.Then, we got word that Nimble Foods, a company that was delivery meals made in a commissary kitchen, not a restaurant, was shutting down.
All week, I’ve been working on a story about the founder of Eat Out In, who revolutionized the entire industry when she started delivering from multiple restaurants in 1986. As I was finishing that story, which you can read next week, I found out that Demand Food also recently closed.
Demand, like Nimble, set out to own more of the supply chain that the Favor, UberEats and Postmates of the world. Instead of relying on restaurants to provide the food, those two companies set up their own commissary kitchens to prepare the food that runners would then drive around with until someone ordered, which meant you could get food in less than 10 minutes.
In a letter on its website, Demand went into more detail than Nimble did about why the business model was not sustainable:
“After serving thousands of people and trying our best to exceed expectations, we find the business model too unsustainable at this current time. Put simply, it has always cost much more to make and deliver these meals to you than we were charging — a lot more. Anybody offering a similar high-quality service is also (most likely) operating at a loss. Companies do this because at some point in the future, enough technology advancements will enable them to break even. Unfortunately, we are still ahead of the times.”
It can be hard to keep up with all the delivery options these days, and the website for Harvest Delivery, one Austin company that hoped to solve that problem by aggregating services, is not accepting orders right now.
A sign of more closures to come? We’ll see.