At your service: How the influx of food delivery options could change the Austin landscape


Austin has a reputation for being laid-back. Would it change us if we could get anything we want, at any time, almost instantly?

That might be too much to think about all at once; let’s focus on food. What if it were easier to have your groceries picked out and delivered for a fee than to go shopping yourself? What if it were cheap and simple to have food from practically any restaurant brought to your door?

It soon may be time to weigh your options. Austin is following San Francisco and New York as a burgeoning market for delivery-service startups ranging from nationally known options such as Instacart and Postmates to homegrown companies such as Nimble Foods, Greenling Organic Delivery and BrewDrop. Some are well-funded by a hungry venture capital industry that sees huge potential in the so-called “instant-gratification economy” while others are scrappy competitors looking for attention and new customers with generous promotions and giveaways.

They’re being used by people like Catherine Shattuck, a stay-at-home mother of 3-year-old twins whose family moved to Austin in March from San Francisco. There, she used Instacart and a service called Good Eggs to get groceries and locally grown food.

When she relocated, Shattuck said, she quickly checked her options. “I did the research to see if I was going to be able to have all the conveniences here.” Not all are available, but she’s found alternatives such as Greenling for fresh food delivery. She uses grocery delivery on occasion and restaurant delivery services such as Postmates and GrubHub so she can spend more time with her kids, seeing friends or working on a book she’s writing.

“It seems silly to prioritize grocery shopping when someone else could do it for me,” Shattuck said. And with restaurants, she has food allergies and looks beyond the typical pizza and Chinese delivery. “It’s really about having a wider variety of delivery options when you don’t feel like cooking yourself. With two kids, I don’t always want to grab them and haul them across town in the car.”

Shattuck doesn’t mind the mark-up on grocery or restaurant items and has even found a way to save money using grocery delivery: she can shop at Costco via Instacart. “You’re paying fees, but you’re not spending money on gas or a membership,” she said.

Delivery’s new wave

What’s different about the new wave of delivery services is that they are piggybacking on technologies that didn’t exist, or weren’t mainstream, even four or five years ago. First, there’s your cellphone. More people now own smartphones than don’t, and these phones are equipped with GPS, making it easy for delivery apps to find you and get things to you more quickly.

The cellphones, typically iPhones and Android-based devices, can download mobile apps that make ordering speedier and easier. A grocery- or restaurant-delivery app can store your credit card information, grab your location — even if you’re not at home — and put you in touch, via texting or phone call, directly with the person bringing restaurant fare or groceries to you.

A wave of transportation startups such as Uber and Lyft have made popular the concept of independent contract laborers who can pick up a freelance gig at any moment via their own smartphones. In what some call “the sharing economy,” newer members of the workforce are typically digital natives open to working for a company that might not even have an office or whose only product is an app or a service that might seem capricious to others.

Isaiah Reed, a 23-year-old tech support employee for Cisco Systems, has been a part-time driver on nights and weekends for Favor delivery service in addition to his full-time job for the past two months. On a good six- or eight-hour stretch, he can make about $140 via his iPhone, driving his Hyundai Tiburon around town, making a percentage of the cost of each order plus tips.

“It’s very flexible. It’s not particularly hard, picking up and delivering things to someone’s house,” Reed said.

The orders, however, can be a little unusual, he says. “One time, I had to get toothpaste, a pregnancy test and a pint of strawberry Blue Bell ice cream from H-E-B,” he said.

Delivery services such as Postmates and Favor don’t need lots of employees or to keep any kind of inventory to do what they do; freelancers, often students or people who have other part-time jobs, accept a delivery gig on the fly, earning a fee (and sometimes mileage). The food comes from a third-party restaurant or grocery store. All the delivery services have to do is build a great app, engage in good customer support by phone, email and social media networks, and, perhaps most importantly, get noticed.

That could mean heavy discounts, especially for first-time orders, or giveaways. Postmates, for instance, is a San Francisco startup that launched in Austin in June and has delivered free doughnuts and burritos in addition to offering a $10 discount for new customers. It has plans to expand its Austin delivery zone soon.

The startups doing business in Austin, as well as the dozens trying to capture the market on each coast, are bumping up against more established delivery businesses such as Mr. Delivery and GrubHub.

GrubHub, a Chicago-based service available in 700 cities, has a slick app and went public earlier this year. It offers the 30,000 restaurants it serves a tablet tool called OrderHub to keep track of orders placed online and has been aggressively trying to own the market of diners who want food delivered quickly.

“We understand that audience better than anyone,” said Abby Hunt, director of public relations at GrubHub, adding that good service must always be the priority. “Marketing can drive people, but if the experience is bad, they’re not going to stay with you.”

 

Two Austin-based companies, Nimble Foods and Demand Food, are carving out a new niche in this delivery space: restaurant-quality food without a restaurant. The catch for both is that the menu is limited to two or three dishes each day, each costing less than $10 per entree, including delivery.

To speed up the delivery process, drivers carry dozens of meals at a time to minimize trips back and forth to the main kitchens, which means customers can get the meals they ordered online in far less time — five to 10 minutes, in some cases — than it would take to place an order at a restaurant and wait for it to be prepared and delivered.

Groceries at your door

When consumers first started buying things on the Internet for home delivery, analysts predicted that groceries would be one of the segments that would really take off.

But more than a decade later, American consumers might buy some personal care products or paper products online, but they are still buying fresh produce, meat, milk and the majority of other food items at traditional supermarkets.

The problem is the cost of establishing a supply chain. FreshDirect and Amazon Fresh are the two biggest competitors in online grocery delivery, but they only serve some parts of New York City (Fresh Direct) and metropolitan pockets of the West Coast (Amazon Fresh) because that’s where they’ve been able to build warehouses serviced by expensive cold-storage trucks.

On a local level, Greenling, Farmhouse Delivery and a handful of area farms offer produce and grocery delivery. In recent years, Greenling and Farmhouse have expanded outside Austin (to San Antonio, Houston and the Dallas-Fort Worth area for Greenling; Farmhouse now delivers to Houston), but they don’t offer the quick turnaround that bigger delivery-on-demand companies are betting customers are willing to pay extra for.

A handful of grocery companies around the country allow their stores to offer delivery service, but no large-scale retailer has been able to maintain it for more than a few years. (That could change soon. This week, Wal-Mart announced that it is testing same-day delivery in San Francisco, San Jose and Denver.)

“You have to be really good at something, and they are really good at what they are doing now, which is operating retail stores,”says Instacart general manager Aditya Shah. “But to do delivery well is really, really hard.”

Austin-based Whole Foods Market offers delivery from a handful of stores in the Northeast and at many stores in England, but not in Austin. Earlier this summer, they announced an expansion in their delivery efforts but did not release details at press time.

In contrast, without any physical infrastructure or warehouses to buy, San Francisco-based Instacart has expanded to more than 10 cities in less than two years.

Instacart sells goods at a slightly higher price than what customers would pay in the store, ranging from a few cents on a pack of ramen noodles or a can of tuna to a dollar or more for some meats, bread and dairy products, including a $4 mark-up on a gallon of organic milk at H-E-B. Customers can place an order through the app or online for delivery in as soon as one hour. You can also schedule a delivery at a specific time during the next seven days.

“It’s a convenience economy,” Shah says. “Three or four years ago, who would have thought you’d order a car to your door through an app? People are curious about something that’s new, and when they see the value of the service, they are easier to win over.”

There are some inconsistencies. Even though H-E-B, the area’s biggest retailer, is one of the stores customers can shop from virtually, the chain’s popular store brands are not available in Instacart’s online ordering system. Whole Foods’ 365 house brand products are.

Burpy and Couch Potato are two other delivery services that started out catering to people who live near the University of Texas but have now expanded beyond that area. They both sell items priced with a slight mark-up, and delivery fees start at $3 and inch up with every additional request or mile away from campus.

Like at Burpy, Instacart’s shoppers are trained to select cartons of milk from the back of the case, which tend to have a later expiration date, and select the best produce, including the slightly green bananas that are a day or two from ripening.

Eric Griffin has been delivering groceries in Austin through AustinGrocer.com since he purchased the company in 2011.

Large corporate orders make up the bulk of his business, but he says he adores his residential clients and, as a small business owner, gives them the kind of personalized service that many of them, especially the older, less tech-savvy customers, are looking for.

The online ordering system isn’t as slick as his competitors’, but Griffin says his attention to detail is what sets him apart. “I’ll take orders by text or phone, but sometimes, they’ll just cut and paste a list into an email,” he says. He can’t promise same-day orders, unless you call and catch him on a slow day and he’s already in your area.

Griffin, who had retired from a state government job when he bought the company from a college student who had founded it in 2004, charges customers exactly what it costs him to buy the products in the stores, plus a fee based on how many products they order, with a $15 minimum.

He’ll go anywhere customers ask him to shop, including Sprouts, Wheatsville and Trader Joe’s, and deliver the goods just about anywhere in greater Central Texas, from Cedar Park to Kyle.

“People’s lives now are just so busy, and they are just so in tune with being online,” he says. “If you live in a condo on Rainey Street, why would you want to drive to Whole Foods and spend an hour trying to park to get 20 items? When you pay that fee, you think, ‘I can do something else now.’ The younger generation is drawn to that.”

Plugged-in millennials aren’t the only customers testing out these services. A third of AustinGrocer.com’s new residential customers are in assisted living facilities or have physical limitations that make it difficult for them to get to stores, and he gives a VIP discount to clients 65 or older.

The future of delivery

So who will use grocery and restaurant delivery regularly? It’s likely to be early adopters who wouldn’t think twice about using an app to hail a ride from a complete stranger and those who can afford a steady stream of extra fees. Once introductory discounts are exhausted, ordering a mid-day snack from a restaurant can be pricey; with delivery fees and tip, a $10 order of Ken’s Donuts for the office we placed as a test turned into a $21 order.

It’s likely not for bargain hunters, and on the grocery side, it’s hard to image that price-sensitive, coupon-clipping power shoppers will hand over control and pay a premium to avoid a trip to H-E-B or Whole Foods.

Also, competition is likely to get very, very stiff soon, and it’s unclear how many of these startups will survive, especially when larger companies such as Google and Amazon are pushing into same-day and “instant” delivery.

The Austin landscape also presents challenges not faced in other cities. Austin is less dense than San Francisco and New York; some delivery services limit their coverage area and, as traffic worsens, fast delivery is a challenge.

Not all restaurants are embracing the use of these services. Some have dishes that do not travel well and have requested that companies not deliver their food. Others, however, that do not offer in-house delivery encourage customers to use one app or another.

Inconsistencies in delivery cost can also present challenges. Kurt Bradley, a product manager in Austin, regularly uses Favor to order food from local restaurants and, though he’s enjoyed using Instacart, wishes there was more transparency in the pricing.

“With Favor, they charge exactly what the restaurant does, plus their fee and a tip,” he says. “It’s not as clear with Instacart.” After using the Web-based ordering system several times, he and his girlfriend decided to shop the same list of groceries through the website and then in person at the store. The Instacart order cost $80, $20 more than the in-store total.

But as an Austinite who loves to cook but not shop, it’s an extra cost he doesn’t really mind paying from time to time. “We have busy, hectic lives, and it’s handy in a pinch.”



Reader Comments ...


Next Up in Lifestyle

Mayim Bialik, Marie Lu coming to Texas Teen Book Festival in October
Mayim Bialik, Marie Lu coming to Texas Teen Book Festival in October

Who is ready to see America’s favorite actress/author/girl nerd or the author of “The Young Elites” and “Legends” series? Mayim Bialik (which parents will remember from “Blossom” and kids know as Sheldon Cooper’s girlfriend in “The Big Bang Theory) will be at the Texas Teen...
Find the fun for the family in Austin this hot weekend, July 28-30
Find the fun for the family in Austin this hot weekend, July 28-30

If the words to “Hot Child in the City” are in appropriately running through your head, don’t worry; there’s a reason for it. It’s going to be 100+ all weekend. Grab some shade, find some indoor events or go early in the day. Bring  sunscreen, water and  bug spray with...
Austin360 recreation list, July 28-Aug. 3
Austin360 recreation list, July 28-Aug. 3

Markets Barton Creek Farmers Markets. 9 a.m. to 1 p.m. Saturdays. Parking lot of Barton Creek Square, intersection of South MoPac Boulevard (Loop 1) and South Capital of Texas Highway (Loop 360). 11 a.m. to 3 p.m. Sundays at 2323 S. Lamar Blvd.512-443-0143,bartoncreekfarmersmarket.org. Bastrop Producers Market. Indoor farmers market. 11 a.m. to 7 p...
Authorities: Texas mosquito infected Rio Grande Valley man with Zika
Authorities: Texas mosquito infected Rio Grande Valley man with Zika

A Hidalgo County man who was diagnosed with Zika probably caught it while in Texas — as opposed to catching it somewhere else and returning with it, the Texas Department of State Health Services announced Wednesday. The Rio Grande Valley case is the first infection this year that appears to have been transmitted by a Texas mosquito, health department...
Five tips to help you keep your cool while hiking on a hot summer day
Five tips to help you keep your cool while hiking on a hot summer day

Hikers explore St. Edward’s Park in May 2016. Photo by Pam LeBlanc May 9 2016   Hiking in Central Texas lately feels like walking across a hot griddle with a blow torch aimed at your face. That’s why Texas park rangers, who encounter lots of park visitors suffering from heat exhaustion and dehydration, want to share some...
More Stories