Green Meals on Wheels?by tim w. ferguson
tim ferguson, the former editor of Forbes’s Asia edition, writes about business, economics and society.
Published March 26, 2019
If the app-driven, on-demand economy sometimes seems to parody itself, DoorDash’s latest ingestion of $400 million in venture capital is a reminder that some very serious investors are ready to bet that the joke’s on you. DoorDash, a five-year-old startup that is already the second largest meal delivery service in the United States, has raised over a billion dollars in capital — and, judging by the terms of the investments, can claim a value in excess of $7 billion.
Actually, maybe the nine-figure valuation shouldn’t be so surprising. The numbers are changing rapidly, but a common ballpark figure is that one household in five is ordering meals for delivery at least once a week. Although one might expect the target demographic to be the overworked urban professional too wrung out to cook or even eat out, a 2016 McKinsey report estimated that three-quarters of meal orders still come on weekends.
The U.S. is not alone in its fascination with store-to-door food deliveries driven by smartphone. One 2013 startup, Deliveroo, offers service in 200 cities in Europe, the Gulf states and Southeast Asia. But the renaissance of remote shopping (a century ago, it was the ice/egg/milkman and the Montgomery Ward catalog) is an especially acute choice in the land of the ubiquitous private vehicle. Previously the auto or SUV was the way most Americans got their food or any other item smaller than a refrigerator. Now a Task Rabbit will bring it.
Which, in the broader era of e-commerce, raises certain questions: even if “free” or promotional delivery charges make the convenience affordable to the consumer, what of the broader impact on the economy and society? There’s the new army of low-paid gig-economy workers, whose plight (albeit voluntary) is giving political progressives heartburn. There’s the extra packaging that is often needed to protect perishable fare en route. And frequently, there’s the fallout from the transport; just how much carbon did DoorDash et al. dump in the atmosphere to bring you that quinoa salad you could have collected on your other rounds? And how much did the delivery van add to already-wretched urban traffic congestion?
The social bottom line is not clear, so it’s probably good that nobody has gotten around to setting ground rules (other than health and safety) for food delivery. Even the most prescriptive scenarios for a Green New Deal do not address the delivery-or-no-delivery question. Yet, if the projections of growth are anywhere near right, it’s only a matter of time until a regulatory finger or three is pointed at gluttony-to-go and not just whether the plastic straws end up in the ocean.
Meal delivery, of course, comes in various forms, including FreshDirect and Peapod or, for those who cook by the numbers, the Blue Apron meal-kit delivery variants. But DoorDash and its U.S. rivals (GrubHub, UberEats, Postmates) are among the most visible to the urban dweller because nearly every apartment house and office building lobby is becoming a real-time depot.
If the projections of growth are anywhere near right, it’s only a matter of time until a regulatory finger or three is pointed at gluttony-to-go and not just whether the plastic straws end up in the ocean.
From the time pizza was first ordered to go, the efficiency/ convenience/ environment tradeoffs have been baked in. Start with time and tastiness. It will cost the eater at least several minutes to fetch an order. But until the drones arrive, the first morsel will generally be mouth-bound quicker if you hike to the counter and get it yourself.
Let’s assume everybody is willing to add handsome tips for deliveries, thereby skirting much of the labor exploitation angle. If either the customer or deliverer uses a vehicle in the process, the externalities really add up. Packaging becomes more of a factor, for one thing. But then consider the fuel use and exhaust, compounded by the traffic congestion. Which will the planet feel more: you going to Sweetgreen or DoorDash bringing it to you?
Well, it depends. How rational are the logistics (grouping errands or orders, rationalizing routes, maximizing proximity) on either side? Is either using renewable energy or at least fuel-efficient vehicles? Dinner time or lunch?
The meal-on-remote-request revolution is too new to have yielded much academic study of such concerns, but the earlier arrival of mass online retail allowed for work on the broader delivery effects. Strikingly, e-commerce won out in terms of environmental concerns, especially as it got savvy about warehouse locations. A 2010 paper from the Logistics Research Centre at Scotland’s Heriot-Watt University noted a “last mile” carbon-footprint advantage for nonfood deliveries unless the traditional shopper took the bus. Another study by a European trio two years later found that online clothing sales were more CO2-efficient than brick-and-mortar buys, except in cases of nearby shopping or returns.
Meals on wheels may increasingly come to resemble the hyper-efficient FedEx delivery model and capture more of this edge. At least two notable entrepreneurs are centralizing the kitchen component — not with the objective of becoming greener-than-thou, but to more profitably handle exploding demand. Travis Kalanick, who parted ways with Uber (and UberEats) in 2017 over nongustatory matters, has bought a controlling stake in CloudKitchens, which has the mission of extending the preparation and delivery reach of otherwise-constrained eateries. And at Dig Inn, a wildly popular farm-to-table, fast-casual chain in the New York-Boston corridor, founder Adam Eskin has an MIT engineer heading the firm’s Room Service push to relieve eat-in locations of the app-order inflow by adding well-situated preparation nodes.
Assuming the smartphone has indeed changed shopping and noshing practices for a long time to come, the outs-and-ins of delivery are going to matter even more — and not just to buyers and sellers. My puritan bias is for the customer to be required to cover the collateral damage. But as a practical matter, it’s probably better to put the onus on sellers to make the whole dynamic best for all concerned. Even for those of us who get a little app-oplectic when we see DoorDashers in the lobby.