How food delivery apps are set to spend on location tech

Competition is rampant in the food delivery industry— advanced location technology remains crucial to stay ahead.
6 January 2020

Location technology delivers the best route. Source: Shutterstock

Thanks to Domino’s Tom Monaghan’s invention of the corrugated cardboard box in the early 60s, the history of food delivery services owes a lot to the humble pizza. 

But the sector has come a long way since then, and as consumers’ literal appetite for instant appeasement has gathered pace, so too has the sophistication and abundance of food delivery services— 86 percent of consumers now order in on a monthly basis, and in the UK, the takeaway delivery market has doubled from £2.4 billion (US$3.14 billion) to £4.2 billion (US$5.5billion) in 2018, a growth of 73 percent over the decade. 

Convenience is at the heart of this growth, and that’s an attribute chased by the likes of apps such as Uber Eats, Deliveroo, Foodpanda, and OLO, to name just a few. 

This abundance of choice is great for consumers, of course, but means competition is rampant for those in the industry and as such, food delivery firms are throwing more and more money at technology in order to remain at the bleeding edge and location technology is a key area of investment.

According to ABI Research, over the next five years, food delivery firms’ spend on location technology in the food delivery space will be driven by two key factors.

# 1 | Cost-effectiveness

Location technology relies on data transmission from various sources for positioning operations and location identification. 

Food delivery companies are turning to location technology to streamline operations and, thus, increase profit. Location technologies have the ability to combine real-time road data and granular map information to plot delivery routes efficiently.   

Leveraging this data, food delivery personnel can optimize their routes, delivering in the shortest time possible and increase accuracy in arriving at drop-off and pick-up points.

For an industry that measures profitability per unit of time, the reduced time for each successful delivery is a desirable outcome. 

# 2 | Technology advancements 

The majority of ride-hailing and food delivery businesses depend on GPS technology to search for routes and locations of designated points, and this established technology is still seeing advancements. 

For instance, the Australian government started a US$12 million project to develop Precise Point Positioning (PPP) through a Satellite-Based Augmentation System (SBAS) and expand the global navigation satellite system (GNSS) positioning. 

Meanwhile, the use of artificial intelligence (AI) to create predictive models for companies to evaluate the performance of restaurant partners, driver’s performance, route efficiency, and consumer behavior is known to be insightful and critical in finalizing business decisions. 

Many of these technology trends are not only streamlining the dynamics of business operations but are also innovating and challenging business models. 

For example, the merge between Just Eat and last year signals a trend of collaboration and acquisition between tech-driven companies. The duo is set on leading the European market and with the combined force to compete better with food delivery giants— Uber Eats and Amazon-backed Deliveroo

“The combination would create one of the largest food delivery companies in the world, with scale, strategic vision, industry-leading capabilities, leading positions in attractive markets and a diversified geographic presence,” Just Eat claimed.