Is Surge Pricing the Future of Food Delivery?
Imagine this scenario: On a freezing cold February day, having a hot bowl of pho delivered to your home will cost you a small fortune; meanwhile, when it’s sunny and 70, that same soup will be a bargain. It’s called dynamic or “surge” pricing – yes, that same thing Uber uses to gouge your wallet when it’s raining – and according to at least one industry player, it’s the future of food delivery.
In a recent guest piece for VentureBeat, Michael DiBenedetto, cofounder and CEO of food delivery search engine Bootler, made the ominous claim “Surge pricing is coming to food delivery.” His hypothesis: A need for this forthcoming introduction of ever-changing delivery fees is “sheer economics.” “Food delivery companies need to somehow compensate for rising driver costs,” he writes. “They can’t increase restaurant commissions. Most delivery companies take between 10 and 30 percent of each order depending on their model, and restaurants already operate on slim margins. Consumers will have to make up the difference by paying variable delivery prices.”
Granted, we have to take into account the messenger. Would dynamic pricing make DiBenedetto’s company Bootler – a search engine that compares delivery fees to find you the best deal – more useful? Almost certainly. But at the same time, the CEO’s arguments aren’t misguided. As more drivers are needed across all industries, acquiring them becomes more competitive. Surge pricing could be a simple way to boost profits.
Still, the idea of delivery going all surge on us is still speculation. As delivery bigwig GrubHub told Eater, “Grubhub does not utilize surge pricing and we don't have any current plans to do so. We are committed to presenting diners with transparent, accurate pricing and an unmatched variety of local options.” Thank god. For a second there, I thought I might have to resort to cooking a meal.