Coupang Eats is ranked the third largest food delivery platform in Korea. It is a restaurant delivery service, similiar to Uber Eats in America. Regardless of the geography, delivery platforms attract workers by offering flexible work hours and turning it into a game. Food Delivery platforms gamify the industry by giving bonuses when it rains, long distance delivery, and special missions. This food delivery model can be applied all throughout the world.
Scooters are the preferred method of travel because of the small winding roads and ease of parking in Korea. It is common in Korea for food delivery men on scooters to run red lights for quicker deliveries.
The business model for a food delivery platform is to charge fees to restaurants and customers. The restaurant fee is in the form of a recurring fee for accepting online orders, commission fee, and/or flat fee per order. That’s a lot of fees.
Baedal Minjok charges a flat monthly fee of $73. In 2020, Baedal Minjok tried to introduce a fixed-rate commission fee 5.8% per order but was met with backlash from restaurant owners. The founders apologized and reverted back to the flat monthly fee.
For customers, there are fluctuating delivery fees depending on all kinds of scenarios—weather, demand, distance. The most expensive delivery fees occur when “surge pricing” during peak demand causes delivery fees to skyrocket due to the lacking number of drivers. Surge pricing is based on algorithms of price increases to find a balance between high demand and low supply.
In my opinion, the food delivery business is not the best type of business. The ugly business model of reinvesting profits to improve efficiency only to be given away to drivers, restaurants, and customers.
Sure— there are some incredibly powerful moats in place. Network effect of the market place attracting drivers and restaurants to join the growing platform. Economies of scale to cover recurring expenses. Even with these powerful moats, I believe the food industry will go through tough years before reaching profitability.