Peak food delivery madness

Monday, August 5, 2019 by Robinhood Snacks | Disclosures

When a Seamless order has a bunch of special requests

Last Week’s Market Moves
Dow Jones
26,485 (-2.60%)
S&P 500
2,932 (-3.11%)
8,004 (-3.91%)
$11,275 (+18.23%)
10-Yr US Treasury

Shark Week wasn't good to markets.

Stocks suffered their worst weekly wounds since December on a trifecta of economic news:

  1. The Fed cut interest rates for the first time since 2008, but not by as much as markets wanted.
  2. The US/China trade war reached Defcon Apple, with everything Americans buy that's Made In China getting tariffs starting in September.
  3. The July jobs report was solid (164K new jobs added), but overshadowed by #1 and #2 above.
1. Who's up...

All part of a well-balanced breakfast... Kellogg stock enjoyed its best day in 19 years thanks to snacks (feels meta saying this). Cereal sales fell another 5% as açai and oats replace Frosted Flakes. But the highlight was Kellogg's Pringles, Cheez-Its, and Pop-Tart snacks growing 4%. Plus, its ingredient-transparent RX Bar enjoyed 20% growth to cap off the snacks theme.

Magic Number = 50%... Apple popped 4% when it revealed that, for the first time since 2012, less than half of revenues came from iPhones. iPhone sales fell 12%, but investors are impressed by Apple's new profit puppies: recurring subscription revenues from Apple Music, iCloud, and Apple News+.

Not your dad's lawn company... Scotts Miracle-Gro is known for boosting homeowners' lawn and garden game. But the 151-year-old company enjoyed an 18% sales jump, powered by indoor pot growing. Scotts' hydroponics division provides the lights, nutrients, and greenhouse goodies for marijuana cultivation — and those sales surged 49% as legalization gains mojo.


We're issuing a "Code Blue"... for shares of Molson Coors. The nation's #2 brewer saw quarterly sales fall 4.4% as Americans swap light, frat-basement beers for rosé, canned wine, whiskeys, and artisan brews. It's launching a new "Made to Chill" ad campaign (no silver bullets or rocky mountains in this one) to regain some demand for its flagship Coors Light.

Buffering... Spotify shares dipped after announcing it reached 232M monthly active users, just short of analysts' expectations. It added too few paying subscribers, but the music streamer's big podcast bet is showing results: The number of pod-faithfuls on Spotify has doubled over the last year (and they spend twice as much time on the platform as music listeners do).

Someone dropped a banana... and Nintendo skidded on it. Shares dropped on word the gamer's profits fell 10% last quarter. This comes just before it launches Switch Lite — the lower-priced handheld game console it hopes will spark a new sales surge. Until then, it's partnering up with Chinese tech to push its Pokemon crew deeper into China.


Past: pizza and Chinese. Today: everything... Food delivery apps are exploding the amount of restaurant food we eat at home — over 50% of all restaurant orders will be delivery/takeout by next year. 50%. And the surging industry is catered to by The Big Food Four:

  1. DoorDash (private, SF-based): Leading with 34% of the market. That’s gonna grow now that it acquired Square-owned Caviar for $410M last week.
  2. GrubHub (public, Chicago): The go-to in NYC, it owns 33% of the delivery-by-app market.
  3. Uber Eats (public, SF): 17% of all food delivery. And the favorite in Miami and Atlanta.
  4. Postmates (private, SF): It delivers 11% of our meals, boasts the most whimsical logo of them all, and is testing a sidewalk delivery bot called Serve.

Now they're moving in together to save money… Classic Millennial style. The Big Food Four are still unprofitable (“$5 off your first 5 orders”) — so instead of fighting each other over growth, it may be more efficient to just team-up. Case in point: DoorDash acquiring Caviar. We expect more mergers to come — that’s how the airlines became profitable. It happened with ride-hailing too, and it’s hitting e-scooters right now.


It's the sum of all current trends... We're connected to work through our phones and spend more time couch-side streaming than ever. And there's less time to cook if you're out trying to keep your Insta-feed fresh. These apps let us Netflix and not-have-to-grill. There’s downside though:

  • Fee madness: The GrubHub CEO accused his competitors of sneakily charging too many fees (service fee, delivery fee, food fee, fee fee...)
  • Pay problems: DoorDash was caught not giving tips to drivers, and delivery wages are still low.
  • Waste: Separate packaging for your curry, rice, spring rolls, utensils, and sriracha are piling up landfills.
What else we’re Snackin’
  • Work: How to say "no" at work without sounding like a jerk
  • Life: 6 apps for beating jet lag
  • Money: Index funds — what they are and how they work
  • Venture: 2 professors sent 80K fake emails to VCs to study gender and racial bias
  • Crypto: Why the new Apple/Goldman credit card arriving this month won't let you buy cryptocurrencies
Snacks Daily Podcast
  • Pinterest shares surged 19% because it's become the feel-good social media app
  • Exxon Mobil and Chevron's earnings reveal a problem: a natural gas “glut”
  • And diving deeper into the climax of the Delivery App Wars
This Week

Disclosure: Authors of this Snacks own shares of Roku.


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