Product Managers Bring Food Delivery To Small Towns

Now food can be delivered no matter where a customer lives
Now food can be delivered no matter where a customer lives
Image Credit: Paul Townsend

One of the most hotly contested markets right now is the home delivery of food. In just about every major city, you can see multiple options for getting food delivered to you when you enter any restaurant. However, for those potential customers who live in smaller towns and cities, home delivery of food has not been an option – until now. Product managers are starting to view the smaller towns as the next battlefield now that they are already entrenched in the big cities. How will they change their product development definition in order to capture these new customers?

The Arrival Of The Food Delivery Services

The food delivery business is in a race and in order to dominate their market, the firms that provide this service are now expanding into places that they have never gone before. These new markets come with their own unique sets of challenges. For example, in smaller cities and even suburbs the food delivery companies are struggling to find drivers who are willing to work as so-called “gig economy workers”. The tight labor market is not making finding these drivers any easier. Additional challenges include transporting restaurant meals and groceries over longer distances while still being able to do it at prices that customers are going to be willing to pay.

The product managers for the food delivery firms are facing a fundamental problem – small town people are different from big city folks. Specifically, the people who live in the suburbs and small towns are used to driving to get their food and groceries. It’s going to take a change of mind to get them to be willing to pay someone else to do this for them. The good news for product managers is that they are expecting food consumption at home to increase over time. What this means for the food delivery firms is that they need to make their network as wide as possible if they want to have any hope of standing out in an already crowded field. Product managers are under a great deal of pressure to capture as much market share right now as they can. If they can do it, then they’ll have something to add to their product manager resume.

The focus on suburbs and small towns reflects the fact that product managers believe that this is where the growth in the food delivery business will come from in the upcoming years. There are food delivery firms that want to be able to make delivery available to 90% of the U.S. population soon. This will be an increase from the 80% that they currently serve. All of the food delivery firms are working towards being able to potentially serve as many customers as they possibly can.

How To Succeed In A Small Town

There is a reason why the food delivery firms are interested in moving into the suburbs and small towns. It turns out that operating in these environments is actually cheaper than running the business in the big cities in the long run. In the big cities, things like advertising, labor, and materials are all much more expensive. The food delivery firms believe that they can make the economics of delivering restaurant food work for them even if they only have five to ten restaurants working with them.

Product managers need to understand that there is a significant cost to entering a new market. Costs can include recruiting new drivers and offering to waive delivery fees in order to get new customers to try the service. As a food delivery company moves into new, smaller markets, their per-order profitability can fall. Something that may make the future brighter for food delivery product managers is the fact that both restaurants and grocers in both small cities and college towns that are home to large companies are eager to sign up with food delivery companies.

Some companies will charge restaurants US$1,500 to sign on to their ordering application platform. Some companies won’t charge a fee. However, the companies that do charge generally take a lower commission on each order – only 15% as opposed to the standard 25%. The restaurants feel that they’ll be able to reach new customers and so the new revenue will more than make up for the fees charged by the food delivery service. In order to build a successful business in smaller towns it is going to take time. Residents of smaller towns use food delivery services half as often as residents of big cities. In the past year, only 7% of suburban and rural residents have shopped for groceries online. This is in comparison to 14% of city dwellers.

What All Of This Means For You

Food delivery product managers are gearing up for the next round of competition. This time out they are going to be doing battle on a different playing field: small towns. The motivation for doing this is that the small towns are where the growth in food delivery services is going to be happening over the next few years. Whomever can use their product manager job description to be successful here, will have found a way to keep their company growing in the long term.

Expanding a food delivery service into small towns is not easy to do. The challenges include finding enough drivers and finding out how to make transporting meals over long distances profitable. People who live in small towns are used to going out and getting their own meals. Food delivery product managers think that they can change this type of behavior and grow their business in small towns. The goal for the food delivery product managers is to make it so that they can reach 90% of the U.S. population with their service. Operating in a small town is much cheaper than operating in a big city. It only takes a few restaurants to make a food delivery service profitable. Restaurants in small cities and college towns with large firms are eager to sign up with food delivery services. Some food delivery services charge a fee to sign up to their app, but then they collect a smaller part of each order. The challenge for product managers is going to be to get smaller town residents to start to use their service.

The good news is that the success of the food delivery business in the large metro areas has shown that this is a service that people want. The challenge is going to be for product managers to get people to change their behavior and start to use their service. The good news is that with lower costs, the food delivery firms have a longer time to get things right. If they play their cards right, there is a good chance that people in smaller towns will stop going out and will start placing orders for food online!

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: How do you think that food delivery services could get more people to get groceries delivered to their homes?

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What We’ll Be Talking About Next Time

Oh man! How great would it be to be a product manager at Starbucks? I mean, they are the largest coffee chain going. It sure seems like there are new Starbucks stores popping up all over the place. In fact, sometimes when you are going down the road there will be a Starbucks on one side of the road and then you’ll see another Starbucks on the other side of the road! When you are part of an organization that is growing so fast, it can be a real challenge to keep things moving. The Starbucks product managers have decided to do this by closing some of their existing stores.