The Delivery Battle for Seattle
Taco Bell spins the wheel of randomness, Walgreens & CVS sink, grocery orders rise
With apologies to all the WTO protestors, there’s a new battle for Seattle brewing, and it’s all about pay and benefits for gig workers. We’ve got the latest salvo in that fight below, plus tastier news from Taco Bell, some pharmacological blues over at CVS and Walgreens and growing sales for digital grocers.
PS - Thank you to everyone that joined us at last night’s Delivery & Mobility Happy Hour. Great crew, see you all at the next one!
Today:
DoorDash Hits Seattle with New Data
Taco Bell Asks if You’re Feelin’ Lucky
Chart Time | Digital Grocery Sales Grow
Walgreens & CVS Catch a Cold
POLICY | Are Seattle Gig Workers Worse Off?
The City of Seattle and the big 3PDs have been butting heads for months now, set off by the city implementing its App-Based Worker Minimum Pay ordinance earlier this year. (As a refresher, check out our interview with the Seattle regulators that crafted the ordinance.) Now DoorDash has published new data to bolster its claim that gig workers are worse off with the new rules in effect. DoorDash says Seattleites have placed 900,000 fewer orders than they would have under the earlier status quo, leading to longer waits for workers and lower take home wages. The study also compares the situation in Portland, where the rules didn’t change and marketplace activity has remained robust.
The Big Picture: The 3PDs’ arguments of course require us to take their word on some of the measures they’ve taken in response to the legislation. DoorDash added a $4.99 regulatory response fee when the law went into effect, and then added additional surcharges for select orders in August. (Uber Eats and Grubhub have also added compliance fees.) DD notes that this is to cover its increased costs due to the new law. That’s a logical enough argument on its own, but the company would perhaps be better able to make a case for itself if it didn’t hide the Y axis on all of its charts.
APPS | Taco Bell Turns Up the Randomness
Taco Bell has released a fun new feature that’s sure to drive users to its first party phone app: a new “name your price” tool that feels like a slot machine for strange flavors. Consumers can enter their budget and the app will generate a meal combo that fits their needs. Don’t like it? (Maybe because it suggested the Mexican Pizza, yuck.) Spin again and get a new idea!
The Big Picture: Companies are always looking for ways to drive shoppers to their own apps, instead of firing up fee-heavy marketplaces. While the classic sweeteners are things like rewards, perks and personalization; this shows that clever brands can really have fun with it. Of course it helps if your brand is already associated with fun and frivolity; this week Taco Bell also teamed up with creators to dream up Crunchwrap Supreme variants featuring not-so-Mexican ingredients like Thai noodles and Indian spices.
CHART TIME | Digital Grocery Sales Keep Growing
Grocery Doppio has its latest quarterly update on digital grocery sales, and it looks like folks still love getting the market to come to them. Online sales were up 3.07% compared to last quarter, hitting 13% of grocery’s $232 billion in nationwide sales. Basket size crept up, while third party platforms also pulled in a bit more share of sales.
RETAIL | Walgreens & CVS Both Struggle
It’s a tough time to be a drug store. While Rite Aid has been fighting for its life for years now, now its stronger competitors are also faltering. Walgreens announced it will close 1,200 stores in the next three years, with 500 of those closing in 2025. CVS just pulled its quarterly guidance, as its CEO steps down, only a few weeks after announcing it was cutting nearly 3,000 jobs.
The Big Picture: These iconic retailers are hurting on a number of fronts, including slowing growth from cash cows like their PBMs and care clinics. But the bigger issues are that the stores have locked up half their merchandise, making in-store shopping a dreadful slog, despite the retail crime narrative being largely overblown. And while CVS and Walgreens are happy to instead deliver shampoo and Zyrtec to your house, so too are a bevy of savvy competitors — everyone from Amazon and DoorDash to Dollar General and Target.
A Few Good Links
Amazon opening Amazon Grocery stores in buildings that also house Whole Foods. Meta fires employees that abused $25 Grubhub meal perks. Zepto goes back to the money trough, raises another $100M. Cartwheel integrates with Relay. Deliveroo adds free delivery for essential workers, launches emergency fragrance delivery. Lilium looks for funding after German gov’t denies loan. SCV Hub brings online food hall to Santa Clarita. Tesla FSD under investigation. Amazon says RTO or quit. Shell launches Starship 3.0 super efficient natural gas Class 8 truck. Uber VP Anirban Kundu jumps to Instacart as CTO. Grubhub+ Gold Days returns. Richtech Robotics opening 20 more automated restos in Walmarts. Domino’s promotes Kate Trumbull to CMO. Chick-fil-A heads to Singapore, where its closed on Sundays for religious reasons thing will probably look even odder. Customers choosing delivery over fast food. Walmart and Amazon look to fight over deals. Meet an Amazon Flex delivery worker.
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