Web3 and DePIN will fix food delivery

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Online food deliveries are projected to reach $1.85 trillion by 2029, and that’s literally not good news for anyone, from restaurants to casual foodies. Seriously, the web2 food delivery industry is one of the most broken things out there; A prime example of how a middleman steps in to make things difficult for everyone. This provides a perfect use case for web3 and decentralized physical infrastructure networks; rather, it puts web3 at the heart of a service used by billions of people around the world.

Vicious circle

So what exactly makes food deliveries so terrible, you may ask? It all depends on the fees.

Consider this: Your daily multi-restaurant delivery app will charge up to 30% for its services. This fee will be paid by the restaurant, which will cover things like use of the platform as well as optional marketing and promotions. But the problem is that while restaurants typically operate on a 2x-3x profit margin, this is to alleviate their extremely high overhead costs. When you have to hold on so desperately to solvency, anything that cuts into your profits, like a delivery app fee, comes back to bite you hard.

The immediate solution is simple; instead passing these costs on to the buyer. Delivery will cost you 20% more than dining in, which doesn’t sound like much fun, right? Delivery companies think the same, which is why they’re putting pressure on restaurants to keep the prices you see on the app consistent with what you’d pay on-site. This clearly does little to solve the original problem; so the usual result is that prices for both in-app dining and in-app prices increase overall.

Of course, users aren’t too happy about the hikes, and understandably, they’re having to pay a pretty disproportionate bill for some comfort. So they are doing the reasonable thing; They are reducing the use of delivery apps. In fact, they are eating out less, which puts even more pressure on restaurants. Couriers, or “partners” as the apps prefer to refer to themselves, also have little reason to rejoice, because they don’t exactly get the lion’s share of the services.

The final chord in this drama brings us to delivery services, which… make almost no money. Locked in a relentless struggle for market dominance, companies spend billions of dollars on marketing, promotions, discounts and anything else that will get them more users. It is truly an industry that is at war with itself at every turn, which is a clear sign of an unsustainable business model.

web3 solution

The above is a great example of how much chaos and misery a middleman can create by getting between the provider and the buyer. Does this mean we should forget to order our well-deserved Friday pizzas? No. We need a more sustainable business model behind the application that enables this. And DePIN is exactly the model the industry needs.

The DePIN-enabled delivery experience for all key stakeholders, from restaurants to stay-at-home foodies, will be largely the same. You still log into the app, browse the menu, order whatever catches your eye, and have it delivered by an independent courier. The main difference is that you don’t have to pay as much because there is technically no middleman.

There is a decentralized marketplace where restaurants offer real-world products directly to customers. Instead of the huge fee of a web2 platform, all they have to pay is DePIN’s very low network fee. This allows them to offer food at lower prices without having to sacrifice profits; In fact, profits will probably increase.

At the other end of this equation are users who eat the same food at lower prices. This further increases restaurants’ revenues by encouraging them to use the service more frequently. Couriers also take advantage of this, earning rewards for deliveries through transparent and reliable smart contracts. And of course, in the best web3 traditions, the community, including all stakeholders, can have a say in how the service works through token-based governance. This community-driven growth model, along with discounted prices, frees the project from an inflated marketing budget, instead letting the service speak for itself.

The world is at a pivotal moment with the rise of DePIN; It’s a moment when Web3 has the chance to make a real impact on how we do some of the most everyday things. The food delivery industry is a perfect use case here, with Web2 intermediaries creating an unsustainable vicious cycle, and the DePIN model offers a chance to break this cycle and reinvent itself in a more sustainable way. The opportunity is there and things are going well; It’s time for big change.

This article was co-authored by Max Thake and Bas Geelen.

Max Thake and Bas Geelen

Max Thake is the co-founder of Peaq, a layer 1 blockchain for DePIN and Machine RWAs, and EoT Labs, a software development and incubation organization that supports open source projects focused on the Economy of Things. Max is also a Fellow of the Sigma Squared Society, a global community of founders under the age of 26.

Bas Geelen is a senior marketer at Bistroo, a food delivery and takeout service, DePIN, where he leads innovative marketing strategies to elevate Bistroo’s brand in the blockchain and food delivery space. With a master’s degree in strategic consulting, Bas combines analytical expertise with creative edge honed as a filmmaker and blockchain brand designer. His diverse skill set and strategic insight strengthen Bistroo’s unique position in the market, making decentralized technology accessible and attractive to a wide audience.