Mobility Research

Food delivery

Food delivery apps have changed our convenience by giving us access to food and groceries for a premium. Their operations are, however, not widely understood. A recent study opens the black box, revealing how delivery platforms strategically balance the interests of customers, restaurants, and gig drivers.

Here are the drivers shaping your food deliveries:

The Key Drivers Behind Delivery Platforms

1. Platforms compete on three fronts simultaneously

Unlike simpler businesses (connecting just buyers and sellers), food delivery apps manage a complex triangle:

• Customers want fast, affordable, and reliable delivery.

• Restaurants seek access to more customers without excessive fees.

• Gig Drivers want fair wages and flexible schedules.

Why it matters:
Balancing these groups means every decision a platform makes (pricing, fees, driver pay) has ripple effects across the market.

2. Better Service Quality Relies Directly on Gig Workers

Rapid deliveries depend on attracting and retaining enough gig workers. Platforms compete for drivers by offering better wages or incentives. But paying drivers more increases platform costs.

Why it matters:
Good service isn’t just about convenience, it's an economic calculation.

3. Higher Service Quality Changes the Pricing Balance

Consumers expect fast, accurate, and reliable deliveries. But this raises restaurant costs (packaging, faster prep) and increases what platforms must pay gig workers. The study finds platforms can charge consumers more to offset these costs but must reduce fees for restaurants to ensure enough join the platform.

Why it matters:
Platforms constantly juggle consumer willingness to pay with the need to keep restaurant partners happy.

4. The “Minimum Wage” Puzzle

Minimum wage regulations for gig workers (like recently introduced in New York) aim to protect workers. The research shows mixed results:

• Drivers benefit from better pay.

• Consumers face higher delivery fees.

• Restaurants may reduce participation due to higher platform costs, shrinking consumer choice.

Why it matters:
Policymakers must carefully design regulations. Well-intentioned changes can have unintended economic consequences.

What These Insights Mean for Policymakers & Cities

This research highlights why regulating food delivery markets is complicated:

• Regulations must avoid overly rigid worker rules, since flexibility is key for peak-demand service quality.

• Targeted rules (insurance, rider safety, minimum pay per delivery) can better address specific harms without damaging flexibility.

• Careful balance can maintain a healthy, fair gig economy without stifling innovation or market growth.

Read the full article here.

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Analysis

News we loved this month, and our take on the story behind

Bike subscription deep-dive: Dance secures new funding, and shares revenue numbers

A subscriber recently asked for a deep-dive on ebike subscriptions, similar to our earlier coverage of Barcelona’s micromobility regulations. As luck would have it, Dance has just announced new funding, along with revenue and profitability figures.

Jury is still out on ebike subscription revenue potential

I have always been excited about the potential ebike subscriptions have. They make ebikes more accessible for users without the up-front cost especially in bigger cities. Dance has been the company to watch: VC-funded with top-tier founders, which is why I interviewed Eric, the CEO of Dance, last year. So when their yearly revenue showed a total of 12MEUR for four tier-1 cities, I was underwhelmed, I hoped the potential was bigger.

That said, an expert familiar with Dance’s markets tells me that demand is there, but inventory is likely constrained, making it tough for Dance to service all potential customers.

Manufacturing ebikes is hard

Dance is still not EBITDA profitable. This is not surprising for a young business model with a delayed start. Developing and manufacturing an ebike is extremely expensive, especially if durability is a priority, and depreciation is a big cost driver. According to my interview with Eric, they depreciate each bike over three years, though he believes the bikes last longer than that. By contrast, car depreciation is typically over five years, which keeps annual depreciation costs lower and makes auto-subscription programs more easily profitable.

But, the depreciation may be too long to defend. Customers are only willing to pay a premium for a vehicle if it’s in very good condition like with escooters (as I wrote about a while back). As one industry expert told me, “The Dance bike is a completely new product. It’s not purchased, so it’s inherently immature.” Meaning it’s going to take iterations before it reaches the standard needed for profitability.

Operations costs take time to optimize

The promise of vehicle subscription is taking away the hassle for the customer of owning, insuring and maintaining a vehicle. Dance originally promised door-to-door pickup and repair, which can get very expensive. Here’s a rough calculation:

You can see how pick-up and delivery logistics alone make this process costly. Eric mentioned that Dance now has central drop-off points for maintenance, and customers pick up a new ebike there, which minimizes door-to-door labor. As one subscription expert put it, “No one wants to be stuck at home waiting for a delivery anyway, so it’s a win-win.”

Conclusion

Dance might not be the new Google, or a new Soundcloud. We still need to see what kind of revenue potential there is for different kinds of cities and companies such as Dance, Whee!, and Swapfiets.

Dance in the article say they will be EBITDA profitable in 2025, meaning that they are profitable without paying vehicle depreciation and interest rates on their loans. This may indicate that they are figuring out operations, but still need to reiterate their vehicle to bring depreciation up to 4-5 years and reduce maintenance costs.

I once asked a subscription operator why they were building their own vehicle. One of their reasons was: “Dance is doing it.” Had I been speaking to them again I would have quoted a supply chain expert I interviewed: “To design a e-bike is a painful process. Even a redesign process should be avoided if the vehicle is working well.” One of the best things I could think would be if a manufacturer comes up with an off-the-shelf vehicle that brings long life-span and low maintenance costs as Segway has done with their escooters.

Fluctuo releases their Annual Review 2024 report showing decline in escooter supply and demand, while bike-share is on the rise

It can be found here.

Fluctuos annual report is out, highly recommended reading of Micromobility market in EU27 + UK + Switzerland and Norway.

Some highlights in developments from 2023 to 2024:

• Escooter fleets declined 16%, total rides down 9%, but trips per vehicle per day (TVD) increased (not specified how much)

• Station-based bike fleets increased with 9%, rides with 12% and TVD stable

• Dockless ebikes saw a fleet increase of 18%, rides increased with 58% (!) and TVD increased

Fluctuo introduces the report by pointing at Madrid, London and Paris, and says that bike-share providers are arguing that a docked system is an even better investment than escooters, making those annoying escooters redundant.

• Madrid ditched their escooters in favor of their docked BiciMad ebike scheme. Their docked scheme had 9.9M trips.

• London has regulated escooters so hard that dockless ebikes are the most convenient, resulting in the best rides and TVD for dockless ebikes. Docked bikes and ebikes are suffering. London had 28M dockless ebike rides (!) and 8.8 docked rides.

• Paris ditched their escooter service in favor of a dockless and docked scheme. Both schemes are doing extremely well. The docked scheme had 49M trips (!) and the dockless 19M trips.

My 2 cents:

Some cities can buy the "screw escooters, buy bike-share" narrative, especially if they can stomach the cash for subsidizing a bike-share solution.

For these reasons, bike-share should be subsidized more than escooters. But the allure of escooters is that people love them: they're simple and convenient. So people demand escooter rides on a whole different level.

For that reason escooters are also a lot cheaper to subsidize than docked ebikes, and give more bang for buck.

From what we’re seeing in the Nordics, regulation is increasingly working and a decreasing amount of people are annoyed by escooters. That’s why I believe that some cities will get the escooter to function completely fine, and then in time when the anger has subsided other cities may take the escooter back.

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