Now, though, fortunes have shifted. These delivery middlemen aren't just bringing dinner, they're cleaning up. It's

really been Silicon Valley's least popular business model in years, essentially because it doesn't make very much profit or any profit. But the pandemic has really rehabilitated it.

Tamsin Booth is The Economist's technology and business editor.

You can see that trend really on steroids with the DoorDash IPO. DoorDash is America's biggest food delivery company. So the firm filed its IPO documents on November 13th and everyone was waiting to see what its numbers were going to be like. And what you saw in the numbers was just really astonishing growth. Uber Eats also you've seen in recent results, that revenue's been up 125%. And the lack of profitability is just receding into the distance. It's just probably the world's fastest growing mainstream business.

And all of that growth is due to the pandemic?

Well, that's the question that everyone is asking. And DoorDash warns investors very clearly in its IPO documents, our growth is going to slow as the pandemic hopefully ebbs. But there's a few reasons to think that this phenomenon will last. So people are going to be nervous about going out for a year or two, very likely. what has changed is that the habit of ordering food has really become ingrained, especially among teens and millennials. And the big structural shift that is also definitely here to stay is that the pandemic has convinced the vast majority of restaurants onto these platforms. And so you've got a lot more high-end restaurants on these platforms. Before they would have been quite snooty about being on the platforms that were delivering pizza or Chinese food. But now they're all on there. But at the same time, none of that takes away from the fact that it's incredibly hard to make profit in these models. Why,

though? If it's so incredibly popular, why isn't there plenty of money to go around? So

these digital food delivery companies, the model has been around since the turn of the century, but it was significantly different. Companies like Grubhub in the US and Takeaway.com in Europe, they acted as middlemen between restaurants and consumers. The restaurants carried on delivering themselves. And that was a pretty profitable model. The new iteration of that from Silicon Valley is that these services are logistics operations. So they actually deliver the food to end consumers. And the reason that's really quite a tricky model is that essentially, there's usually quite small value of a food order has to be split three ways. The restaurant has to get its cut, the driver has to get paid, and then there's just not very much left over always for the delivery company. And as well as that difference in business model, it's just vastly competitive. Because there did seem to be a lot of consumer demand, the companies like Uber Eats, DoorDash, Postmates were able to raise tons of venture capital money, fling subsidies at consumers, and therefore the competition was just crazy. And

how are those other competitors, the companies, not just the ones in the US, all doing? Has the pandemic also turned around their fortunes? Absolutely.

It's a global pandemic and it has lifted all boats in this industry. So you can see Delivery Hero in Berlin, orders have doubled. Just Eat in the UK, again, soaring numbers. There's lots of commentary about how it's possible that Just Eat can be worth more than venerable industry giants like British Telecom or Rolls-Royce. China, which is the country's largest food delivery company, they recently turned profitable. And with the pandemic boost, they're now valued at a really quite massive $230 billion in terms of market capitalization. And

so to your mind, what's next for the industry here? Will this tide continue to rise? Well,

the first thing to watch is how the DoorDash IPO goes. That's going to be early December. It looks like it's going to be a massive success. It's oversubscribed already. Further out, the question is whether a whole huge sized digitally driven convenience economy is going to take hold. These firms are now branching into other areas beyond just restaurant meal delivery. They're going into bringing you convenience items, grocery, pharmacy deliveries. But when you ask what's coming next, I think there's also going to be a lot of backlash against this convenience economy model. It feels like you're getting a kind of class divide between the couched potatoes who are being delivered to, and then the rather precariously paid people on the bikes and cars delivering stuff. So I think you're going to get a lot more attacks around the conditions and pay of drivers and riders. There's nothing unusual in that among tech platforms. I mean, you can see DoorDash as merely joining the club, really, because of course, Amazon, Google, they all rely on armies of low-paid and often kind of invisible workers. So the fact is that consumers love the services, the convenience of them. I'm just not expecting any boycotts. Thanks

very much for your time, Tamsin. Thank

you for having me.