Contributing editor, Peter Backman, is a long-term foodservice sector guru and founder of theDelivery.World, a platform that connects the delivery sector and makes sense of the myriad changes and challenges that affect the sector across the globe.
The global food delivery market has exploded from $90 billion in 2018 to nearly $700 billion by 2025, forcing restaurants worldwide to confront a fundamental question that goes to the heart of their business identity: do they control their own destiny or surrender it to digital platforms?
This choice between First-Party Logistics (1PL) and Third-Party Logistics (3PL) represents more than operational strategy – it reflects competing philosophies about what restaurants should be. 1PL means restaurants control their entire delivery soul, owning vehicles and employing drivers as extensions of their brand identity. 3PL involves surrendering that control to platforms like Uber Eats, Zomato, or Delivery Hero, accepting that delivery becomes someone else’s responsibility while restaurants retreat to kitchen-only operations.
The 1PL model offers complete control and eliminates commission fees of 15-30%, but requires substantial investment. The 3PL approach provides immediate market access with minimal upfront costs but involves ongoing commission payments and reduced control.
Global adoption varies dramatically. India’s Zomato and Swiggy serve over 800 cities with 3+ billion deliveries, while most restaurants operate exclusively through these platforms. Jubilant FoodWorks operates over 1,900 Domino’s locations across India, Bangladesh, Sri Lanka, and other markets using comprehensive 1PL infrastructure. European markets show diversity, with Delivery Hero spanning 70+ countries and Just Eat Takeaway operating across multiple European nations.
Regulatory frameworks significantly influence model viability, with Spain’s ‘Riders Law’ requiring 3PL platforms to classify workers as employees with full benefits, while EU legislation establishes a presumption that platform workers are employees when companies exercise control. These developments alter platform economics and may make 1PL models relatively more attractive in high-compliance jurisdictions.
The future will be shaped by five transformative forces. Autonomous delivery technology through robots, drones, and self-driving vehicles could fundamentally alter economics for both models. For 1PL operations, automation may eliminate the complexity of managing drivers while reducing labor costs. For 3PL platforms, automation could erode their primary value proposition of managing large driver networks.
Artificial intelligence is revolutionizing delivery optimization through demand forecasting, dynamic routing, and predictive analytics, making 1PL operations increasingly viable for smaller restaurants while enabling 3PL platforms to offer hyper-personalized services.
Regulatory evolution continues accelerating globally, with worker classification laws spreading beyond Europe. This suggests 3PL platforms will face increased labor costs, potentially making 1PL models more economically attractive in regulated markets.
Sustainability requirements are becoming mandatory across major markets. Electric vehicle mandates and carbon footprint reporting create new considerations where 1PL operations may gain advantages through direct control over vehicle choices and packaging decisions.
Market consolidation among 3PL platforms, evidenced by Prosus’ €4.1 billion acquisition of Just Eat Takeaway, suggests movement toward oligopolistic structures. This concentration may increase platform power over commission rates while reducing restaurant negotiating leverage, potentially driving more establishments toward the independence of a 1PL model.
The convergence of these trends points toward sophisticated hybrid models that may represent the future soul of delivery – neither pure independence nor complete surrender.
Successful restaurants will likely operate 1PL systems for core areas where they can maintain their identity while using 3PL partnerships strategically for expansion markets. Technology will enable seamless integration between owned and outsourced operations, allowing restaurants to preserve their essence while adapting to market realities.
The restaurants that thrive will be those that understand delivery isn’t just about logistics – it’s about defining who they are and how they connect with customers in an increasingly digital world.
