AI-powered ordering services like Bites are challenging traditional delivery apps by connecting customers directly with restaurants, potentially reducing fees and changing how food delivery platforms make money. (Source: Image by RR)

New Startup Routes AI-Powered Orders Directly to Participating Restaurants

Artificial intelligence could reshape the food delivery industry by allowing customers to order directly from restaurants without navigating traditional delivery apps such as DoorDash and Uber Eats. A small San Francisco Bay Area startup called Bites is testing that model, enabling diners to place orders through ChatGPT while routing those orders directly to participating restaurants. Although Bites has only about 300 restaurant partners compared with DoorDash’s enormous national network, its approach is drawing attention because it challenges the commissions, advertising fees and customer relationships that underpin the established delivery business. DoorDash reportedly contacted Bay Area restaurants in August to warn that some businesses may have been listed on Bites without their consent, a concern the startup acknowledged in certain cases.

Bites argues that advances in AI and existing restaurant technology make it possible to offer a simpler, less expensive ordering experience. Traditional delivery platforms can charge restaurants commissions ranging from 15 to 30 percent, costs that businesses often offset through higher menu prices. Bites instead promotes simplified service fees and a flat $1 surcharge per order, connecting to point-of-sale systems such as Toast and Square to retrieve menus and transmit orders. As noted in an article in theverge.com, a pizza and beverage order placed through ChatGPT using Bites totaled $56.73, including taxes, fees and tip, compared with $70.29 for the same order through DoorDash. The comparison illustrates potential savings, although pricing differences may vary by restaurant, location and order.

The emerging competition also threatens the control major platforms maintain over restaurant discovery and customer information. DoorDash and similar services generate revenue through advertising, promoted listings, subscriptions and commissions while generally retaining most customer contact information. By directing orders to restaurants, Bites says it can provide businesses with more direct customer relationships and opportunities for loyalty programs and marketing. One Bay Area restaurant operator with 13 locations on Bites estimates that 65 percent of his delivery orders now come through the startup, compared with 25 percent through DoorDash, and reports stronger margins on Bites transactions. Those results represent one operator’s experience rather than evidence of an industry-wide shift.

The broader implications extend beyond food delivery. As AI agents increasingly handle shopping, reservations and other transactions, consumers may begin interacting with businesses through conversational assistants rather than individual websites and apps. That shift could weaken the advertising and promotional systems that have made digital marketplaces profitable. DoorDash is already exploring its own agent-based ordering capabilities, including allowing customers to reorder meals through iMessage. Whether AI ultimately reduces delivery costs or simply creates a new generation of intermediaries remains uncertain, but Bites demonstrates how conversational commerce could change who controls the transaction between a restaurant and its customer.

read more at theverge.com