A client in the food delivery industry asks whether it's a good industry to be in long-term. How do you assess this?

How to answer

Apply Five Forces: (1) New entrants — moderate threat; low capital requirements but network effects create barriers at scale. (2) Supplier power (restaurants) — high; restaurants can multi-home across platforms easily, and top restaurants have leverage. (3) Buyer power (consumers) — very high; zero switching costs, extreme price sensitivity, low loyalty. (4) Substitutes — high; cooking at home, pickup, direct delivery from restaurants. (5) Rivalry — intense; 3-4 major players competing on price, delivery speed, and selection. Conclusion: this is a structurally challenging industry. Winner-take-most dynamics mean only 1-2 players can reach profitability. Recommend the client either scale to be a top-2 player or find a differentiated niche (e.g., premium, corporate catering).

Key idea: High buyer power + intense rivalry + many substitutes = structurally tough industry.