Tuesday, 28 April 2020
Before Covid-19, the takeaway food delivery market – delivering foods that are ready to eat – was estimated to account for 8% of the value of the overall UK foodservice sector. With the temporary loss of the eating-out market, many food establishments are turning to takeaway delivery. While this offers the industry an opportunity, it is unable to compensate for eating-out losses.
Data from Kantar shows that delivery occasions saw a surge in the week before lockdown (16 to 22 March), with delivery trips up 57% year on year. This suggests that people were swapping dining out for takeaway delivery due to social-distancing advice. The proportion of full-service meal occasions that were delivered surged to 20.8%, up from 2.6% the week prior (Kantar OOH, w/e 22 March 2020).
During lockdown, an initial slump in takeaway deliveries was reported by delivery apps, due to fears around food carrying the virus and the loss of office deliveries. There are now reports that, after several weeks at home, people are turning to comfort food in the form of deliveries, however it remains an ever-changing picture, with the use of meal-delivery services wavering week by week. According to MCA’s Channel Pulse survey (from 6 to 12 April), the average frequency that people used takeaway delivery was 2.3 times that week. This compares to 2.1 times in the week prior, and 2.3 times in the final week of March. Even at dinnertime, the biggest occasion for takeaways, only 13% of people who would normally have eaten out opted for takeaway delivery, with the majority choosing grocery shopping instead (MCA Eating Out panel w/c 6 April 2020).
The absence of big brands, such as McDonald’s and Wagamama, has contributed significantly to the decline, as the market relies on these brands for volume. In the week before it closed, McDonald’s accounted for 20.5% of all delivery occasions (Kantar OOH, w/e 22 March 2020). This was up from 10% in the previous week. Fast food chains are beginning to reopen some sites for delivery, including Burger King and KFC. However, these restricted reopenings are likely to only bring a small positive swing.
Opportunities for growth
It’s therefore clear that grocery shopping, rather than takeaway delivery, will benefit most from eating out closures. Some supply chains cannot easily shift from supplying foodservice markets to grocery, with the dairy sector an example of this. As such, pursing the growth opportunities in the delivery market will be important for many supply chains to help reduce loses from Covid-19. Below we outline some of the opportunities which do exist.
- Play on treating
We are eating an additional 503m meals in home per week – delivery or takeaways break up the boredom, and reduce the need for cooking. The main reason to have a meal delivered is as a treat, with this cited as a reason in 27% of deliveries, up three percentage points week-on-week (MCA’s Channel Pulse, 6 to 12 April). Tap into this need through communication.
- Reassure food fears
People are unsure about the safety of food deliveries, despite delivery apps like Deliveroo and Just Eat offering contact-free delivery. The Food Standards Agency published advice for consumers on 17 April, which clarifies that “it is safe to have takeaway food delivered if the business you order from follows the Government’s safety guidance”. Therefore, be explicit to consumers about how your business is ensuring food hygiene.
- Fly your local flag
Research from CGA suggests 43% of the GB population either have, or are planning to, support local pubs, bars, restaurants or cafes as a result of Covid-19. A popular way to do this is through hot food delivery.
- Offer affordability
MCA’s Channel Pulse shows the biggest barrier to having food delivered is expense, and at the moment people are hugely concerned about personal finances. Some delivery apps have waived or reduced their fees in order to help restaurants gain orders. But if you are going it alone it is important that your offering is affordable.
- Look beyond the evening meal
Dinner is more important to takeaways than it is for the overall eating-out market. In the overall market, lunch accounts for 27% of occasions (MCA, YE Dec 2019). Therefore this is a gap which can be filled through offering lunchtime delivery options.
- Offer what people want
British, according to MCA’s Channel Pulse for 13-19 April, is the most popular delivery cuisine during these troubled times. Think about which British dishes can survive travel to people’s home, maintaining the restaurant quality standard. Burgers are the next most popular option, with fries on the side. Well-known pizza brands have remained open but there is still an opportunity here for Italian restaurants as pizza is the third most popular delivery option. Lastly a ‘curry night’ is also appealing, with curry typically being the top dish for lamb in the eating-out market. It’s not just food either – a survey from CGA at the start of lockdown showed 11% of people have purchased alcohol online for the first time or more often than usual due to Covid-19, therefore adding this to your offering could be beneficial.
In the long term, it’s likely that the takeaway food delivery market will see accelerated change from the virus, but it won’t be immediate due to the current uncertainty. As people move away from restaurants and have less spending power, takeaways may prove a more cost-effective alternative to going out to eat. Also, with more brands (particularly fast-food brands) starting up again, this may help support takeaway food delivery growth. However, with the eating-out market accounting for an estimated 80% of the total foodservice market, and takeaway only 8%, any growth won’t be enough to compensate for overall losses.