Food delivery grows and diversifies

Monday, 10 February 2020

The food delivery market is growing and evolving at an incredible pace. This is due to an ever-increasing variety of cuisines to suit every consumer’s individual taste, as well as the convenience of numerous mobile apps – which appeal to the busy consumer. NPD are forecasting that the delivery service will make up 10% of the entire UK foodservice industry by 2022.

Market Highlights (MCA Foodservice Delivery Report 2019)

  • In 2019 the food delivery market* was worth £8.4bn in the UK, seeing growth of 18% year-on-year and a staggering 75% versus 2014.
  • Just Eat has seen a 99% growth in volume of orders between 2015 to 2019. Also gaining momentum are Deliveroo and UberEats with the introduction of fast food and coffee shop offerings e.g. McDonalds via UberEats.

Why is it growing so fast?

Consumer choice

There is an ever-widening array of different foods available for consumers via delivery apps such as Deliveroo and UberEats. This is enabled by ‘dark kitchens’ and ‘virtual brands’.

A dark kitchen is a purpose-built building that has the capacity for a wide variety of different brands to prepare and cook their food in, purely for the delivery service. They also house virtual brands which are brands that’s do not have a permanent restaurant site but exist only to serve delivery. These have proved extremely popular for start-up brands as they do not require a large investment, and street food vendors or smaller independents to widen their customer base. Jamie’s Pizzeria was Deliveroo’s 1000th virtual brand.

Dark kitchens and virtual brands not only widen meal choice for consumers beyond your typical takeaway offering of pizza, Chinese and Indian, they also reduce the pressure on existing restaurants, allowing them to increase their delivery service without compromising the customers in-store experience. Well-known high-street restaurants such as Wagamama’s and McDonalds are utilising this model.

Technology

Across the globe food companies have been testing alternate delivery methods, including drones and robots, which will make the delivery service more efficient and environmentally friendly. Mobile apps are key to ordering as, according to MCA, 36% of UK orders are now placed using apps, so continuous improvement of user experience is vital. In Australia, Dominos launched an app ‘Zero Clicks’ where you simply click on the app and after 10 seconds it orders your favourite pizza, without any further thought or actions. The US also introduced twitter ordering where customers who add their Twitter handle to their Domino’s Pizza Profile will be able to re-order their favourite pizza by simply tweeting #EasyOrder or the pizza emoji to @Dominos. Voice assistant, such as Siri and Alexa, are anticipated to also make the ordering process more efficient. They are likely to learn customer’s tastes and help aid the ordering process to make it more efficient.

Tapping into other needs

Lines are being blurred with the retail world. While platforms such as JustEat are typically known for delivering food which is cooked, delivery platforms are seeing the opportunity to meet other needs. An example of this is JustEat trialling a partnership with Asda to deliver basic groceries in 30 minutes. The existing structure of Just Eat allows for much faster delivery for consumers.

Opportunities

  1. There is a large gap in the delivery market for pub and bar food. According to Mintel, 56% of adults have eaten in a pub, bar or carvery restaurant in the last 3 months, however, this number drops to only 7% of adults who ordered a takeaway from a pub, bar or carvery restaurant (Mintel, Attitudes Towards Casual Dining, April 2019). According to MCA, only 17% of the top 100 pub restaurants in the UK offer delivery, compared to 44% for bar restaurants, 87% for branded restaurants and 100% for fast food.
  2. Meals for one have seen a growing share of delivery, up 4 percentage points year on year compared to 2018, while meals for two have seen a reduction of 4 percentage points. This means suppliers must make sure their menus have suitable meal sizes to accommodate this type of shopper.
  3. Lunch is an opportunity which could push more growth. 13% of adults say they typically order takeaway for lunch compared to 58% who ordered a takeaway dinner (Mintel, Menu Trends - UK). According to MCA the lunch share of the delivery market was at 9% in 2019, up from only 4% in 2018, as it becomes more popular, especially in bigger cities, such as London, where consumers are getting lunch delivered to work.
  4. The environment and sustainability are becoming more important to consumer’s and are likely to impact decision making processes for some. Because of this, delivery brands are having to rethink some parts of their business. Deliveroo is at the forefront of this, last year it introduced an “opt-in” option for cutlery, where customers have to specify whether they want to receive cutlery with their order. According to the company this has cut the amount of cutlery requests by 90% globally. It is also now trying out a “clean and recycle” system, this gives the consumer the option for their containers to be picked up again, washed and reused. Be seen to take action.

 

*The food delivery market is defined as: prepared, ready-to-eat food that is delivered to people’s home for consumption (not collected in person).