The Delivery Dilemma - Food Delivery in 2019
Plenty of commentary has been written about food delivery, but now that we are over the honeymoon period, there are a couple of themes that have started to emerge:
Some people love it: Time-poor consumers love it for the convenience, government ministers love the creation of flexible jobs while restaurateurs love the additional revenue streams.
Some people don’t: Consumers suffer reduced value and experience, the environment suffers over sustainability concerns, dine-in guests see restaurants prioritise delivery over them, restaurants lose revenue and control over their product and how it is received, while sociologists worry about its contribution to increased human isolation within urban environments - to name a few.
Whilst smaller businesses may find the margin shrinkage of the home-delivery models challenging, the results for volume-sales oriented businesses are there for all to see and these are starting to show: “Food delivery apps have helped the largest owner of KFC restaurants in Australia boost its sales at the fast food chain and serve up a 20 per cent jump in profit.” “Same-store sales at its 231 local KFC stores grew 3.7 per cent, which the company said was driven by its digital and delivery offering. Sixty-four of its restaurants now offer delivery through either the Menulog or Deliveroo apps.” (Source)
In countries like the UK and the US, inner urban living and single person households are driving in home meal delivery up and kitchen sizes down! “Research by LABC Warranty, which provides warranties for newly built homes, found living rooms and kitchens in British homes have shrunk to levels last seen 80 years ago. According to the report, space dedicated to food preparation peaked in the 1960s and is now 13% smaller in new-build homes.” A UBS research report, titled The End of the Kitchen?, posits that by 2030 we could see a scenario where “most meals currently cooked at home are instead ordered online and delivered from either restaurants or central kitchens.”
As a counterpoint, whilst there appears to be a common perception that home delivery services such as Uber Eats and Deliveroo are ubiquitous across the Australian market place, the “Eating Out in Australia 2019” report by Graeme Philipson at Intermedia Group highlights an interesting counter-perspective. The report indicates that the uptake of home delivery services with venue operators is led by Uber Eats, with Deliveroo in second place and Menu Log as the third favourite. No surprises there! However, 13.1% of venue operators surveyed, claim that they have never even heard of Uber Eats and a 46.7% don’t use them. Only 13.1% of surveyed venue operators admitted to currently using the Uber Eats service and an even smaller 9.9% use Deliveroo.
Our take is that the death of cooking at home is greatly exaggerated. Even more importantly, the sociality of dining together is a basic human need and is something that can never be replaced. There is a significant niche, however, that needs to be served: Time-poor young professionals wanting to optimise their days and those who don’t want to/can’t cook want and need quality prepared food delivered to them that isn’t pizza.
For many Centres and development sites with F&B included as a component of the retail offer (where often this is dominated by volume-based F&B businesses), the rise of food delivery means that at an operational level contingency needs to be considered within the context of building infrastructure: Where will delivery drivers park, what access do they require and how will it impact dine-in customers?
One thing is for sure – Delivery services appear to be here to stay, convenience as a major commodity is on the rise and everyone wants a piece of the action. Big-gun Uber Eats is trialling dine-in options in the US that allows users to pre-order their food and arrive at the restaurant as the order is served, skipping the queue for tables and the wait for food. Supermarkets are rolling out new prepared food offers, home-cook-meal-replacements, and the meal kit and meal-in-a-box business is growing strongly.
Food and beverage like every other industry is morphing under the weight of changing community expectations, their use of technology and the globalisation of opinion, trends and economy. The only question that remains is; how is your business going to react to the future of food?
Is your project’s food, future proofed? Are you across the latest industry data?
Have you quantified the metrics of hospitality success for your project? Are you maximising your food & beverage revenue potential?
Future Food specialise in Hospitality Masterplanning across local and global projects. Ask me how we can work together to maximise customer uptake, revenue potential and asset value for your project.
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Cover image: Menulog (Image via the Register)