Consumers are embracing the Evolving Food Delivery Market - especially as COVID-19 continues to spread. And food chains and eateries are scrambling to fill orders, as long as they can stay open.
Today’s fast-paced society requires businesses to constantly evolve in order to meet the demands of consumers. Restaurants must realize this dog-eat-dog mentality, or face landing belly up as technology and the economy threaten to leave empty chairs at empty tables. Here are some considerations and a way forward.
A Basket Full of Success
While food delivery is nothing new, the Romans had their own version of take out as far back as 753 BC - online and mobile app ordering is a bit more recent, starting in 2004. With over 10 major fast food delivery services in the United States alone, “Frost & Sullivan estimated the industry at $82 billion in terms of gross revenue bookings and is set to more than double by 2025, backed by a cumulative growth rate of 14%.” People are obsessed with ordering food:
A snapshot of the food delivery conversation in Quid shows it’s a global trend too – one that is expanding:
While food delivery service in general makes up almost 10% of the discussions, individual delivery platforms, such as Grubhub, Zomato, and Uber Eats make up an additional 20%. And we know that Amazon and Walmart’s food delivery/pickup services are hot commodities right now too!
The popularity of food delivery is not going away any time soon, especially not right now when most people are stuck inside self-quarantining.
We can see this growing trend a bit more clearly when looking at a 4 -week overview of food delivery posts. Note the spike between March 16-18, very likely due to the impact of COVID-19 and social isolation.
And we can confirm this by clicking on the spike itself and viewing the fluctuation summary for that day:
So armed with this knowledge, how are these brands able to stay ahead of the food delivery curve – and what can other delivery services do to compete? And, importantly - what does this mean for traditional dine-in restaurants? It revolves around food promos, unrecognized costs and hygiene . . .
Food Delivery Promos on Phones
Delivery services have an edge over restaurants, as they have consumers phone numbers, as well as permission to text them. And they’re quick to offer freebies in exchange for link shares that convert, further solidifying their standing in consumers’ minds and hungry bellies:
They also partner with various community programs to provide meals for school-aged children. And recently announced pick-up and drop-off options during the Coronavirus shutdown.
And they seem to be such an economical choice, when one figures in commute time and gas, right? Well, not really – and that’s the part where dine-in would have an edge, or at least a solid bargaining chip. That and hygiene – which can be a huge issue.
The Price of a Good Meal
In addition to charging consumers, most online and app platforms charge delivery and ordering fees to the restaurants they serve, causing small establishments to either raise prices or forgo using a third-party service. “Another, more accurate, critique is that the slice of profit the main three food-delivery apps charge a restaurant can oftentimes be exorbitant. According to Chris Webb, CEO of ChowNow, some apps are charging as much as 50 cents per dollar ordered."
In light of the Coronavirus, many are waiving those fees:
While some states are taking measures to cap these fees, consumers may not be aware – and likely wouldn’t appreciate the upcharge to their favorite venues. And this might encourage them to go into restaurants after all. Consumers are a feisty bunch after all – and that can spin either way.
And then, with growing income disparity between the haves and have nots, many restaurant workers around the country are being affected by deliveries as well. They’re facing less income, increased duties, and potential layoffs, as more consumers turn to app-based ordering and delivering.
An article from Pittsburgh’s Post Gazette noted: “it’s becoming common to see half-empty dining rooms around town with a staff that’s trying to keep up as they fold in delivery orders… For this extra work, ‘There’s no gratuity’… When there’s tipping involved it goes to the driver... Either way the employees are losing tipped income and taking on additional duties.”
But beyond extra costs, consumers have another reason to be wary of their food deliveries – hygiene.
The Price of Food Hygiene
UberEats and Grubhub have certainly had their share of complaints. Traffic causes orders to be picked up or dropped off ate; food arrives cold or disheveled; the wrong order is delivered. But a study done in December of last year shows a more disturbing price to pay for delivery - “According to a study by US Foods, about 54 percent of drivers are tempted to eat the food they are delivering, and half of those have admitted to taking a bite.”
And, particularly right now, that’s the stuff of horror stories.
Delivery services are working on a way to solve these problems, including deactivating driver accounts and offering full refunds when these things happen, but is it a risk that consumers will continue to take, if presented with palatable options?
As the world and society evolve, companies must be willing to adapt or risk going out of business. Consumers, now more than ever, are embracing ease and convenience, but healthy practices will certainly jump to the forefront of everyone’s minds moving forward. Businesses wanting to stay ahead should be watching consumer and market intelligence for ways to innovate ahead of competitors on this one. And if you reach out for a demo, we can show you how!
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