The Food Delivery Industry and Technology
Online food-delivery platforms are expanding choice and convenience, allowing customers to order from a wide array of restaurants with a few taps on their mobile phone. The services range from making reservations, being offered localised promotions, pre-ordering food and beverages and delivery to a different location.
In the previous decades, it was commonplace to use your telephone to call the venue, place your food order and then arrange to either collect the meal at a certain time or use the venues delivery service to bring the food to your location. With the birth of online ordering a decade ago customer delivery expectations and behaviour changed.
But now with the advancement of technology and the mass consumer adoption of apps means this industry is seeing significant growth, competition and expansion globally.
The business of delivering restaurant meals to the home is undergoing rapid change as new online platforms race to capture markets and customers. Related to this, there has been significant investment in technology companies aiming to disrupt the market with new ordering and delivery methods.
Global Growth Set To Continue
Global figures speak of this dramatic increase in industry growth going digital, with 25% growth expected between 2016-2019 in key markets. 6.6% of all restaurant orders come from digital channels, outpacing telephone orders (5%) for the first time**.
Online and mobile ordering is not new but today with better technology, the consumer primed to save time and effort means every venue should be aiming to grow their revenue by servicing an evolving customer.
The McKingsey report on the food delivery industry states that “Once customers sign up, 80% never or rarely leave for another platform”. The players within the food delivery industry are aggressive in their pursuit of capturing as many new clients in the shortest period of time as possible and will often undercut or run loss leader promotions to acquire new clients initially.
Customers are spending a reported $2.6 Billion on food and drink delivery each year and 68 million online food orders were made in Australia last year!***
Aggregators and New Delivery
There are two different food delivery models that are emerging – Aggregators and New Delivery. Both allow consumers to compare menus, scan and post reviews, and place orders from a variety of restaurants with a single click.
The aggregators, which are part of the traditional-delivery category, simply take orders from customers and forward them to restaurants, which handle the delivery themselves with their own fleet and drivers. The aggregators collect a fixed margin of the order, which is paid by the restaurant and there is no cost passed to the customer.
Hospitality from search to seat
Technology has made the aggregators be able to provide more functionality with their platforms such as customer loyalty programs, business intelligence tools, connecting directly into the venues POS so orders can be processed without manual intervention and offering remarketing campaigns to venues based on the client information held in their database.
In contrast, the new-delivery players build their own logistics networks, providing delivery for restaurants that don’t have their own drivers. These companies are compensated by the restaurant with a fixed margin of the order, as well as with a small flat fee from the customer.
Venues like mobile delivery ordering because it means more revenue, more customer loyalty and better operational efficiency. With mobile delivery the venue needs to meet their customers’ expectations with time being the most critical factor, then the quality of product followed by convenience and then only is cost considered.
It comes as no surprise that the industry has seen vast growth and expansion in the last 5 years and with better coverage of the top 4 players in the new-delivery, there is lots of competition.
However ironically, the top fast-food providers have not yet benefited from the food delivery apps boom, but the landscape is changing. According to IBISWorld research, fast foods should integrate with food delivery apps to succeed in the increasingly challenging environment of the foodservice sector. They have stated that food apps contribute to a revenue increase of 2% in 2017-18, which is seen to possibly reach $21 billion.
Only early adopters of venues are benefitting from the App or web platform boom – with the aggregators cashing in on the fine dining venues where quality is a larger consideration over convenience. These platforms allow for better guest experiences and valuable patron insights for the venue.
Technology has also matured so that previous disparate software platforms were unable to link into each other and as the food delivery industry has grown there have been advanced that allow the integration of Point of sale, payment portals, CRM and loyalty programs even the issuing of gift cards to customers from the venue. This has led to the elimination of manual entry errors, savings on merchant fees and data being available for analysis in real-time and make cost-effective changes to their business operations. Using Doshii API many venues have connected frictionlessly with reservations, ordering, payment, loyalty, BI, data and analytics apps and web-platforms to ensure their restaurants are utilizing technology seamlessly for their benefit.
**data sourced from PYMNTS.com