The humble takeaway has always been a popular dining option, but over the past few years, with diners increasingly choosing to stay at home, the food home delivery sector has been booming and it shows no sign of slowing down any time soon. According to research from MCA Insight, the U.K. restaurant delivery market is now worth £8.1 billion – a growth of over 13% on 2017 figures.
This growth is largely being driven by multi-national industry giants such as Deliveroo, Just Eat, Uber Eats, Grubhub and DoorDash (US only) – all of whom provide a delivery service for local restaurants in the cities within which they operate. Such has been the demand for home delivery that for many restaurants it has now become an integral and important revenue stream – many of which had otherwise been struggling to fill seats due to the current economic uncertainty, while simultaneously facing rent hikes and rising wage bills. In fact these days you would be hard pressed to find a restaurant that doesn’t offer a takeaway service through at least one of these operators – from fast food to Michelin starred fine dining.
Deliveroo has even taken things a step further and established its own ghost restaurants – that is, restaurants that are set up exclusively to cater for home delivery, with no physical dining room to speak of. Branded as Deliveroo Editions these stand-alone kitchen units allow established restaurants to free up their own kitchens to focus on eat-in diners, while increasing capacity to cater for home-delivery orders and hence further boost their revenue. According to Brittney Bean, co-founder of Mother Clucker, a street food operator specialising in Fried Chicken, by being part of Deliveroo Edition it has allowed rapid expansion into areas that would otherwise be impossible for a small, growing business with no outside investment. The company has been able to circumvent extortionate property premiums and avoid the incredible expense of building and fitting out a kitchen and restaurant and outsource the operational headache of managing a fleet of delivery drivers, all while expanding its reach and delivering the best possible product across as much of London as possible. Besides London, Deliveroo Editions is now operating successfully in Dubai, the USA and South East Asia.
Deliveroo Editions is also supporting a number of chef and proprietors in launching virtual brands that don’t have a bricks and mortar presence and so only exist only for home delivery. This is a potentially attractive proposition for establishments that already have an established high-street restaurants and a guaranteed customer base, but are keen to try out new concepts and menus and target a new part of the market. These virtual restaurants allow restaurateurs to keep everything from staffing to business rates to a minimum and also grant them the freedom to expand or relocate quickly as demand dictates. Two such examples in London are Motu, a high-end Indian takeaway from JKS Restaurants (Gymkhana, Lyle’s, Hoppers, Berenjak and Bao) and Mexican concept La Pistola from Brad McDonald (formerly of Lockhart and Shotgun).
Of course the home delivery market encompasses much more than these ready-to-eat restaurant-prepared meals and a major part of the sector is also made up of meals designed to be cooked or re-heated at home. This can range from supermarket ready meals to meal-kits with many other options inbetween. Meal kits consist of ingredients to cook a meal, with consumers mixing the ingredients and cooking the meal according to the instructions provided and can be purchased in shops (especially common in the US) or delivered by a company such as industry leaders Hello Fresh or Simply Cook (although there are many others). These kits appeal in particular to a growing number of time-poor diners who want the convenience of home delivery, but also want to still be able to do some cooking.
Subsequently sales have been soaring and it’s been predicted that this is the going to be the next major growth area for the food delivery sector. According to the Maryland-based research firm Packaged Facts, the U.S. meal-kit market had sales of $2.6 billion in 2017 and will hit an estimated $3.1 billion in sales in 2018. The firm estimates that the meal-kit market will grow by double-digits over the next several years yet expect it to decline to low single-digit growth by 2023 as it reaches peak market penetration.
Despite the impressive growth predictions for the food-delivery sector as a whole, there’s still a number of obstacles to overcome – one of which is quality. Despite investing in plenty of technology to ensure food reaches consumers in the best condition possible, one of the complaints levelled at the likes of Deliveroo et al is that the delivered food is often far removed from the original restaurant dish – whether it arrives at the wrong temperature, is poorly presented or just doesn’t work as a stand-alone dish. Part of the issue here is that actually many restaurant meals are just that – meals designed to be prepared and eaten in a restaurant that by their very nature do not travel well. It might be telling that the best-selling dish through Deliveroo in the UK is a Five Guys burger.
Meal kits suffer from similar problems – they are often more time-consuming than they appear, the subscription model is now old-fashioned and restrictive, and the taste and texture of the meals suffer from extreme variance.
Looking to the future, food delivery is likely to continue to become speedier, more efficient and more cost-effective and as a result cheaper – in fact analysis suggests that the total cost of a professionally cooked, home-delivered meal could soon approach, or better, that of a home-prepared one. The quality of the food is also likely to increase, and it seems probable that someone will overcome the current packaging issues to allow restaurant food to be delivered at the ideal temperature for eating. This packing also likely to become more sustainable as customers demand better environmental accountability.
The meal-kit in its current form is similarly likely to evolve. There is a definite gap in the market for high quality, chef-made meals which can be personalised in terms of ingredients and be delivered requiring as much or as little prep as the customer wants without compromising on quality. As automation and efficiency in the sector increases there will be a counter-drive towards this type of bespoke, personalised and artisan food delivery service.
With UBS predicting that global food delivery will grow ten-fold over the next 12 years and analysts at Morgan Stanley reporting that delivery could top 40% of restaurant sales by 2030 there’s clearly still plenty of room for innovation within this sector and still plenty of people out there willing to pay for the convenience of having their meals delivered direct to their door.