Casual Dining: Can It Survive the Delivery Boom?

In Digital News, General News by Isabelle HillsonLeave a Comment

While food delivery is by no means a revolutionary concept, the low-cost market entry for providers means that a plethora of platforms have sprung up in recent years. The services they provide include food delivery, matching gourmet chefs to consumers, farm to table food and platforms for supper clubs, to name but a few – the combined effect of which is drastically changing the landscape of the casual dining sector.

There is also the continued shift in spending from retail to experiences which is changing the face of consumer markets.

Indeed, consumer spending on eating and drinking out has increased more than spending on any other form of leisure during the last quarter of 2016, yet visits to restaurants only grew moderately. This can be explained by an increase in off-premise eating, up 3%, accounting for 58% of all eating out spending; Deliveroo alone reported an increase in orders of 650% last year.

The expectation of customers is for a fast, cheap, seamlessly efficient service that is uniformly excellent throughout. Yet with so many separate stakeholders and variables: the restaurant, delivery companies, drivers, technology, traffic and weather conditions, there are plenty of opportunities for a sub-optimal consumer experience. And, with an almost infinite number of outlets and types of dining experiences on offer, consumer loyalty is falling, creating a fiercely competitive casual dining market.

Given the risk restaurants might see in putting their product, and therefore brand reputation, into the hands of a third party   – is it still worth vendors signing up to the likes of JustEat, UberEats, Deliveroo and Jinn?

Undoubtedly so – despite some anecdotal evidence of delayed deliveries, when we analysed social sentiment around the use of delivery service apps it shows an impressive 98% of conversations on social media were positive. Given this overwhelming level of support, delivery apps are a channel that no restaurant can afford to miss out on.

Furthermore eating out sales have been increasing on average at a rate of 2% since 2013, when delivery apps began to shake up the market, and by over 5% in urban markets,  where they predominantly operate, such as London. Alongside the overall market increase, the platforms can deliver boosts to off-peak revenue which help cover costs of having kitchen staff around all day and drive up notoriously thin margins. The growth in orders has even led to some restaurants, such as ClockJack in London, having to open a delivery dedicated kitchen to deal with the increase in demand.

Rather than stealing restaurants market share of the casual dining sector, delivery apps provide a source of healthy competition, increase sales and satisfy the high-maintenance customer of the 21st century. As a channel, they are undoubtedly here to stay and no one in the sector can afford to miss out.

 

To find out more about how onefourzero’s market analysis and strategy can help you identify opportunities for growth and potential risks, contact fleur@onefourzerogroup.com

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