When it comes to food delivery, how come all we talk about is the food?

 

When it comes to food delivery, how come all we talk about is the food?

July 5, 2018

While consumers still crave the ‘treat’ factor of not having to cook for themselves, more and more people are shunning the option of dining out to eat delivered restaurant food at home. Convenience, price and time are all factors driving this trend.

Look around the food industry and it’s easy to see which way the wind is blowing. JustEat now outranks Sainsbury’s in the FTSE. Last year, McDonald’s announced a major partnership with Uber Eats, and Yum! Brands - the parent company of KFC, Pizza Hut and Taco Bell - recently bought a significant stake in mobile and online food ordering company GrubHub.

Add to that the fact that Domino’s shares have out performed some of the largest companies in the world (think Apple and Amazon), giving investors returns of 2000 per cent, and it’s not hard to see where things appear to be headed. 

Despite all this growth though, no one seems to be talking about how to actually deliver the goods. 

There’s plenty of talk about the growing amount of food being ordered, the increasing number of people staying at home, the demand for convenience and getting ‘more for less’, but rarely do we talk about how well we actually get the food to the customer. 

In a recent article on The Motley Fool website, Michael Cochrane asks, “Consumers are staying home more than ever before and, increasingly, even when they're eating out, they're eating in. How can you invest in America's growing appetite for delivery?” It’s a good question, but the answer seems obvious to me: Invest in delivery. 

Domino’s knows this. In fact, ask anyone who works for the brand and they’ll tell you - Domino’s isn’t a pizza company, it’s a process company. And while the question was directed at the U.S. market, it’s just as relevant in the UK and beyond, where delivery demands are also growing at pace. 

Cochrane also says, “In a 2016 research note, Morgan Stanley stated that the total restaurant industry pulled in about $500 billion a year in revenue -- which included about $210 billion of food that was eaten off-premise. Yet, of this $210 billion, only about $30 billion came from delivery sales, implying a huge unmet need for restaurant delivery and a long runway of growth.

“More recently, the NDP Group, a global information and research company, said that while restaurant sales have been flat over the past five years, delivery sales have increased 20%.”

For all this growth potential, almost all the investment in food delivery is currently being made in the engine room. Similar investment will need to be made in the delivery infrastructure if this booming micro-economy is to succeed.

Then the question will become this: where’s the competition going to come from? 

 
Nicole Lyons