Restaurants started delivering food decades before the global pandemic of 2020. In fact, Pizza Hut founded the first online ordering and delivery service back in 1994. However, most restaurants didn’t follow suit, and people would find they were limited in their choices if they wanted to stay home and order dinner. That slowly changed with other restaurants following suit, but it wasn’t until the global pandemic that things really took off. In fact, restaurant meal deliveries, grocery deliveries, and meal foot kit services all witnessed growth during the lockdowns. It’s easy to see why, as having food delivered is convenient, saves time, and allows men and women to avoid crowds. What do restaurant owners need to know about offering this option?
Researchers Sherri Kimes and Chaoqun Chen conducted a study to determine whether consumers preferred to use a third-party app when placing an order for food delivery or if they wanted to engage directly with the restaurant. They found that consumers choose to work with the restaurant and cut out the middleman. This backs up information provided by eMarketer in 2017, which found that 52 percent of consumers chose to order food through the restaurant app as opposed to a third-party one. Restaurant owners need to consider this and work with DataDreamers to eliminate the middleman and meet the needs of their customers. Why is this crucial?
The Impact of the Pandemic
The National Restaurant Association conducts regular State of the Restaurant Industry reports and the 2021 version shared some devastating news for those working in this industry. The Association surveyed 6,000 restaurant operators along with 1,000 adult customers to gather information concerning a variety of topics. The Association found that sales were $240 billion less than predicted for the year, with this prediction being made before the pandemic hit.
During the survey, the team learned that over 110,000 restaurants were closed as of December 1, 2020. Some of these eating and drinking establishments were closed temporarily, but others had shut their doors forever. They couldn’t survive the loss of revenue. Sadly, 2.5 million workers in the industry remained unemployed at the end of 2020. The only good news was that this was significantly less than the eight million workers who were furloughed or laid off at the height of the initial restaurant closures.
Customers spend more when they order food for delivery now. Average orders have gone up 20 percent over the past year, according to Grubhub, and DoorDash states it has seen a similar trend. In fact, all four major third-party delivery providers state their highest order sizes were seen in May 2020. It is believed this may be due to families remaining stuck at home thanks to the pandemic. In addition, high menu prices and consumers ordering from new places may have played a role in the jump in average order size.
In addition, many restaurants that never offered delivery in the past began doing so as a result of the pandemic. Forty-two percent of restaurants opted to go the route to generate sales during the lockdowns, Rewards Network reports. Thirty-one percent of restaurants stated they would continue to invest in the delivery service in the future, which suggests they believe consumer demand for food delivery will continue in the future.
In 2015, the United States food delivery industry brought in $8.7 billion. By 2020, this figure jumped to $26.5 billion. Surprisingly, Business of Apps figures shows that 2020 didn’t account for the largest jump in food delivery revenue. Revenue for 2019 increased by $5.2 billion in that year alone. In 2020, it only increased by $4.5 billion. This shows the industry was growing before the pandemic and will probably continue to do so well into the future. Overall, the market revenue has increased 204 percent over the period from 2015 to 2020. Every restaurant owner can benefit from offering delivery, as consumers use this service and will probably continue to do so in the future. In fact, the projected revenue for this industry is $42 billion by 2025.
Delivery App Usage
A business owner might assume app usage remains limited to a selected group of individuals. However, new people continue to make use of the apps every day. Sixty-six million users turned to restaurant delivery apps in 2015. By 2020, this number jumped to 111 million. America isn’t alone in this either. Sixty-five million Europeans made use of food delivery apps in 2015. By 2020, this figure had almost doubled, with 150 million people using them in 2020. This may be due to extended lockdowns seen across multiple parts of the continent, although other factors likely played a role as well.
Nevertheless, China stands out in the crown when it comes to food delivery app usage. In 2015, 75 million users turned to food delivery apps when they wished to have a meal delivered to their homes. By 2020, this number grew to a staggering 650 million. Hopefully, America will see growth like that in the future, and every restaurant needs to be prepared if it does.
Of those individuals using food delivery apps, one in three falls into the millennial category. Surprisingly, these customers, who many would say want instant gratification, state they don’t mind waiting up to 40 minutes to have their food in hand. However, they want to keep fees to a minimum, saying they prefer service fees, gratuities, and delivery fees to remain under $8.50.
What the Future Holds
Experts predict the restaurant delivery sector will continue to grow in the future. Every restaurant needs to consider this and offer food delivery to remain competitive. Seventy-eight percent of off-premises orders are placed directly with the restaurant, which is of great benefit to the restaurateur. Today, third-party apps take on average 30 percent in commission. By offering direct-to-consumer delivery services, restaurants can keep prices low while saving money on commissions. Forty percent of restaurants began offering food delivery as a result of the pandemic. Experts believe there will be a slight dip in sales when restaurants open fully once again, although a lack of employees to man restaurants and serve customers may alter this prediction. Every restaurant needs to consider offering food directly rather than going through a third party, as this allows them to keep fees down while meeting the needs of their patrons. If your restaurant has yet to offer this option, consider doing so today. Otherwise, you are likely missing out on sales, and no restaurant owner wants that.