In this article, we’ll dive into the food delivery scene in Australia. You’ll read about the most popular take-away food, how much sales are really made and an emerging revenue stream for food delivery platforms called dark kitchens.
The growing prominence of food delivery platforms
According to research by Cowen, almost half of the people asked use a food delivery service more than once a month. Between 2018 and 2023, it’s expected that the food delivery business will grow more than three times the rate of on-premises sales. Another research paper by the NPD Group estimates that by 2020, 70% of customers will have their meals off the premises.
This food delivery trend shows that over time, a restaurant its ambiance and the dining experience became less of a deciding factor, and the main focus is now the food itself. And how fast it get can to your door.
In Australia, the food delivery service is a booming business that continues to grow exponentially. In 2013, 67,000 Australians ordered food online, in 2017 this already jumped to 134,000, according to a 2018 NPD report about foodservice trends. Today, that number continues to grow continuously.
Some of the most famous ones, like Deliveroo and UberEats, are international players that are also active overseas. And then there are companies like Menulog and EatNow, founded in Australia itself.
Food service operators that are volume-sales oriented generally benefit the most.
Food delivery apps have helped Collins Foods, the largest owner of KFC restaurants in Australia boost its sales at the fast food chain and serve up a 20 per cent jump in profit. Same-store sales at its 231 local KFC stores grew 3.7 per cent, which the company said was driven by its digital and delivery offering. Today sixty-four of it’s restaurants offer delivery through platforms like MenuLog, UberEats and Deliveroo.
What are Australians ordering and consuming on food platforms?
Looking at the main reasons why people order in — time-sensitivity and convenience — it doesn’t come as a surprise that millennials make up for the majority of the group who orders their food online. Over 73% of this group place their orders through mobile apps.
Each year, roughly 68 million food orders are made in Australia, which translates to 7,000 orders per hour. Research by finder.com.au shows that Sydneysiders spend approximately $1,958 a year on food delivery services. The same research reveals that food delivery platforms make up for 12% of the sales within the $44.1 billion cafe, restaurant, and takeaway food services industry. The cities that order food most often are Sydney (at least once a week), Brisbane (3.4 times a month) and Melbourne (3.2 times a month).
Though flavors change, 2018 was definitely the year of Viva México. Deliveroo revealed that the most ordered at-home delivered dish was a burrito. A grilled chicken burrito from Guzman Y Gomez to be precise. Among the list were also beer battered fries, chicken schnitzels, and more burritos.
Australians are furthermore fans of Asian noodle dishes and often aim for healthier options. Dishes like poke bowls, vegan meals, protein bowls, and sushi, are becoming more and more beloved as food delivery orders. In 2018, healthier food orders even tripled.
Since food orders to the home and office are on the rise, some restaurant owners see less value in paying for a space where people don’t come to sit and dine. The creation of dark kitchens as an added revenue stream for some large food delivery platforms has begun. These are restaurant kitchens that only service food take out demands. They’re tiny kitchens that don’t host customers but are just there to prepare food.
In Australia, the first dark kitchen can be found in Windsor, Melbourne and was opened in 2017 by Deliveroo. Under the name Deliveroo Editions, the food delivery company motivates existing restaurants to partner with them and recreate their restaurant food in one of the dark kitchen stations. This is especially attractive for restaurants without an own delivery service who want to tap into the profitable food delivery market.
The second dark kitchen opened back in 2018 in Sydney, right inside the Veriu Broadway Hotel in Ultimo. On the ground floor, you’ll find nine work stations, or “pods”, where different chefs prepare their specialties. Then the couriers come to pick up the food, jump on their bicycle, pushbike, motorcycle, motor scooter or car, and off they go. Inside the dark kitchen space, there are also parking spots reserved for the many vehicles.
From a cost perspective, it makes sense. Plus, it opens up many more possibilities for ambitious entrepreneurs. It’s easier to find a small kitchen, ingredients can be shared among the different kitchens, remodels can happen within a day, there’s no need for any extra staff, and the food can be advertised online and via the apps.
In a world where space is limited and people expect to have things within minutes, dark kitchens are an excellent answer to the ever-growing food delivery industry.
What’s next for the food delivery business?
During the next years, we’ll most likely see the delivery food business continue to expand even more. We can also expect more dark kitchen concepts appearing around the world (Shanghai is already big on this trend). Though some people are divided on whether food apps are good for restaurants, they do make it easier for businesses without delivery options to offer a delivery service.
That being said, the more profitable the market gets, the heftier the fees will become. Some restaurants can pay up to 35% to have the food delivered, making it impossible for them to make any profit.
If restaurant owners do start to see their profit margins decrease, we might see alternative options appearing, like placing orders via Facebook Messenger. That, however, only time can tell.