Have you been effectively utilising food delivery apps in your business?
Food delivery apps are being used by an increasing number of Australians to access the food they want. As a foodservice operator, how can you make the most of these services?
To ensure using food delivery apps is profitable for your business, you need to consider the associated fees and balance them with your existing costs According to a 2020 report by CBRE, commission fees charged by delivery providers in Australia range between 13-35% per order.
For some apps the commission charged on an order varies based on how the order is delivered. For example, UberEATS charges a 30% commission fee for providing delivery, but only charges 16% if you send out your own delivery staff.
It can be useful to simplify your menu and focus on high-margin items that mitigate the impact of commission fees. Making your kitchen more productive by investing in new equipment and staff training can also help you improve your margins with food delivery platforms.
As this report from the RCA (Restaurant & Catering Association of Australia) points out, food delivery platforms offer a range of opportunities for your business. Apart from the marketing and consumer discoverability benefits these platforms provide, their utility also presents an opportunity to radically streamline your internal operations, increase your profit margins, and grow your business.
Food delivery services thrive during lockdown
Before the outbreak of COVID-19 and the subsequent lockdowns that followed, food delivery services were already enjoying rapid growth. Once lockdown hit and Australians were forced to adjust to the new normal, it created the perfect environment for these services to thrive and provided a lifeline to local restaurants that would otherwise struggle to operate their own food delivery service. If you’re a foodservice operator who’s been impacted by COVID restrictions, it’s highly likely you’ve already had to rely heavily on food delivery apps to serve your customers!
In May, a report by Roy Morgan revealed that the second lockdown in Victoria increased the state-wide usage of food delivery apps to 36.1%, beating Sydney (31.7%) and Perth (29.0%). This result suggests that strict lockdown conditions have had the most significant short-term impact on propelling the demand for food delivery services.
According to IBISWorld, the Australian Online Food Ordering and Delivery Platforms industry is expected to grow by 12.8% in 2021. Measured by revenue, the food delivery services market is worth $847.9 million as of 2021. Overall, this industry has grown faster than the Australian economy as a whole.
Young people continue to use food delivery apps the most
Perhaps unsurprisingly, it’s younger Australians who are using food delivery services the most. Roy Morgan’s 2021 report also revealed that over a third of Millennials and Generation Z are using meal delivery services in an average three-month span.
While the use of food delivery services has increased year on year across all age groups, numbers begin to drop sharply amongst older Australians. According to Roy Morgan, only 11.4% of Baby Boomers and 9% of Pre-Boomers use food delivery apps during the same three-month average.
Image Source: Roy Morgan Finding No. 8713
With this data in mind, you may want to consider pivoting your offers to appeal to a younger demographic if you’re going to leverage food delivery apps with your foodservice business. Using appealing images, and creative, catchy names for your menu items while offering a high amount of customisability could help you attract more orders from younger Australians.
UberEATS continues to dominate
According to the CBRE report mentioned earlier, UberEATS controlled the highest majority of market share (59.7%), with Deliveroo (17.5%) and Menulog (12.1%) following in second and third place. We can assume that this market dominance has remained steady throughout 2021, with Roy Morgan indicating that 12.8% of Australians are now using UberEATS (up from the 11.5% reported in 2020).
Dark Kitchens are here to stay
We commented on the rise of dark kitchens in our article The State of Food Delivery Platforms in Australia 2019, and over the last two years, they have continued to grow in prominence. Undoubtedly propelled by the impact of COVID-19, CBRE reported that the market size of dark kitchens in the Asia-Pacific region had more than doubled between 2019 and 2020, with steady growth continuing into 2021.The impact of the COVID-19 pandemic has undoubtedly reinforced the appeal of dark kitchens for foodservice operators, allowing them to reduce their overhead costs and focus entirely on the healthy demand for delivery orders.
What does the future hold for food delivery services in Australia?
It’s easy to predict that food delivery services will continue to enjoy healthy growth throughout 2021 and beyond. For better or worse, the increasingly widespread and frequent use of food delivery apps by young Australians suggests a generational shift away from home-cooking and traditional out-of-home dining.
In many ways, the COVID-19 pandemic has given us a peek into the future of how the foodservice industry will transform, with the growing number of dark kitchens showing that the industry is already beginning to adjust.