Will increased appetite for food delivery continue after Covid?

Contributor: Gareth Ogden, partner at haysmacintyre

As UK lockdown measures ease and the vaccine rollout takes effect, the hospitality sector that emerges from the pandemic will in many ways be a very different one to that which was forced into lockdown in March 2020. 

Whilst the provision of food delivery and takeaway services was already burgeoning before the Covid-19 crisis, the growth of this market has only been further enhanced during the pandemic, particularly amongst dry-led businesses. However, as table bookings fill up and a sense of normality returns, will the eat-at-home sales channel retain its recent prevalence?

Take out to help out

The growth in food delivery and takeaway services during the pandemic was a natural product of a sector without recourse to continue trading by any other means. The recent haysmacintyre Hospitality Snapshot Survey taken in March 2021 found that 50% of restaurants had implemented a takeaway and/or delivery service during the pandemic, swiftly followed by 54% of food-serving pubs and bars. Furthermore, 77% of the businesses that began delivery and/or takeaway services during the pandemic planned to continue to offer this service.

On top of traditional ready-to-eat delivery channels, restaurant DIY meal kits exploded in popularity, as a bridge between the entertainment value of cooking for citizens trapped in lockdown and the premium experience that restaurants offer above traditional takeaway and delivery outlets. Similar to the statistics above, the haysmacintyre survey also found that three quarters of restaurants were planning to continue to offer the service, a significant vote-of-confidence for a previously niche revenue stream. 

This long-term pivot to takeaway and delivery was demonstrably caused by the pandemic: in the 2019 haysmacintyre Hospitality Index less than 30% of respondents thought that offering delivery had a positive impact on the bottom line. As lockdowns gave no alternative to implementing these services, many businesses will now have streamlined operations to the extent that continuing the service into 2021 is not only feasible, but profitable. 

In part, the pandemic offered not only an opportunity and (literally) captive audience for food delivery services, but also afforded operators greater time to strategise and reallocate unused floor space towards the new channel. Now that indoor dining has recommenced, the question facing many businesses will be how to maintain popular delivery services with less space, less time and greater cashflow considerations.

A digital paradigm

Here, the answer may lie with digital solutions, which many hospitality businesses have already turned to during the pandemic. From online menus accessible via QR codes to full table service apps and payment services encompassing credit or debit cards, PayPal and the likes of Google, Apple or Android Pay, the social distancing and hygiene benefits provided by adopting these systems have paid dividends over the past year. Indeed, the Hospitality Snapshot 2021 revealed that 95% of operators who implemented on-site payment or ordering apps during the pandemic aimed to continue to utilise the technology. 

Similar systems can be, and have been, adopted to enable meal delivery or takeaway revenue channels with minimal extra cost. This does however present an interesting clash with the current titans in the delivery sector, the third-party ‘middleman’ services – of which JustEat and Deliveroo are perhaps the most well-known. 

Food delivery service popularity

Cutting out the middleman

Whilst the brands of JustEat, Deliveroo and their contemporaries have become shorthand for delivery food over recent years, hospitality businesses keen to continue food delivery and takeaway services implemented during the pandemic may find advantages in going it alone. 

Taking direct responsibility for all customer interaction (whether via a website, independent app or even over the phone) and delivery operations allows a business greater quality control across the entire process. For higher-end restaurants looking to recreate a fine dining experience through delivery, this quality control may be essential to ensure that food arrives at the right temperature, moisture level and in pristine packaging to protect the premium reputation and brand. 

Whilst the start-up and increased operational costs resulting from delivery and takeaway services cannot be overlooked, many businesses will have already invested in those start-up costs during the pandemic and, in the long-term, the high commission rates of partnering with third party apps may prove equally costly to independent operations. 

The hospitality sector has emerged from the pandemic bruised but unbroken, and capitalising on new opportunities will be essential as the industry recovers. Consumers have developed new tastes over the course of lockdown, and businesses should budget for an increased appetite for takeaway and delivery.

Contributor: Gareth Ogden, partner at haysmacintyre
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