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Jul 8, 2020

COVID Accelerates the Digital Evolution in Food and Foodservice Industries

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The COVID-19 pandemic has brought about a myriad of behavioral changes, and among the behaviors most interesting to me was the rapid escalation of using technology to order groceries and from a restaurant. I remember standing before an audience a few years back talking about e-commerce across retail and how the food and restaurant industries were just in the early stages of the digital era.  I asked the audience to imagine a world five or six years into the future when grocery and restaurant orders would be double what they were that day. No one in the room that day, including me, thought we’d get there so soon, but because of the coronavirus, we did. 

For grocery shopping, online ordering for both pick-up and delivery was growing before the crisis.  As consumers looked to minimize exposure outside of their homes during the pandemic, this trend picked up considerable momentum. By mid-April, online grocery buying was about 77% higher than before the crisis and in May, 40% ordered groceries online for delivery or carry-out compared to 28% same month year ago. This has the potential to reshape the grocery retail landscape. Retailers who are more developed in their digital capabilities and have strategic partnerships with third-party platforms will likely emerge from this crisis stronger than their peers.

Digital foodservice orders represented 5% of foodservice visits in January 2018 and by April 2020 the share of digital orders increased to 20%. Digital restaurant orders increased by 138% in May. Certainly this growth was accelerated by the mandated dine-in closures that happened across the country in March. Overnight the U.S. restaurant industry, for the most part, became totally reliant on carry-out, delivery, and drive-thru operations to stay in business, and digital ordering became the linchpin. Digital ordering through restaurant and third-party apps as well as restaurant websites enabled restaurants to quickly pivot and provided consumers with the safer option of remote ordering and delivery. Not only did the necessity of the time accelerate digital orderings, but it also brought in new users. For example, new users currently represent 48% of third-party foodservice delivery app users. 

Over the last three months restaurant operators, grocery retailers, and third-party platforms have all expanded their capacity for digital and delivery during the pandemic.  The consumer also learned during this time new capabilities for frictionless and contactless food acquisition. These benefits aren’t likely to be shelved just because the pandemic fades.  While we may settle down to a more normal pattern, I expect these behaviors to remain.

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