Delivery – A Growth Opportunity On The Horizon

Foodservice Brief — January 2016

Historically, consumers had very few meal choices in terms of what could be delivered to them. Pizza and Asian foods were about it. Carry-out/take-out/drive-thru have been the primary options fulfilling consumers’ need for speed and convenience. Recently, restaurant operators have offered convenience by making it easier for customers to obtain a prepared meal through delivery options, particularly in large metropolitan areas. It is obvious consumers find appealing the availability of delivery options beyond traditional pizza and Asian.

Restaurant delivery – beyond traditional pizza delivery – is a growing business

Delivery traffic outside of pizza is growing strongly, up by double-digit rates since 2012, while traditional QSR pizza delivery is on the decline. It must be noted, however, that the decrease in delivery for QSR pizza is primarily attributable to small chains/independents. Delivery options outside of pizza are still relatively small, with roughly six million delivery-related visits in the past year. But there is little doubt that the growth rate for categories outside of QSR pizza will continue on a strong growth path. All types of restaurants are increasingly partnering with delivery services, such as Eat24, GrubHub, and Door Dash, because of the availability of online ordering, particularly through mobile apps.

Eating in is the new eating out

Consumers want the “eat out” experience of quality food, but they’re saving money by having food delivered to their homes. The increase in consumers eating more of their meals at home has been growing for several years. What’s behind the increased demand for restaurant meals that can be eaten at home? It varies. For some, it’s about time constraints and working from home. Others want to spend more time at home with the family and they’ve increased at-home leisure activities.

Our 2013 report, A Look into the Future of Foodservice, revealed restaurant meals purchased for off-premise consumption were expected to outpace overall industry traffic growth over the next decade. How has that played out? While the market has largely been dominated by pizza concepts, there is increasing demand for other types of meals for home delivery. Looking at share of delivery by restaurant category in the period since we produced that report, we see growth in share of delivery for concepts outside of pizza. The share loss for pizza is largely the result of new options becoming more available and consumers wanting something new and different in terms of delivered meals – sandwich, burger and fast casual options in particular. 

New delivery options are being used at all meal occasions

Among the concepts making inroads into the delivery market, delivery usage by meal occasion is vastly different from that for pizza. This suggests the opportunity for growth of delivery is widespread, and not just limited to the dinner meal occasion, as is the case for pizza. CREST® data shows where consumers are prior to ordering delivery – they are typically at home when they decide to use delivery, especially for pizza (73 percent). When they utilize other concepts for delivery, only 44 percent indicate they are at home, while around 25% are at work when choosing delivery. This provides a great targeting opportunity for all restaurants that offer delivery: Target potential and prior users earlier in the day, when adults tend to be at work.

Delivery is convenient and more lucrative for restaurant operators

Delivery is one of the most convenient options a restaurant operator can offer to address consumers’ needs for a convenient meal solution. And restaurant operators have new options available to them when it comes to entering the delivery market. Restaurants no longer need drivers, vehicles, and insurance in order to offer their customers a delivery option. Multiple menu aggregators provide this service. Some work with select restaurants only, some charge restaurants a fee to offer their services and others do a mix of both, charging the customer and restaurant. There’s another delivery option for customers, too. Uber, the taxi app that everyone loves to hate, may have just gotten a little more likable – it’s entering the food-delivery market with the guarantee of lunch and dinner meals delivered in 10 minutes.   

If delivery fits a restaurant operator’s business model and is operationally feasible, now’s the time to consider adding it as an option for customers. It’s one way to stay competitive in a changing foodservice market.

To learn more, or if you have any questions, please contact your client service representative, call Bonnie Riggs at 847-692-1767, or email bonnie.riggs@npd.com.

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