Speed, price and service are driving sales. Don’t be left behind, says Stefan Appleby
British people are busy. We’re working parents, hectic 20-somethings, social singletons, and ageing adventurers. And, some of us are just lazy. Whatever our circumstances, we’re a nation that sits down on the sofa at the end of the day and orders its evening meal, a nation that looks to its smartphone for inspiration.
It’s why Euromonitor claimed last year that we will spend £8bn a year on takeaways by the end of the decade. We have more smartphones and less time. Even established players such as Dominos are seeing quarterly sales rises of more than 20%. The main reason for this is clear – 75% of those orders were placed online, 61% through a mobile device.
Seven of every 10 takeaway orders are still made over the telephone rather than the smartphone, but this is changing. Foodservice suppliers – and, by implication, wholesalers – need to evolve along with this.
It’s becoming clear that the more consumers are given the speed, price and service that they want from online services, the more they will use them. This creates interesting dilemmas for cash & carry and foodservice wholesalers. Should they rapidly launch their own online delivery services? Should they advise their customers to do the same? How can they deliver that speed, price and service to their retail or foodservice customers?
The online delivery service grows
Even the big boys are getting in on the act. Pizza Express announced that it was launching its own delivery service, having previously focused its efforts on its High Street offering. Just three months on, it has evolved this strategy by announcing that it is teaming up with delivery service, Deliveroo.
Services such as Deliveroo are ‘smashing it’ at the moment. Earlier this year, Just Eat announced a sales rise of 58% last year, processing over 96m orders, while the company that owns Hungry House recently raised $110m in funding from two US investors.
In the three months to March, Just Eat processed 31.5m orders. And just this weekend, Uber users in London received an email inviting them to trial UberEATS.
Restaurants are almost caught between a rock and a hard place with services like Just Eat. If you don’t pay the £699+VAT to join it, then you miss out on those consumers using the service – one in 15 people in the UK used it last year, according to the company.
Join it, and sit beholden to a creeping rise in the commission that you pay them, which is currently at 14%, having started initially at 10.8%.
Quality still matters
This drive doesn’t mean that people are ready to accept a drop in quality. Deliveroo’s raison d’être is delivering quality food from your favourite restaurants that don’t have delivery services – or did but found Deliveroo preferable, in Pizza Express’s case.
At a Convenience Store News summit in the US earlier this year, Danny Meyer – founder of restaurant Shake Shack – said that quality was absolutely crucial, no matter where the food is consumed.
“People still want the highest quality food, but they don’t want the fancy experience any more,” he is quoted as saying. “We don’t need to eat at fancy places. We like our food better when it’s at a hole in the wall.”
He added: “There is a huge number of places to eat. Today, if I’m eating excellent food in every other channel of my life, why wouldn’t I want that quality at every place I eat?”
How are the multiples catching up?
It isn’t just foodservice. As part of a $2bn investment to try to catch up with Amazon, Walmart is piloting a delivery tie-up with Uber and Lyft in Denver and Phoenix in the US that costs $7-10 per delivery.
In the UK, Amazon has announced a version of its US Amazon Fresh service, while in London, Sainsbury’s is trialling ‘Chop Chop’, its new ‘speedy delivery’ service app.
The crowded battlefield of supermarket delivery is an interesting one, driven by consumers’ desire for convenience. But this comes at a cost for business.
The Financial Times quotes ‘the chairman of a listed retailer’ as saying that “whatever they tell you, online grocery services are not making money… delivering food is much more labour-intensive than when your customers drive home themselves.”
Technology is changing the playing field like never before. This week I heard a succinct summation of convenience retail that is equally applicable to big box grocery and foodservice. Simply put, “The store of yesterday isn’t right for today, and the store of today isn’t right for tomorrow.”
Are you ready for this change in consumers’ habits? The more that shoppers or diners demand change, the more your customers will be forced to move with them.
Technology isn’t going to regress, so it is absolutely crucial to equip yourself with the knowledge of what is out there, the impact on your business and the areas in which you need to be investing to grow your own business.