KerryDigest Fast Facts:
- Foodservice delivery is on the rise across the world, with statistics showing meteoric growth in some regions.
- COVID-19 drove consumers to dine at home and accelerated the adoption of delivery apps and other technologies, but the trend will likely outlast the virus.
- As consumers get accustomed to the convenience of delivered restaurant quality foods, delivery dayparts are expanding beyond meals to include more beverages and snacks.
- This article is part one of a two-part series on foodservice delivery, covering the current state as well as challenges and solutions that will impact growth.
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KerryDigest Full Scoop:
From work to entertainment, quarantine measures related to COVID-19 are centering consumer life at home. And, while many people find themselves cooking and baking more than before, we are also seeing a surge in foodservice deliveries as consumers across the world continue to limit their time in the outside world.
At first, consumers were quick to place orders out of the need for convenience and comfort. But as delivery becomes the norm and consumer expectations rise, foodservice providers are having to take into consideration other factors at the heart of delivery. These include creating portable foods with optimal taste and texture; satisfying consumer demand for sustainability, health and variety and predicting how the growing delivery market will affect the traditional restaurant space.
To fully examine the global foodservice delivery market, we’ve broken the topic into two articles:
- This piece, which covers statistics such as the size of the delivery market as well as consumer preferred dayparts and modes of ordering
- A second article, "Optimising Foodservice Delivery with Insights and Innovation", which details how operators can create more deliverable foodservice products that fully meet consumer expectations
To receive a notification when the second article is published, subscribe to KerryDigest Monthly Bites.
Insights, statistics and recommendations on foodservice delivery were provided by the following Kerry experts:
- Pedro Tatoni, Gerente de Marketing, Latin America
- Francisco Ormenese, R&D Director Food & Beverage Latin America—Brazil and South Cone
- Chloe O’Shea, RD&A Senior Technologist, Europe
- Elaine Druhan, Marketing Manager, Foodservice, Europe
- Louise Kerrigan, Senior Brand Manager, Foodservice, Europe
- Elissa Rempfer, Senior Manager Market Research and Insights, Foodservice, North America
- Cian Leahy, Director of Culinary, North America
- Quynh Leahy, Senior Marketing Manager, Foodservice, North America
- Simon Martin, Executive Chef, Middle East, North Africa and Turkey
- Svetlana Malakhova, Senior Marketing Manager, Middle East, North Africa and Turkey
- Olive Tang, Regional Senior Key Account Manager, Asia Pacific, Middle East and Africa
- Richard Wang, Key Account Manager, Asia Pacific, Middle East and Africa
- Josh Strong, Senior Marketing Manager, Asia Pacific, Middle East and Africa
- John Namy, VP of Culinary Innovation, Applications, Asia Pacific, Middle East and Africa
Quantifying the size and scope of the foodservice delivery market
The foodservice delivery market was in growth mode before the COVID-19 crisis, with third-party delivery services such as Just Eat, Deliveroo and Uber Eats gaining traction amongst consumers, especially in urban markets.
During virus-related quarantine measures, which took effect in winter and spring of 2020 and are, in many places, ongoing, such delivery apps gained users from both the consumer side and the restaurant space.
These third-party foodservice delivery apps—along with branded foodservice apps and phone- and website-based orders—provided a lifeline between consumers craving convenience and a break from cooking and restaurants trying to remain operational without dine-in customers.
Here are the latest stats on foodservice delivery, by region, along with predictions about future market size.
Exponential growth is expected to continue across the Asia Pacific region, with Adroit Market Research valuing the online food delivery market at US$34.31b in 2017 and predicting it will reach US$90.95b by 2023. This makes the region the fastest growing in the world, in terms of the adoption of foodservice delivery, according to Euromonitor International.
At a country level, China is number one in foodservice delivery volume, with a market currently valued at US$51.5b. This is up from US$27.7b in 2017, with an estimated worth of US$67.6b by 2024. Websites such as Ele.me and Waimaichaoren.com connect consumers to online menus and delivery services. A report from Daxue Consulting found that the majority of food delivery orders—83%—in China come from white-collar workers, and 10% come from students. Although the gender of users is split, 75% of foodservice deliveries are made to younger consumers aged 18 to 39.
Deliveries are also growing elsewhere in the region. In India, a 30% CAGR is expected to bring the value of the market up to US$9b by 2024. In South East Asia, where apps including GoFood, GrabFood, Dahmakan, Food Panda and Deliveroo help drive the market, the food delivery market is projected to expand rapidly between 2019 and 2025, growing to US$14.8b, representing a 48% CAGR.
The U.S. is the world’s second largest market for delivery, with an overall value of US$26.5b for online delivery orders and projections it will reach US$32.3b by 2024. A proprietary Kerry foodservice delivery study, which is detailed in the 2019 white paper “Out for Delivery: New Opportunities in Foodservice”, found that delivery orders were most frequently made by consumers who were:
- aged 22 to 37 (56%)
- male (69%)
- educated (57% had a college degree; 26% had a grad degree or higher)
- raising children (71% of frequent users had children)
These stats represent consumers who ordered delivery six or more times per month, or roughly 60% of the food delivery spend in the U.S. However, the COVID-19 crisis has introduced new consumer groups to delivery, including boomers. According to research from Datassential, 50% of U.S. consumers will say they will continue ordering delivery and take out when COVID-19 social distancing restrictions are lifted.
In the U.S., Uber Eats accounts for around 11% of foodservice delivery orders, Grub Hub trails just behind at 10% and Doordash has 6% of the market. Around 18% of consumers utilize delivery through a brand’s restaurant app/website, and plenty of consumers still prefer to place orders via phone.
Another region experiencing massive growth in foodservice delivery is Latin America (LATAM). LATAM has seen a 150% increase in deliveries since March 2020, with user gains coming from all but the lowest income consumers. And, that’s after what Latin American Business Stories reports as a 4-fold period of growth between 2014 and 2019, during which the market reached almost US$30b.
This infrastructure change is especially significant because nearly 80% of foodservice is independent in Latin America. Although Uber Eats is used by some consumers, local delivery apps such as iFood and Rappi rule the market. And, while the technologies are being adopted broadly across the region, phone orders and digital orders remain equal in volume, setting LATAM apart from other regions.
The Middle East and Africa
The Middle East market was strong in delivery before COVID-19, with delivery preferred by the young working adults who account for a majority of the population in this region. More than 60% of the population of Gulf Cooperation Council countries are expatriates and around 90% are under 54 years old, according to GlobalMediaInsight.com.
On average, 40% of consumers in the region order delivery twice or more each week, including through the apps Talabat, Careem Now and Zomato. Also gaining popularity is a new online food ordering software called ChatFood, which facilitates online ordering straight from a restaurant’s website, enabling restaurants to maintain direct contact with customers.
The Middle East foodservice market is estimated to be worth around US$31b a year, according to Gulf News, with the delivery segment contributing a growing share.
For more information on the global foodservice delivery market, download our recent report from Kerry Foodservice Europe, “The Future of Foodservice Delivery”, which explores the size of the market across different regions.
New opportunities in expanding dayparts and streamlined menu items
While the overall volume of foodservice deliveries is growing, so too are the dayparts in which consumers are interested in enjoying delivered food. There’s also mounting demand menu variety, including new items as well as times and days of delivery, meaning menu innovations and updates will be key to satisfying consumer needs and capturing repeat customers.
Of course, the consumer demand for variety is in some ways counter to the operator need for more streamlined and easy-to-assemble offerings, due to COVID-19 related kitchen safety restrictions and cost concerns.
In Europe, some of the above reported growth in foodservice delivery is due to the new consumer trend of ordering across all days of the week, compared to pre COVID-19, when weekends were the focus. Delivery in Europe is also opening up to new dayparts such as breakfast and lunch, due to many people being confined to working from home. Fir example, there have been more orders of desserts, shared items and comfort foods.
For LATAM foodservice operators, lunch represents 60% of total foodservice delivery orders in LATAM, though dinner and indulgence items are gaining traction, especially the delivery of baked products. Pizza and burger deliveries continue to maintain market dominance in LATAM, with consumers generally preferring to cook local cuisine at home due to concerns over cost.
In North America, afternoon snacking is up significantly and consumers are showing interest in both food and beverage snack products. Dinner is the most ordered meal, and familiar favorites like burgers, Chinese food and wings are popular at limited service restaurants, as are DIY desserts, according to Datassential. At full service restaurants, craveable proteins including steak and fried chicken are a draw, as are heat-and-eat options and meal kits.
In the Middle East, North Africa and Turkey, over 60% of orders from fast food chains and FSRs are during lunch and dinner while 45% of orders from cafes and coffee shops are snacks and breakfast. Ordering multiple sides and indulgent meals is the norm here, with bundles and “feast meals” becoming more popular. The region has seen the purchase of beverages and desserts impacted by food items not meeting expectations when delivered.
Although the entrée to new dayparts may suggest expanded menu offerings and added steps in the kitchen, retailers can streamline purchasing and processes by innovating with existing ingredients and equipment. For instance, a dessert sauce might become the star ingredient in a snack beverage, or salad toppings may play a new role in a breakfast wrap. By simplifying work on the backend, restaurants will be able to more easily fulfil orders, reducing wait time for anxious consumers.
Expanding into new dayparts can also allow restaurants to explore new types of cuisine, such as through meal kits. For example, a QSR restaurant in North America that specialises in chicken sandwiches and other lunch fare is now offering a pasta take home kit complete with sauce, protein and chopped veggies. This has given the brand more share in another daypart as well as a new cuisine.
To read about creating products for delivery, go to "Optimising Foodservice Delivery with Insights and Innovations". To learn more about partnering with Kerry on winning foodservice products, contact us.