The Future Story of Eating out, Takeaway and Online Ordering

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The comfy couch, the latest OTT show, a pack of snacks and online ordering of the favorite food from the neighboring restaurant—the perfect weekend! May be not quite in the post-COVID world. While most of it remains unchanged, the neighboring restaurant has made way for home-cooked noodles.

The coronavirus outbreak has upended the restaurant business, as the pandemic forces people to seek the safety of homes

The opportunity: Food Delivery and Takeaway

Food Industry in COVID-19

Food delivery is a huge opportunity in India and will continue to be one. Insiders see 2020 as a blip that may have pushed the industry behind by two years but it is not a lost opportunity. The industry, however, desperately needs technology intervention.

Amazon’s entry into food delivery in the middle of the pandemic is a case in point. The ecommerce-to-payments behemoth launched a pilot in Bengaluru a few months after it shut down its food business in the US.

It means stiffer competition for battle-bruised Swiggy and Zomato but it is also a vote of confidence for the market. Estimates suggest that the food-delivery business contributes juts $4.5 billion to a $65-billion food and beverage industry.

Quick service restaurants such as Mcdonalds, Pizza Hut and KFC have been able to recover better from the pandemic than dine-in restaurants because a sizeable part of their revenue is dependent on takeaways and online deliveries which have surged during and post the lockdown as people remain wary of venturing out.

Per day per store McDelivery sales have bounced back to 70% of pre-covid levels, while daily take out sales from operational stores have surged 1.7 times compared to levels before the pandemic broke out, as per the company’s first quarter results.

Jubilant foodworks, which runs Domino’s pizza chain, said online sales contributed 90% of its delivery sales in fourth quarter. This crisis period has been almost a driver of lost consumers embracing online ordering. KFC India also has reported a steady increase in delivery and takeaway business.

The Challenge: The Restaurants vs Delivery platforms

The souring relationship between restaurant owners and delivery platforms is making an already bad situation worse. Commissions and exclusive deals are a few of the reasons many restaurants are looking to set up their niche customer base outside the aggregators through their own online channels

The National Restaurant Association of India has partnered with technology players like Dotpe and is encouraging member restaurants to build their own technology partnerships. Restaurants are also looking at social media for direct online orders to keep the delivery firms out.

Impresario Handmade Restaurants that owns brands like Social and Smoke House Deli has launched its online delivery platform and fleet. Over the past few years, there’s been billions of investment dollars poured into POS and restaurant front-of-house technology startups.

The Potential Threat: Fear of Dinning Out (FODO)

As per WHO, physical distancing, good personal hygiene with frequent hand washing, and application of general food hygiene measures are the most important precautions food workers should adopt. Frequent hand washing with soap and water and use of hand sanitizers are also important in reducing the risk of transmission. All food businesses should follow the physical distancing and hand washing guidance of WHO.

A new forecast projects that one in three U.S. restaurants may close permanently this year, showing how the Covid-19 pandemic is decimating an industry that employs millions of Americans. As many as 231,000 of the nation’s roughly 660,000 eateries will likely shut down this year, according to an estimate from restaurant consultancy Aaron Allen & Associates.

The economic impact of restaurant closures will reverberate beyond the industry itself, which accounts for nearly 4% of U.S. gross domestic product and employed about 8% of America’s labor force before the pandemic.

In further proof that you can’t solve the current restaurant industry crisis by flipping a switch. Upserve released new data this week that shows many restaurants are still struggling with off-premises formats.

Upserve’s survey polled 421 players across different types of restaurants, including full-service/dine-in, fast casual, QSRs, and fine dining, among others. The big takeaway? More than half (64 percent) of restaurants feel “optimistic” about the future, but nearly half (47 percent) struggle with shifting their business models to online ordering and the formats that come with it.

We’ve seen this play out in real time for better and for worse throughout the last several months. Restaurants historically focused on dine-in service have had to pivot to delivery and curbside pickup, not to mention find affordable tech solutions that could enable online ordering. Businesses have struggled to master off-premises operations. They’ve gotten really creative with ad hoc tech stacks and worked much harder to communicate with their customers. And most all of them have seen a rise in off-premises orders. Upserve’s report said that as of July, its restaurant customers “have seen a 782.7% increase in Online Order sales volume growth.”

The call to action for all restaurants right now is to get their off-premises strategies fine-tuned, streamlined, and operationally efficient, regardless of the trajectory of the pandemic or the future of indoor dining. Even if indoor dining returns in some form close to what we used to know, its chances of unseating off-premises at this point are slim to none.

Some QSR’s Growth Hacks across globe:
Delivery Price Hikes by QSRs Could Spike Demand for Drive Thru

In the US, some QSRs are raising their delivery prices more than 15 percent. What’s the motivation behind the price hikes and whether they’ll prompt more customers to order drive-thru and pickup to save a few bucks?

Chick-fil-A’s prices are 30 percent higher for delivery, while Starbucks and McDonald’s prices are about 20 percent higher. Of course, part of the reason for these price hikes is that large chains, just like small restaurants, have to pay the third-party delivery piper when it comes to commission fees, Passing some of that burden on to the customer makes sense from a business perspective.

Question is, will customers want to shoulder that delivery burden when they could hop in, and collect their food via curbside pickup for cheaper? In many cases, probably not. For one thing, a lot of food from QSRs just doesn’t travel well and you typically wind up with soggy fries, watery soda, and lukewarm burgers. For another, we’re in economically uncertain times.

Given all that, more customers will be motivated to order their fast food via pickup and drive thru, which may be part of these chains’ longer-term strategies in terms of price hikes. Restaurants make more money off pickup orders (no commission fees), and when orders are funneled through the business’s own digital properties, the customer data remains in-house. Over the last year we’ve seen an uptick in brands encouraging customers to order via in-house apps, while others are even launching their own full-stack delivery services.

Price hike’s won’t take third-party delivery down, but if customers respond by choosing pickup, curbside, and drive-thru, the loss of business will be another swing of the hammer currently trying to crumble third-party delivery’s chances of profitability.

‘Eat Out to Help Out’: UK govt to pay 50% of food bills from today

This scheme is designed to get more customers through the door – protecting jobs by giving businesses the confidence to retain and hire staff. Under the scheme, diners who eat-in (not applicable to takeaways) will benefit from a 50% discount, up to a maximum of £10 per person, on food and non-alcoholic drinks, any Monday to Wednesday throughout August. There is no limit to the number of times it can be availed on those days.

Over 53,000 restaurants, cafes and other outlets have signed up to the unique ‘Eat out to help out’ scheme introduced by chancellor Rishi Sunak to help the restaurant industry almost crippled by the coronavirus pandemic as well as encourage moves towards a Covid-secure semblance of normalcy.

‘Eat Out to Help Out’ stickers and posters have been displayed in windows of participating restaurants, cafes, bars and other establishments across the UK as part of the scheme that begins on August 1. They will claim the 50% discount given to customers from the government on a weekly basis.

Eligible establishments are those in which food is sold for immediate on-premises consumption, such as restaurants; cafés; public houses that serve food; hotel restaurants; restaurants and cafes within tourist attractions, holiday sites and leisure facilities; dining rooms within members’ clubs; and workplace and school canteens.

The discount is not applicable to alcoholic drinks. If customers consume alcohol, the discount will only be applied to food and non-alcoholic items consumed up to the limit of £10 per person. An online restaurant finder tool enables diners to identify participating outlets within five miles of their location.

The other strategy is for food outlets to reinforce online delivery systems and expand business with cloud kitchens instead of dining outlets.

In a cloud kitchen model, a business only offers online delivery of food, restricting staff and customer interaction to the minimum.

Way Ahead: Rethink-Reimagine-Reinvent

This black swan event has severely impacted this industry, and while given the current circumstances, having optimism is key.

If the future isn’t on plate, maybe we need to change the plate, maybe now it’s a bowl or a basket. Hygiene and technology which was perceived as ‘luxury’ are now the ‘necessity’ and social distancing will force businesses to rethink their approach. Probably, outdoor venues seem to be the most preferred outlet to deal with new normalcy.” The restaurant industry will bounce back as more and more people would like to step out.

With Unlock 3.0 beginning from 1st August, 2020, the government has announced lifting restrictions on night movement, late hours of operations for restaurants will boost the fortunes of the restaurant sector as it will bring late-evening diners back to the outlets.

Restaurants can never go virtual. People will always want to meet up with family, enjoy a meal or have drinks with friends. This is just a temporary blip and things will eventually return to normal.