THE RESTAURANT STATE A Global Analysis Mobile ordering, powered by Want to know more? preoday.com Contents Why you need to read Contents this white paper: The restaurant and home delivery market is in the midst of an industry revolution - your business cannot afford to be left behind. Overview Preoday supports businesses, like yours, around the world and has its finger on the United Kingdom industry’s pulse. This white paper will make sure that you’re up to date on the latest trends in key regions across the globe. North America What you will learn: Asia Australasia • The value of the restaurant market in each territory and how it’s predicted to change in coming months and years Conclusion • In which regions digital ordering is experiencing the strongest growth, and why • Which online ordering and delivery companies are competing to take control in each market About Preoday • The role of mobile internet penetration in furthering the march of online ordering 2 Contents Contents Overview In Summary No one-size fits all is no real limit to the number of restaurants In Summary: There’s no one sentence that can accurately they can sign up. However, as Deliveroo has • There is no single, unifying factor for success, but there is strong investment and interest in describe the state of the global food and drink seen recently, rapid growth and investment online and mobile ordering everywhere, amid a rapidly changing market market. Every region is experiencing different does not automatically result in profit. And • Food delivery is going digital with 25 percent growth expected between 2015-18 in key markets highs and lows, trends and technologies. Grubhub? As of October 2017 its shares were • The aggregator model is seeing investment but its success is potentially short-lived The economy of the USA is different to that falling rapidly and investors marked its shares • Businesses are increasingly considering their own branded platforms of the UK and naturally, this impacts growth as ‘Sell’. and changes in the industry. Equally, it is not possible to talk generally about “food and Going off the aggregator drink” trends; in order to draw out meaningful While the aggregator model has gained much insights we need to be more specific about of the world’s attention until now, white-label the type of business. products could soon pull ahead as businesses look to carve their own digital ordering Here we look specifically at the restaurant identity. Such technologies not only facilitate Projected value of Annual value of industry and break the facts down by region. order and, sometimes, delivery, but also the online delivery the online pizza market by 2022 delivery industry We aim to answer the question, what do reduce in-restaurant queues for guests. Quick restaurants need to be aware of so they service food outlets, catering to busy office don’t fall behind in North America, the UK, workers in particular, are realising the benefit Asia and Australasia? of click and collect meals. Strong investment all round Of course, the rise of both aggregator and of all restaurant orders that now Across the world, the business of delivering venue-specific ordering technologies is being come from digital channels, in India currently partnered outpacing phone orders (5 restaurant meals to the home is undergoing driven by consumer demand for convenience. with the UberEATS food percent) for the first time Global Figures** rapid change as new online platforms race As people choose to stay at home, rather than delivery service to capture markets and customers. Related head out for a traditional dining experience, to this, there has been significant investment many are seeking more convenient ways to in technology companies aiming to disrupt eat quality food. When out and about, they the market with new ordering and delivery want to be able to grab their food on-the-go, methods. rather than spending a significant portion of their time waiting in a queue. Aggregators in particular, have caught the imagination of the industry, though we argue With these new online platforms making their of internet users who told of commission costs research analysts they had that their reign might prove short-lived. So mark around the world, the food-delivery charged to participating ordered food delivery in the far Grubhub has been through six rounds of industry is in the midst of a dramatic channel restaurants by ordering past year; another 20 percent platforms such GrubHub, said they plan to try it soon funding, raising $84,100,000 in the process; migration. According to McKinsey & Co, we UberEATS and DoorDash Deliveroo’s six rounds have seen it raise can expect online delivery to grow by 25 $859,597,403. The reason companies like percent per year from 2015 to 2018 in key of online orders which come from a this have seemingly done so well is that there markets. mobile device **data sourced from PYMNTS.com 4 Contents The Restaurant State: A Global Analytics 5 United Kingdom Where the takeaway market is mature but open to disruption Kitchens are going dark Deliveroo Editions champions ‘dark kitchens’: Within the UK, Just Eat and Hungryhouse are delivery-only kitchens that exist solely in the The UK has the largest share of the online But it’s not just home delivery people are perhaps the best known of the aggregator online space without any traditional shopfront. takeaway market and is the most advanced looking for; there are more than 32 million order and delivery companies and have It says it provides restaurants with unique country in Europe. We are therefore focusing people in work in the UK, and few have time to the widest reach, although more recently insights “that allow them to tailor menu items on it as a leading light of the region and one take a relaxed lunch break. This demographic UberEats and Deliveroo have been gaining and pricing to the customer base, leading which other countries are carefully watching. is one that increasingly uses its smartphone to headway with their disruptive approaches. to increases in sales of up to 400 percent”. place lunch orders, avoiding lengthy queues in Deliveroo’s Editions programme, for instance, Whether true or not, the kitchens aren’t order to collect favourite foods on-the-go. has opened up new lines for business for the universally loved and are facing significant The UK by numbers online ordering industry. controversy. As the Guardian reports, • Britain will spend £8bn a year on According to Vianet, consumers in the UK are Southwark Council told Deliveroo to suspend takeaways by the end of the decade twice as likely to use their smartphone to pay Because London has particularly high operations at a site in Camberwell, south for lunch than they were a year ago (a figure • There are people in the UK in commercial rents (there’s been a doubling of London, on account of the company not having 32m that will include tap-and-go payments as well work and many experience rushed business rates in some areas), it’s not possible appropriate planning permission. It remains to as online order and payments). Additionally, lunch hours for some restaurants to afford a property with be seen if and how this trend grows. analyst house CGA revealed, during a enough cover seats to turn a profit. Noting this, • 35 percent of mobile device presentation at the 2017 Lunch! show that using weekly food-to-go users use a smartphone to speed up food orders • The phone is the biggest threat to online Snapshot of Europe* 35% of 'Online Takeaway' market volume in 2017 (in US$) takeaway companies - more than 40 mobile percent of orders for takeaways are still 5000 made using a phone in the UK device using 4500 weekly food- 4000 to-go users 3500 use mobile Time-poor consumers look to takeaways 3000 According to the NPD Group, outside of the devices to 2500 USA, the majority of growth in foodservice speed up 2000 traffic comes from the quick service food orders. restaurant (QSR) segment. In 2015 it was 1500 predicted that Britain would spend £8bn 1000 a year on takeaways by the end of the And why? Because 500 decade. The given reasons were a surge we are constantly seeking 0 in smartphone use, alongside time-pressed more choice, greater convenience Italy households cooking fewer meals. Since that and faster opportunities to get what we want. Austria France Poland Russia Spain Germany Norway Portugal Sweden prediction, if anything, the nation’s urge to Netherlands Switzerland order online has grown. United Kingdom *Data sourced from Statista 6 Contents The Restaurant State: A Global Analysis 7 United Kingdom North America Disrupting the industry their own online and mobile ordering options Where take-out is king and big brands are investing in digital technology Within localised areas of the UK, restaurants which help them cut down on excessive costs regularly express concern about the costs of the and avoid commission on every order placed. Backed up with statistics services provided by traditional aggregators. Using their own technology they can incentivise North America by numbers In 2015, for the first time,Americans spent This is leading to the rise of new, commission- customers by offering discounts, and access • 70 percent of consumers think of online more at restaurants than at traditional free services. Oxford Orders, for example, is the owned customer data for future marketing services as the most crucial elements of grocery stores. Since then growth has first in a series of local marketplace solutions campaigns. Most important, they give the restaurant technology stagnated in the traditional restaurant intended to promote regional restaurants by ability to control their customer service, such • Online delivery already represents 43 space, but not for order-ahead venues.