What Netflix has achieved for film enthusiasts, food delivery apps are realizing for takeout eaters.
Marking a major milestone in food delivery, U.S. restaurants are now projected to earn more from food consumed outside restaurant doors than in; and this shift is occurring on a global scale.
“Convenience” is the holy grail across various sectors, and customers are willing to pay more for it.
Pioneered in other industries – by platforms such as Netflix – advanced solutions geared toward convenience have subsequently set new standards for the experience provided by takeout vendors.
Growing expectations have ultimately eaten their way into the delivery domain, and are both a cause and effect of its expanding capabilities.
But, despite its growth, the food delivery space is a volatile one; as reinforced by the coronavirus outbreak.
It’s therefore necessary to understand where players are meeting consumer demands, and where they’re falling short – questions to which our custom survey run in February sheds light.
1. Time constraints only tell part of the story.
The most common reasons among takeout eaters for ordering food are not being in the mood to cook and sometimes wanting to treat themselves.
These cues are more influential among those in the UK, where around 6 in 10 order takeout as an occasional treat, compared to 49% of U.S. takeout eaters.
In both the U.S. and UK, a rapid increase in the number of mothers working full-time over the past few decades and a new culture of constant connectivity (where work-related messages are viewed outside working hours) often provide added justification for indulging.
This is where the food delivery industry comes to the rescue – serving up easy rewards for a hard day’s work.
As highlighted in our recent talent and workforce trends report, 43% of knowledge workers in the U.S. always work overtime, stay late or check messages outside working hours, compared to 35% of those in the UK. This helps account for why U.S. takeout eaters are more likely to cite being busy and not having time to cook as a reason for dining in (35% do).
Yet, not all takeout eaters are working professionals with busy schedules.
We should therefore consider age when looking for answers to why we order food. For example: Gen Z takeout eaters are the most likely to order in because they feel like a treat (53% do); with baby boomers being the least likely to cite being busy as a factor (24% do).
Despite these differences, fluctuations in mood and a reward-seeking mindset drives the impulse to order takeout food across all demographic breaks.
Being time-poor can put consumers off cooking and suggest the need for a treat, but the main point is that delivery habits are less utilitarian than we might think.
2. TV is often consumers’ first choice on the takeout menu.
While in this “treat yourself” frame of mind, takeout eaters tend to sit back and unwind, usually by watching TV.
As an alternative to a movie at the cinema and dinner at a restaurant, the appetizing option of Netflix and delivery is gaining traction – with the two often being a package deal.
Globally, those who order takeout online each month spend roughly 15 minutes longer than the average watching online TV each day (1 hour and 40 minutes).
For younger consumers in particular, the primary ingredient of this activity is the accompanying entertainment.
Among takeout eaters, almost 7 in 10 Gen Z and millennials watch online TV while eating takeout food.
The popularity of streaming does decline with age, but home entertainment is still a takeout staple among older consumers, albeit offline.
Online takeout eaters in the baby boomer category spend around three-quarters of an hour longer watching broadcast TV each day compared to their Gen Z counterparts (2 hours and 20 minutes). TV is therefore just as much a part of their takeout routine, with 46% in this group usually opting to watch broadcast TV as a side.
Entertainment aside, across all demographic brackets relaxing by oneself ranks higher as a takeout pastime than socializing with friends.
Eating takeout food is ultimately a very different experience to restaurant dining and shouldn’t be seen as a direct enemy to it. In many cases, delivery platforms have provided a new revenue stream for restaurants, with 69% of those joining UberEATS in London reporting an increase in sales.
The portion of online takeout eaters dining out each week has fallen slightly over the last year, but this behavioral pattern is still standard for 4 in 10 of this group.
The food delivery market may have penetrated consumers’ lives at scale, but takeout delivery services will be hard-pushed to replicate some of the qualities that make dining out irreplaceable.
3. Loyalty does exist, but remains fragile.
Half of takeout eaters typically use the same service when ordering takeout food, which indicates that various brands do have their fair share of regulars.
Customer loyalty varies by age, with 57% of millennials usually sticking to the same provider, compared to 47% of Gen X.
The top motivations for ordering more often are financial. While takeout eaters in the Gen Z category over-index for wanting free delivery (59% do) and rewards/discounts (57%), Gen X (despite not being the most committed to brands) stand out for their partiality toward loyalty points and programs (42%).
Among takeout eaters, Gen Z are 53% more likely to say eco-friendly packaging would persuade them to order takeout more often.
Monetary incentives aside, younger consumers expect more from food delivery services in terms of transparency and variety.
3 in 10 millennials say they would be moved by a more diverse menu (Index 1.14), with Gen Z taking a shine to the option of seeing food recommendations (Index 1.16).
Gen Z are also 21% more likely to say that bad customer reviews would discourage them from ordering (46% say this). With a greater sense of social responsibility and an aptitude for anything digital, they’re more inclined to be put off by evidence of staff being treated poorly (35%) or the website or app not being user-friendly (31%).
Overall, a lack of value and efficiency are the leading frustrations consumers have toward ordering in. Perhaps unsurprisingly, low quality food is the most likely deterrent across all age groups – with cold food, wrong orders and raised delivery fees leading the pack.
This has implications for food delivery services that are increasing costs to make ends meet – including Zomato and Swiggy, who are tightening cancellation rules and raising the price of their loyalty programs.
In addition, the response to Deliveroo’s recent plans to introduce service fees on all orders highlights how quickly customers can jump ship, with many now vowing to boycott the app.
4. No player is secure in the delivery game.
In the UK, the majority of online takeout eaters order from JustEat the most.
But, when we focus on a group of loyal consumers, who’ve adopted one service as their go-to option, JustEat and Domino’s take up yet more space at the table: 31% of those who aren’t loyal to any service order from Domino’s most regularly, which rises to 40% among those with a brand affinity.
While brand loyalty is less concentrated in the U.S., loyal online takeout eaters still skew more heavily toward a certain app – in this case, UberEats. It’s therefore difficult for new entrants to make a noticeable dent in a space where so much of the land has already been possessed.
That said, many factors have the power to incentivize takeout fans. For example, UberEats recently lost its main trump card in the UK after McDonald’s announced its plans to incorporate JustEat into their alliance.
Given over 1 in 4 takeout eaters agree that their favorite restaurant no longer being available would cause them to order less, it’s clear that the selection offered by a service is an important factor in the continuation of customer loyalty.
What’s more, online takeout eaters with a brand preference carry higher expectations than those without one: 58% of the former group would order takeout food less were they to receive low-quality food, compared to 48% of the latter.
Even once loyalty has been attained, it should never be taken for granted; as one bad experience could potentially alienate followers for life.
5. There’s light at the end of the tunnel.
In addition to stealing another’s buyers, the potential for increasing the frequency of orders among existing customers also exists.
1 in 4 takeout eaters believe they’ll order takeout food more over the next 6 months.
There are many ways providers can stand out and reach new areas of the market. For one, the feature capturing most attention among this group is 24/7 delivery. A new service called Evart Eats is aiming to capitalize on the late-night takeout market, which Domino’s is well-known for attending to.
Aside from the added convenience 24/7 delivery brings, consumers have high hopes for the future of the takeout industry; and we’re likely to see more collaboration as expectations and competitors evolve.
Overall, younger consumers are more excited about the prospect of edible packaging, as well as more grocery, coffee and retail chains being added to providers.
This justifies various steps being taken across the industry – such as Starbucks’ plan to team up with UberEats, and Deliveroo partnering with KeepCup’s founder to trial reusable containers for deliveries.
When it comes to enthusiasm toward new technology entering the food delivery space, affluence plays a part. Roughly 3 in 10 of those in the top 25% income group long for the rise of delivery drones and robots (Index 1.29), as well as the ability to order using voice technology (Index 1.18).
This shift may not even be as far-off as we might think, with Amazon, Uber, and Google all promising and already in the process of trialling delivery drones.
The coronavirus is testing the industry’s immunity
It’s necessary to mention the impact of the global health crisis on what we’ve already identified as an extremely volatile industry, as the trends we’ve been seeing across the takeout delivery sector recently indicate signs of struggle.
In the countries occupying the media spotlight amid the outbreak, many consumers are changing their dining habits.
In Italy and Spain – two countries on lockdown and among the most affected by the outbreak at this time – at least 3 in 5 consumers have reduced their visits to bars, cafes and restaurants.
While food delivery services are reckoned to be “one of the only winners” in the crisis, on account of consumers spending more time indoors, those in China were reported to be suffering back in February.
Likewise, our upcoming wave of data covering the first quarter of 2020 indicates that the portion of the global online population using takeout delivery apps or sites remains consistent month-on-month.
There are several explanations for this. Our first wave of coronavirus research, for example, shows that over 4 in 10 internet users (across 13 markets) are spending more time cooking at home because of the virus – a figure that jumps to 55% in China.
Among other shifts in preferences, moves to mitigate the risk of infection don’t bode well for food delivery services. These patterns are now surfacing throughout Europe, with UK food delivery orders falling sharply since the nation first went into lockdown.
How players stand to fare as the pandemic progresses will vary by country, and depend on how well each one adapts. Though some may prosper in the crisis, hopes that the industry will flourish as a result may not take effect.
But, by addressing these key takeaways in new ways, takeout providers can continue to add fresh shades of meaning to the word “convenient”.
From launching contactless delivery, to initiatives supporting restaurants and grocery shopping, many services are starting to get creative – proving just how adaptable and valuable the industry is.
