The Good and Bad of Food Delivery
Spurred by the pandemic, the food delivery market in Southeast Asia is expected to grow from US$2 billion in 2018 to a whopping US$8 billion in 2025. With a whole host of reasons for delivery increasingly eclipsing dine—in services, in this article we dive into the pros and cons for restaurateurs to offer food delivery.
Why delivery over dine-in?
The most obvious factor driving the adoption of food delivery has — without question — been the COVID pandemic. Since 2020, cities across the world have been forced into lockdowns, with delivery as the only channel by which these restaurants could utilise. For many, this was a fatal blow; their menus, staffing plans and restocking approaches were only geared toward dine-in. Many were unable to adapt fast; they quickly shut their doors rather than face financial ruin. For those that didn’t, the transition was hard.
What is the “bad” of food delivery?
Many were not used to the new world of delivery: (1) The high fees charged by these apps — sometimes close to 40%! — eroded any profit these restaurants were hoping to make. (2) For many, their menus could not be adapted well to delivery. Their product wasn’t packaged well, didn’t travel, or alternatively was too pricey for the average consumer. While some were able to adjust, the impact was difficult and many restaurateurs hated the overall experience with delivery; in their mind, it was impersonal and unprofessional.
What is the “good” of food delivery?
By contrast, there were a number of restaurants that were able to succeed. Those that had minimal staff and operated quick food concepts — like sliders, sandwiches or snacks — did increasingly well across the life of the pandemic. Often, these locations then supercharged their operations by adding ghost kitchens — new “faceless” brands that couldn’t be ordered in person, only online. This allowed restaurant owners to tap into their unused capacity without disrupting their core offering — enabling them to make more money with less. As delivery becomes more prevalent, it is abundantly clear that these setups will play an increasingly important role.
So what’s the verdict?
We think delivery is here to stay — for good. Don’t believe us? The data suggests that 68% of consumers are more comfortable now ordering digitally than they were pre-pandemic — with delivery increasing to a similar percentage up from 18% just two years ago.
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