The hospitality industry has been one of the hardest-hit sectors by the pandemic. Hong Kong’s dining sector, for example, saw “receipts [fall] to an all-time low in the third quarter” of 2020.
However, these challenging times have forced companies to become innovative. Scottish chain BrewDog, for example, offered their empty outlets to the UK government as potential vaccination centres.
For most, though, adapting to offer takeaway or food delivery services has been the main way to continue making money during nation-wide lockdowns.
While their doors remain closed to the public for the time being, some kitchens have kept busy. The so-called customer-free ‘dark kitchens’ have been seen worldwide, allowing restaurants to cook food and have it delivered to the customer’s door.
Customers have supported their local restaurants through purchasing meal kits, prepared meals that only need cooking at home. These have proved extremely popular, and it is likely that they will continue when restaurant doors reopen.
Having meals delivered is nothing new, but the trend has inevitably exploded during the pandemic. Food delivery services have seen a huge increase in their order numbers, with companies like Deliveroo, Uber Eats and Just Eat being able to profit from delivering restaurant food to front doors.
This has been brought about in the last year, given that pre-pandemic many of these businesses struggled to make a profit. Deliveroo, for example, is one of the most popular apps to provide food delivery but had been loss-making until the second half of 2020.
With the pandemic reinforcing the app’s place in the market, “Covid-19 has accelerated consumer adoption of food delivery services by about two to three years,” according to founder Will Shu.
You may be surprised to learn that Deliveroo was created from within the investment banking community, as Shu was working for Morgan Stanley and lacking in late night food delivery options when he came up with the concept for the app.
The recent boom in Deliveroo’s trade has made it one of the most anticipated UK IPOs of 2021, valued at over seven billion dollars, having recently gained further funding from big-name stake holders like Amazon.
The app’s competitors have experienced similar boosts. For the Netherlands-based Just Eat group, the last three months of 2020 brought a 57% rise in takeaway orders from consumers across Europe, when compared to the final quarter of 2019.
The group also expanded its companies earlier last year, buying American app Grubhub to become the “world’s largest food delivery service outside China“.
In China, Meituan and Ele.me, owned by Alibaba, saw the same surge in demand following the lift in lockdown restrictions last year. Meituan reported not only an increase in consumer demand, but also a 110% increase in ”newly-onboard branded merchants” during the second quarter of 2020.
These services and apps, then, have been the lifeline for restaurants around the world during Covid-19. This lifeline, however, has not been without its tolls for smaller businesses.
According to the Financial Times, the average commission rate for Deliveroo and Uber Eats is around 30%, whereas Just Eat takes a 14% commission due to most of their restaurants using their own couriers.
Despite some efforts to help ease the burden – such as Deliveroo’s promotion of independent restaurants on their app and lowered sign-up fees – paying couriers’ wages and commission fees has not been an easy task for restaurants.
Couriers themselves have also struggled during this time. In September 2020, Meituan and Ele.me came under fire for reducing couriers’ allotted delivery times, and for fining couriers if they did not make the delivery within this time limit.
As we move through 2021, and restaurants are beginning to plan for their reopening, will these delivery apps build on their success of the past year, or will they return to their loss-making ways?
As with some of the other changes brought about by the pandemic, such as working from home, it seems that our increased food delivery habits may be here to stay.
Even though we will return to on-site dining, relationships between restaurants and delivery companies will continue to grow.
According to Forbes, advances in technology could change these relationships in the not-too-distant future. Following regulation announcements in America late last year, the possibility of receiving a takeaway via drone is not out of the question.
Despite the sharper economic difficulties they have faced compared to chains, fans of independent restaurants will be pleased to know that the future is not all doom and gloom. The resiliency of this type of restaurant in the past suggests that there’s hope for independent dine-in options yet.
In the meantime, order a meal kit or takeaway to support your local restaurants.
