The Digital Journey of Food Delivery Systems: From Pizza Delivery to Food Delivery Management
Food delivery systems are continually developing and adapting to meet changes in the Food and Beverage landscape. As technology advances, new delivery systems are creating disruptions in the food and beverage technology market, resulting in alternative and expanded revenue streams. Here, we will highlight three existing food delivery systems, as well as future trends and adaptations.
The familiar and traditional food delivery system that is managed in-house, is often referred to as the “Pizza Delivery” system. This model utilizes a simplistic, centralized, and linear process flow. A consumer will place an order at the restaurant, the restaurant will then confirm and complete the order, and proceed to send the order out to the intended consumer. The traditional delivery system still represents a significant 90 percent of the overall, worldwide food delivery market as of the 2016 year-end which is valued at 83 billion Euros (around 130 billion Singapore Dollars) (Hirschberg, et al.).
Platform companies, such as GrubHub and Seamless, have taken advantage of this simplistic process, and created a network out of restaurants that offer the “take-out” or “delivery” option. McKinsey and Co. refer to these as “Aggregators”. Instead of ordering directly from the restaurant, consumers can now utilize an Aggregator to access a variety of food options across multiple businesses. The Aggregators represent 26 percent of the traditional food delivery system, which will continue to increase as restaurants choose to leverage these platforms to market their products.
The concept of aggregation advances further, presenting a more integrated solution, which we refer to as “Food Delivery Management”. In this case, not only does the third-party platform handle food orders, but also the delivery of the order. Examples of this integrated solution include UberEATS, Deliveroo, and FoodPanda. With Food Delivery Management rising in popularity, each platform is continually developing ways to attract merchants’ business, such as offering to provide marketing analytics and statistics (as UberEATS does).
Since restaurants do not handle delivery operations in-house, more high-end (Michelin-rated included) restaurants are taking advantage of this solution to expand sales. With this new type of delivery system in the market, the market expects a 25 percent CAGR until 2018 and a 14.9 percent CAGR from 2018 onwards to 2020 (Hirschberg, et al.). Winners in the Food Delivery Management sector will be the ones who concentrate on user experience and interaction on both the merchant and consumer end.
However, while Food Delivery Management systems present a one-stop solution to a wide range of restaurateurs, an area of caution is increasing dependency on a third-party solution for revenue streams. As Food Delivery Management platforms become increasingly saturated with merchants, utilizing their services may prove to be less effective than in-house management.
With all being said, today’s food delivery market is shaped by Millennials, when attention should be paid to Generation Z as they grow in purchasing power. Millennials are always on the lookout to try the “new foodie thing”, and platforms such as UberEATS, Deliveroo, and FoodPanda provide the accessibility to the variety that is desired.
Generation Z, however, look for more wholesome experiences: dinner prepared at home, with fresh, locally-sourced, sustainable ingredients. Services such as Blue Apron deliver pre-portioned, uncooked ingredients with a recipe to follow. These services are much like the IKEA furniture of food delivery, and should be watched in the coming years.
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