How coronavirus affects the food delivery market?

 

Nobody expected the situation we are facing right now. A virus born in a city of 11 million people, soon spread around the world, collecting a deadly harvest and changing the lives of each one of us. A pandemic is not only a threat to our health but also a great setback to the economy. Today we will try to answer the question of how coronavirus affects the food delivery market.

Changes in the gastronomy industry

One of the industries that will suffer the most is the gastronomy. All gastronomic establishments were closed by one administrative decision, leaving deliveries and takeaway as a restaurant’s last resort. We will not discuss this decision right now, but we have to know under what circumstances was it taken. 

In the current situation, a difficult question has to be asked. Is it profitable for restaurateurs to continue working and turning things upside down by changing the current mode of operation? Even if you ignore the question of profitability, how one can simply survive and stay on the market? What to do, to not be put in the position when you have to fire your crew and shut down the whole business?

Before making any decisions, it’s worth looking at how citizens who have been dealing with the coronavirus epidemic for a long time have responded. We will try to look at gastronomy markets in China and Western Europe. Is there a chance that Polish consumers will behave in a similar way? We will start with the Middle Kingdom.

How coronavirus affects the food delivery market in China

Before the outbreak of the epidemic, China was the largest online food delivery market. Its value in 2020 was estimated at 40.658 million EUR (Can you imagine, 40 658 000 000 EUR?!), with an annual growth rate of about 7%.

Unfortunately, no one could see the storm coming.

The coronavirus attacked in December and due to the rapid increase in the number of cases, the Chinese government imposed a mandatory quarantine on extensive areas of the Republic. The restaurants faced the choice that many European entrepreneurs have to face now. Shut down business or rely on deliveries? 

Perhaps the habits of ordering everything online have played a big role here, because already in January 2020, Chinese customers spend 20% more on deliveries from restaurants, compared to the previous year. Interestingly, the majority of deliveries carried out in China prior to the spread of the virus, concerned single-person orders. During the peak of the epidemic, the inhabitants of China changed their consumer habits, increasing the amount of food ordered, and placing orders for bigger groups of people. The Chinese company Meituan has reported a 31% increase in orders for more than one person and a 70% increase in orders for groups over 5 people. It’s understandable – in the period we call “quarantine” people are staying at home with their families.

Situation in Hong-Kong

Chinese delivery driver i yellow overalls, holding a card that confirms that he doesn't have a temperatureOn the other hand, at the very beginning of the outbreak, Hong Kong residents preferred to buy food and cook it at home. Only after a few weeks, the number of food deliveries from restaurants increased significantly. The British company Deliveroo (a direct competitor for UberEats or for Wolt), which operates in dozens of markets around the world, claims that since January the number of orders has increased by 60%. The well-known company – Foodpanda, recorded a two-fold increase in demand for its services between the Chinese New Year, falling on January 25, to the beginning of March. 

The vast majority of orders from January to the beginning of February were contactless. Couriers, wanting to reduce customer’s concerns, carry with them special cards confirming their good health.

How coronavirus affects the food delivery market in Europe?

Italians and Spaniards, unlike the inhabitants of the country by the Yangtze River, have never been in favor of buying things online. Before the outbreak, 4%( in Italy) and 5% (in Spain) of total retail revenues came from online shopping. The rate of buying food online was even lower. In a survey by Statista.com, only 18% of food deliveries were made online. 37% of Italians, when asked how much they will spend on food deliveries in 2020, said that they would spend nothing at all. 

As it turned out, at least some of these promises were empty.

The national manager of the Glovo company – Elisa Pagliarani, explains that the beginning was difficult since some restaurants had to close the business during the epidemic. The demand for restaurant dishes decreased. Recently, however, the downward trend has reversed and the number of orders is vastly growing. The coronavirus pandemic also had a positive impact on the sale of competing companies like Deliveroo or Just Eats.

 

Consumer doubts

 

In China and Europe, the food delivery market has not slowed down. At least not for long. Initial downtime was partly due to concerns about the safety of delivery.

The Google trends curve shows it well. During the epidemic, the number of inquiries about the safety of food delivery by UK residents has significantly increased.

Certainly, interest in the topic is growing. Therefore the efforts of companies around the world, convincing customers that they have no grounds for concern should not surprise us.

In Poland, UberEats, just like Wolt and Pyszne.pl (Takeaway.com’s group), enable contactless delivery or take away for all their platform users.

 

What is this non-contact delivery?

 

Of course, as the name suggests, customers who have chosen this option do not want to contact the supplier directly. This type of delivery implies that the courier after calling the apartment simply leaves a meal under the customer’s door (Papu System also offers this option for restaurants that want to start selling on their website).

 

Portals and restaurants introduce a lot of restrictions and rules that their employees must follow. For example, couriers working for Pyszne.pl (Takeaway.com group) are equipped with hand disinfectants. Uber employees who have been infected with Coronavirus or who have been quarantined, are entitled to financial support granted for the period of account suspension, but not exceeding 2 weeks. Due to the limited amount of disinfectants, some suppliers have to buy them for themselves. 

 

How it’s gonna be in Middle Europe (on the example of Poland)?

 

We checked how coronavirus affected sales, the number of deliveries, and the average order value in the restaurants selected by us over the last few weeks. We compared the results obtained with data from January.  

The choice of restaurants that took part in the study was not accidental. We selected premises located in various parts of Poland, for which deliveries were an important or even a key element of business and sales.

A restaurant from Lodz generated 55% of sales on deliveries in January, a restaurant from Silesia 65%, from Kraków 85% and from Poznan almost 95% of turnover.

chart that shows how coronavirus affected sales, the number of deliveries and the average order value in the restaurants

 

Since the outbreak of coronavirus in Poland, sales in all of the restaurants we’ve studied have decreased from around 5% to 14%. The decrease in sales affected the least those restaurants whose business model was previously based almost entirely on deliveries and those for which deliveries accounted for at least 50% of all orders. The percentage of turnover generated by deliveries increased in most cases by about 2%. Except for a restaurant from Silesia, where the volume of deliveries increased by as much as 10%.

The charts below illustrate the changes in the order structure of restaurants in Łódź. The Group of customers gave up on-site meals in favor of take-away dishes.

The charts illustrates the changes in the order structure of restaurants

 

 There was a decrease in the number of dishes ordered through portals by 11%, and the average order value increased by about 10 PLN

In restaurants where deliveries accounted for the majority of orders, the number of dishes ordered by the portals and the average value of the order did not change significantly compared to the values from January.

 

Conclusions?

 

As the information collected by us shows, the most affected by the current situation are the premises that have so far lived mainly from a customer coming to the restaurant. In the case of this gastro-business group, it is evident that the number of orders regularly decreases, along with the restaurant’s profits. What’s worse, having no alternative, some of these restaurants had to completely suspend their operations. 

 

Premises that were based on deliveries before the epidemic are in a slightly better position. Unfortunately, also in their case the problem exists and should not be underestimated. For this group, shines, although pale but better than nothing, the light in the tunnel.

The owners of restaurants in China and Europe followed a similar path. After the initial crisis, customers remembered their favorite restaurants, which resulted in a growing number of deliveries. That’s why restaurateurs have to be patient.  The moment when people will run out of huge quantities of food bought in panic will come for sure. The only question is, how long will it take. Unfortunately, no one knows the exact answer.

Initiatives worth your attention

Is there anything we could advise you during this difficult period? You may now think “easy to say”, but there are a few things that should help:

 

  • talk with your employees and make sure they know the general direction and new working methods
  • enable your clients contactless delivery,
  • supply your employees with disinfectants and gloves,
  • be loud about the precautions you have taken at your restaurant;
  • there are a lot of initiatives your restaurant can get involved in. Get inspired:

-Arlington Restaurant Initiative

-gastropomaga (gastro is helping)

-deliver free meals 

-RESTAURANT WORKERS RELIEF PROGRAM

You can also search for actions by hashtags:

#supportrestaurants, #feedthepeople

Participation in such initiatives will not only create a positive image of your restaurant in the eyes of a potential customer but also ensure your team has something to do during periods of downtime! Besides, we believe that it’s always worth helping !!

  • Do not break down and try to act – in times of crisis, innovative ideas come up faster!
  • Stay active on your social media. At the same time, remember that exaggeration in everything is not advisable! That’s why you need to make sure the content that you post is diverse. After all, there are lot of things to talk about besides coronavirus 🙂