By Dan Brookman of hospitality & retail CRM specialist Airship.We are getting lazier, slightly fatter, and lazier (did I say that already?). We don’t see eating out or ordering a takeaway as a treat, it’s simply a decision in our day-to-day.The Takeaway Economy Report commissioned by Just Eat states that the delivery market in the UK is expected to hit £11.2bn by 2021, up 13% on 2017, my own thought is that might be somewhat more... (Greggs & McDonalds are trialling with UberEats)In this blog we look at the future of takeaway: exploring the launch of platforms such as UberEats, Deliveroo, Just Eat, Seamless, and delivery entrants Quiqup and Stuart, an ‘anything’ store-to-door delivery service.We also look at voice technology. My three year old son can almost say ‘OK Google’ when we want some music on via our Google assistant; who knows in a couple of years how many toddlers will utter Siri, Alexa, or Cortana as their first words… (I can almost hear you groaning).The hospitality industry has transformed over the last 20 years: changes in licensing law, the smoking ban, and general consumer habits have put pay to the 10 pints, 20 Bensons, a bag of pork scratchings followed by a kebab (and fight) on the way home (I was a pub landlord in Hillsborough, Sheffield in the 90s). At that time, the most exotic food my customers had consumed was a Kebab Della pizza which consisted of a pizza base with chilli sauce, tomato paste, topped with onions, kebab ‘meat’, jalapenos, more cheese and then finally a further liberal coating of chilli sauce. After downing 6 pints of Stella (responsibly) they tasted great; leave a slice overnight though and the layer of fat on top by the morning would put you off eating them forever... (or until the following weekend).Nowadays we are truly spoilt - we head off to the local street market where we grab a jian bing (Google it, the stuff of dreams) or cod in charcoal bao before jumping in for a gourmet burger or some poutine. At work when working through lunch, Deliveroo can bring me a Wagamamas or on rare occasions (if I’m really hungover) a KFC. Often, when on a project deadline, we’ll order from Pizza Express, laying out £150 to keep the team going. The culinary choice at our fingertips is never-ending.More and more of our clients are now utilising takeaway and delivery to keep the kitchens busy, searching for that additional uplift of revenue whilst struggling with already tight margins. After all, the companies doing the delivery don’t do it for free. UberEats charge £750 set-up and then 35% per order + a customer delivery charge of £2.50. According to a source, Deliveroo are charging 29% + Vat on the gross order value.There’s a few problems here though;
So how do we solve the problems above...Dark Kitchens (not as ominous as they sound)
So, in a bid to protect margins, you’ve now got Deliveroo and some operators opening up ‘dark kitchens' or ‘restaurant-less restaurants’ just to facilitate delivery. Deliveroo has 5 such kitchens in London where operators (Meat Liquor is in two sites) can avoid the distraction of customers and get down to the job of turning orders around and getting them over the pass and to the customer’s door while they are still hot. Deliveroo plan to open a further 30 locations with the most recent ‘Edition’ (Deliveroo’s brand) opening in Brighton.Obviously, these have many benefits, the main being the overhead saving associated with operating a restaurant in a prime position.
Another business making the most of centralised cooking and low overhead is Farmstand who have one physical location, several ‘pop-up’ locations and a central kitchen. The central kitchen supports the delivery business as well as the pop-ups. What’s clever here is that the pop-up locations are consistent, being negotiated with businesses and partners for continuity for customers and security for their own growth.Somewhat relevant here is a business that I bumped into at the Retail Week tech conference recently called StreetDots. This app allows traders to book pop-up locations all over London. StreetDots has negotiated with landowners and has an ever expanding list of drive-on, trade, drive-off locations which can be booked through the app.Lyndsay Anderson of StreetDots explains "At StreetDots our desire is to evolve the street food scene so that street trading is on a level playing field with traditional retail. Technology, like our Trade Smart app, makes it easy for street traders to book and track their business and developments like pay and collect will help these brands access the growing delivery market".Like ‘Dark Kitchens’ will brands start opting for non bricks and mortar locations, saving a massive amount of overhead? How long until we see 25 - 50 location brands without locations, all working the street food markets and in pop-up locations via apps like StreetDots and through dark kitchens?Push for takeawayIf a customer collects their own food they are responsible for the time and condition that it arrives home in. Companies like Orderswift have built out platforms that allow restaurants to upload and manage orders - this also takes away the time or risk of unanswered calls. Orderswift counts Tasty PLC, Ask Italian, Rosa’s Thai, Busaba Eathai, Zizzi and Harry Ramsden’s as a few of its clients, reporting that customers spend on average 20% more when ordering online. The other benefit here is that you get ownership of your customer data.Matt Gilbert, Co-founder of online ordering platform Orderswift, says: “Increasingly, casual dining operators are starting to offer customers delivery through their own websites. Orders can be placed through a white-label platform like Orderswift, with a logistics specialist – like Stuart – providing the delivery.” The other benefit here is that you get ownership of your customer data and a far greater margin.Better delivery pouchesAccording to CNBC, Pizza Hut (USA) recently announced that it would deliver its pies (US translation for pizza) 15 degrees hotter after investing in their delivery pouches. They are also investing in packaging with thicker sides to lock in the heat. Operators can learn a lot from the likes of Papa John's, Domino's and Pizza Hut who’ve been delivering for years. From my own experience, Wagamama has also come a long way in their own packaging designs.You can bet that UberEats and Deliveroo will be having huge advances in this area.Push for feedbackYou might not get your customers’ data from UberEats or Deliveroo but you can include a call for feedback or sign-up in your packaging. This will serve a dual purpose, one: if the order is not up to scratch then you can give your customer a route to let you know (you’ll have to follow-up though…) and two: you can provide a sign-up route that gives you a recognisable list of delivery customers (allowing you to push them to click and collect).Create a local communityPreoday, has developed a system that can be ‘white labelled’ by restaurants to facilitate ordering through an app or website. They have set-up Oxfordorders.co.uk as a local hub to drive traffic to local businesses. The service charges a flat fee to businesses rather than a commission model.In a recent article in the FT, Andrew White, Preoday Chief Executive said that restaurants were at risk of becoming mere “food processors for Just Eat” rather than businesses with well-known brands and loyal customers in their own right.You don’t want to offer delivery or takeaway as you want your customers to enjoy your dine in experienceFair enough, you’ve invested in training your teams and developed an environment that creates an ‘experience’, and that’s even before the brand development. However, this isn’t going to go away, it's going to grow. A scenario where Mr and Mrs Jones said, “oh they don’t offer delivery, let's sort out a sitter and get a taxi and go out instead” will be rare. More likely they’ll jump on an app and find the next best thing and order that. Brands that embrace this should prosper. There is simply nothing going to stop the growth… however, let's consider the next point.The gig economyOr ‘piece work’ is where a worker is paid per task rather than per hour. According to the McKinsey Global Institute (MGI) there are around 5m people in the UK working in the gig economy, around 15% of the full and part-time workforce. The BBC put this figure at 1.1m with only around 9% made up from delivery or courier services.The government has ‘promised’ to look at the rights of workers and have commissioned the Taylor report which recommends that workers be classed as dependent contractors. Dan Warne, Deliveroo’s UK Managing Director said recently that any cost would be passed on to customers by raising the cost of delivery by £1.So will this put consumers off? Delivery currently costs £2.50 on Deliveroo so making it £3.50 in most cases isn’t going to convince consumers to go out or to ‘simply’ cook themselves something.New entrantsJust Eat recently had their acquisition of HungryHouse preliminary approved by the CMA, no doubt they will be making moves on the Deliveroo and UberEats market; this might have an effect on the commissions charged by the platforms.Appetise are another entrant, with an impressive board, recently joined, as a non-exec is Revolution Bars Group Chairman and ex Arsenal MD Keith Edelman.And finally… “Alexa, order me my favourite for delivery to my home…"It’s not far off. According to an article in Zdnet, within 2 years 30% of our interactions with technology will come through ‘conversations’ with smart machines. The consumer IT giants such as Google, Amazon, Apple and Microsoft have all invested heavily.This is just another channel to convenience, most of the population (certainly millennials and generation Z or Linksters (as they've been dubed) which are those born post 2002 will invariably be holding or have within reach a mobile device. Why do you need to tap a device to carry out an action so mundane as streaming a film or music, ordering groceries, or indeed ordering your dinner. It just takes away valuable time from the important job of engaging online with 'friends' or just scrolling through pages of irrelevant content.In our own home we have a Google assist, we can instruct it to stream films to our TV, listen to the radio or music via Spotify as well as track flights and run Google searches. I wish that I could say that we no longer need to be so attached to our phones, it simply wouldn't be true.It won’t be long until I can connect my Deliveroo, Just Eat, Appetise or UberEats account and get my son to order our dinner… one thing is for certain though, I’ll still have to pay.In summary
Other reading:Greggs trialling with UberEats - IndependentJustEat and HungryHouse get CMA preliminary approval - FTSourcesGig Economy: http://www.bbc.co.uk/news/business-40561807Taylor Report: https://www.gov.uk/government/publications/good-work-the-taylor-review-of-modern-working-practicesMGI: https://www.mckinsey.com/global-themes/employment-and-growth/independent-work-choice-necessity-and-the-gig-economyFinancial Times: https://www.ft.com/content/d23c44fe-4b0b-11e7-919a-1e14ce4af89b / https://www.ft.com/content/95e5e008-7b4b-11e7-9108-edda0bcbc928 / https://www.ft.com/content/0bd3a6a0-9d1c-11e7-8cd4-932067fbf946?mhq5j=e6Telegraph: http://www.telegraph.co.uk/business/2017/03/20/kitchens-restaurant-industry-seeks-shake-property-driven-expansions/Big Hospitality: https://www.bighospitality.co.uk/Article/2017/07/11/Takeaway-food-market-to-swell-to-11.2bn-in-five-yearsZdnet: http://www.zdnet.com/article/siri-cortana-alexa-and-google-assistant-are-just-the-beginning-voice-is-the-future/