Foodservice 2022 - p
After years of disruption with government enforced closures across the globe, and consumer anxiety about gathering in a public place, the Foodservice...
How meal delivery
is transforming Foodservice
An industry with
a lot on its plate
After a tumultuous couple of years,
has the industry fully recovered?
A sigh of relief for the industry
After years of disruption with government enforced closures across the globe, and consumer anxiety about gathering in a public place, the Foodservice industry is finally seeing some true signs of recovery. But the industry’s story is far from straightforward, with brands having to navigate rapidly transforming consumer expectations on how, when and where we eat.
Restaurants are the perfect get-together for consumers after a long period of isolation. In general, we are going back to our ‘normal’ habits rather quickly, across the OOH landscape, from fast food chains right through to sit down dinners.
Globally, total food occasions are up by 33% versus a year ago – across all channels. This is brilliant news for the industry.
But as this report unpicks, growth is not equal across every channel. Some channels, such as Quick Service Restaurants do particularly well, capitalising on consumers’ desire for ease and offering affordability in an increasingly tough financial landscape. And with over 50% of foodservice occasions now not taking place on-premises, it’s clear there has been a noticeable shift away from OOH consumption to immediately available freshly prepared food, regardless of where we eat. We see delivery winning out as a way to offer consumers ultimate convenience – and we see how aggregators are changing the landscape for our food delivery future.
We are seeing recovery across all regions. It is at its highest in Mexico, at 64% growth followed by Brazil and Portugal at 54%. Something important to note, however, is that the countries have kept the same ranking as last year, which indicates that growth has been fairly consistent across all markets.
But there are now new pressures facing the industry. Inflation is high around the globe, with headlines referring to the cost-of-living crisis and economic hardship. Naturally, this is impacting how we are consuming food in an OOH setting.
Across the board, brands are having to diversify how they entice consumers back to foodservice. Focusing on in-person dining in isolation is no longer cutting the mustard, and outlets are finding new strategies to rebound towards pre-pandemic revenue levels. But who is winning out in the new normal of foodservice?
and transforming tastes
As people across the world embrace
in-person dining again, how has
foodservice evolved to meet demand?
Gastronomy across the globe
Since the pandemic, how and where we choose to eat has changed significantly. Foodservice businesses have had to adapt to years of government restrictions and changing consumer priorities to keep pace and remain competitive.
But this year has been a cause for optimism in the sector. There has been a real bounce back in how people have decided to engage with restaurants, food providers and hospitality environments. In 2022, people bought from foodservice providers 86 times on average globally, compared to 64 times last year.
With global efforts to limit human contact, we saw an undeniable surge in consumers choosing collected or delivered meals last year. And this trend is only set to continue, with 22% of foodservice occasions being collected meals, and 31% being delivered in 2022.
But in spite of this, 47% of foodservice occasions happened on-premises this year, up from 32% in 2021, showing a strong recovery in dine-in hospitality environments. And this hunger for meeting in person and sharing food on-premises has resulted in this type of foodservice contributing 75% to the sector’s growth.
While the foodservice landscape indicates a healthy appetite for on-premises dining, local nuances across Latin America, Europe and Asia show that different markets are responding to post-pandemic recovery with their own distinctive flavour.
In Latin America, consumers are showing a clear preference for delivery service and eating in with each occupying 39% (78% in total) of foodservice occasions in the region. In contrast, the European foodservice industry still heavily relies on traditional on-premise dining, with eating in accounting for 59% of dining occasions.
With a strong heritage of bar and café culture, there is a clear appetite for dine-in environments in Europe and these will remain a key area for brands to harness in their growth strategies. The Asian markets offer a more balanced foodservice model, with eating in (34%) and delivery (36%) only slightly outweighing collected food (30%).
It’s clear that foodservice is transforming across the world at pace. Across all markets, new models and platforms are changing how and when people engage with the service industry. Outlets and providers will have to look beyond traditional eat in only models, even if it plays a key role in their offerings.
So, where are the emerging opportunities for foodservice businesses and what growth can we expect to see in the future?
Case study: the European equation
The verdict is in for foodservice in Europe this year. On premises dining is back, and it has proven to be overwhelmingly popular across the region. But the story of which outlets consumers are choosing to purchase from is far less uniform, and our country breakdown suggests that businesses looking to grow in Europe must be specific in terms of where they choose to set up shop.
Local habits across Europe depict an increasingly varied channel landscape for foodservice providers. While the continent-wide picture indicates 30% of spend happens in bars, cafés, and coffee shops, this accounts for only 9% of foodservice spend in France. With a strong pub culture, it’s also unsurprising to see 36% of spending happening in similar spaces in the UK.
But Full Service Restaurants (FSR) have also had a strong year with 37% of spend occurring in these outlets in Spain; and in France nearly half (49%).
Value vs frequency
We’ve already seen how the holistic picture of the foodservice industry is one of endurance and resilience. But what does this recovery actually look like, and how are consumer habits changing in the face of mounting economic pressures?
While consumers are finally spending the same amount of money as they were compared with pre-pandemic levels, this year’s data suggests a marked shift in the way people are interacting with foodservice outlets.
In 2022, consumers made 20% less foodservice trips than in 2019 but when people did choose to eat out, they spent 15% more compared to pre-pandemic levels.
This year, we have seen a trend of consumers choosing trips with substantial meals rather than trips with snacks; and the average price of these substantial meals is on average 5 times more expensive than trips with snacks.
We have also seen a shift in when people choose to dine out. Weekend dining out frequency is 90% of the pre-pandemic levels while weekday dining out trails at 74% of pre-pandemic levels. With Covid restrictions being lifted in nearly all regions, consumers are once again choosing to eat with friends and family. This has led to an increase in occasion-led, more expensive dining experiences out of the home.
But what type of outlets are successfully capturing consumer attention and persuading people to spend more on their meals?
How Quick Service Restaurants are winning the Foodservice race
Affordable and convenient, Quick Service Restaurants have bloomed during the
pandemic. Let’s unpick the channel’s
What’s behind the growth of QSRs?
Quick Service Restaurants (QSRs) has been the only channel to grow in actual terms as a result of the pandemic, with a +21% revenue uplift in OOH spend when comparing Q2 2022 with Q2 2019 in Western Europe.
The first thing to mention is that QSRs growth may be due to it being one of the most affordable channels. Amidst rising inflation around the globe, QSRs offers a lower cost meal option.
As you can see from the data, QSRs have seen a 7% increase in buyers. But this is not where we see most of the channel’s growth. We are seeing that the channel has seen buyers spending more – with an increase of 25% per trip.
Consumers aren’t spending more due to menu item price increases – as of Q2 2022, there have been no relevant price increases in the basic range of key QSR chains. What is instead happening, is two things. One, is a story of premiumisation, where consumers are buying products with a higher price when compared with the store’s basic range. This may be through choosing limited edition menu items that have a higher cost, or simply more premium ranges. The second thing is that, with each trip, consumers are adding additional items to their order, generating a higher spend.
Post-COVID, it is clear that OOH eating habits have changed. Consumers are back eating in the OOH space, but there is a shift in priorities; they are putting weekend meals on-premise first, but are opting for the more affordable channel of QSR. For QSR brands looking to capitalise on the trend, it will be fruitful to extend the menu choice to include more affordable ranges. As the cost of living becomes an increasing concern amongst consumers, brands who keep pace and develop discounts and promotions will ultimately win out.
Close to home: where QSRs are seeing the most growth
When we compare the different restaurant types over the three-year period in Western Europe, we see two different stories.
For Coffee Shops, Independent FSRs and Chain FSRs, we see a similar trend: Covid changed how these channels operated, meaning they leaned more heavily on deliveries and collections in 2021. Consumers were likely deterred from their usual on-premise consumption due to anxieties around catching Covid in environments with larger groups, and many restaurants and coffee shops closed due to government enforced lockdowns in the period. With 2022’s ‘return to normal’, we generally see consumers migrating back to their previous habits, enjoying being on premise in a way they either hadn’t been able to or hadn’t felt comfortable to in 2021.
With QSR we see an entirely different story. For a start, it is the only channel that has seen value growth (vs 2019) – and steep growth at that (21%).
Pre-pandemic, the channel already had a higher share of value coming from delivery and collection pre-pandemic, meaning QSRs were best-prepared for the disruption COVID would cause. The channel saw growth in delivery and collection during this time to a far greater degree than the other channels, and in 2022 off the back of the pandemic, that continues to be the story. Food delivery and collection contributes to two thirds of the total QSR revenue.
While this provides an interesting departure for QSRs and its consumption, it also has the potential to generate a future risk. There are some outlets that are now starting to incentivise the on premise, restaurant experience with exclusive toys or gifts. It is clear that the pandemic has shifted how we engage with foodservice, and for QSRs the challenge lies in finding creative ways to bringing people back to eating in-person.
Crowning the king of
So, we know QSRs are growing. But which outlets across channels are gaining the most new shoppers?
We ranked OOH outlets based on which saw the biggest penetration gains last year – and there is a clear pattern across countries.
We are seeing a similar story in terms of growth: QSRs is queen and Burger King is… king – the only constant across all four markets. The ranking is generally heavily reliant on QSR outlets – perhaps for their ease, affordability and for their presence across countries.
It is important to mention the presence of Coffee Chains here too, with Starbucks and Costa. Coffee chains were the channel most impacted by the pandemic, as the channel most often features as an on-the-go food and drink option for those in the office. But coffee shops are an extremely versatile channel, and with more people heading back into the office as well as outlets understanding how to pivot their offering by to meet different service occasions (incorporating more food items on menus, for example) they are recovering and winning new buyers once again.
After two years of
delivery services are
showing no sign of
We have already outlined the welcome return to in-person dining in many regions, but the story of booming delivery services is also cause for cautious optimism for brands this year.
While the surge in ordering delivered meals in 2020 and 2021 may have seemed like a flash-in-the-pan increase because of covid restrictions, our 2022 data has shown that delivery services are still very much in demand. In fact, meal delivery services have added new buyers everywhere in the world compared to 2020 levels.
Areas less reliant on in-person dining such as Brazil, Thailand, Mainland China, and South Korea have all seen continuous year-on-year growth in market penetration for delivery services and these markets have been largely unaffected by the lifting of restrictions.
Nevertheless, in regions where foodservice is traditionally dependant on in-person dining such as Mexico and countries across Europe, delivery services are still struggling with market penetration as on-premises dining recovers.
We’re also seeing a universally upward trend in how frequently people are ordering delivered food, with total foodservice occasions up to 85.5 per year in average for 2022, 31% of which are delivery instances. In parts of Asia such as South Korea and Thailand, consumers are having meal delivery once per week on average, while in Mainland China and Indonesia people are using delivery services once every two weeks.
In Europe, however, this figure drops to an average of 16 purchases per year (or once every three weeks), meaning there is plenty of opportunity in the region to develop their presence, widen their scope and ultimately win consumer loyalty.
This global year-on-year growth suggests a consolidated habit of more frequent food delivery across the world, making it an attractive arena for brands to develop future strategies. So, who are the most valuable targets for brands to focus their efforts on?
Homing in on Heavy Buyers
As part of this upward trend in frequent buying, we are seeing an emergence of heavy meal delivery buyers across the world. We describe heavy buyers as someone who buys delivered food once a week or more, and we’re seeing this group grow by 54% in Asia (compared to 2020), 66% in Latin America and 114% in Europe.
This means around 40% of consumers in Asia are using meal delivery more than once a week, with this figure dropping to 25% in Latin America and 15% in Europe.
But who are these Heavy Buyers? How are they buying delivered food? And how can brands understand them better to develop strategies to deepen their loyalty?
Our research indicates that Heavy Buyers of delivery service have several common characteristics across markets. Usually ranging in age from 25 – 34 years old, Heavy Buyers tend to live in urban areas and key cities from higher socioeconomic backgrounds. They also take advantage of promotional opportunities with 75% purchasing with direct discounts or loyalty schemes. Heavy Buyers also lean towards using aggregators in place of ordering directly, with 66% ordering meals via an aggregator.
The good news for bricks and mortar restaurants, however, is that 75% of Heavy Buyers said that delivery services will never replace on-premise dining and these consumers choose delivery services as an add-on to other foodservices. For Heavy Buyers, the key motivator behind choosing delivery services is convenience, with 70% citing this as their demand moment. This year’s data also suggests that the majority of Heavy Buyers (55%), with their increased disposable income, also enjoy delivery services as they give the option to sample different cuisines and try new flavours.
Convenience wins out
We have seen how, for our Heavy Buyers, convenience is crucial in deciding to purchase delivered food, and this trend follows the wider global population with 55% of consumers indicating that convenience is the main reason they order in.
By contrast, the remaining 45% of consumers state that using delivery service is a reward or treat, with the UK and Spain presenting particularly marked increases on last year. These figures demonstrate a clear consumer mindset shift around meal delivery, as in 2020 only 41% cited convenience as their primary motivator, while 59% cited reward.
To succeed in this space, brands must harness the convenience motivator and understand the reasons why people are using delivery services in the first instance. This year, the leading reason for consumers to order in was that they “can’t be bothered to cook” (25%). Responses also revealed that “not having enough/ the right ingredients” accounted for 8% of delivery purchases.
This underlines that, for many, meal delivery services are being used to avoid the effort of cooking rather than for their inherent benefit.
With that in mind, it’s easy to see the opportunities that lie in delivery services for brands to leverage. But which cuisines are winning over the hearts and mouths of consumers across the world?
We all have our own unique tastes and preferences. From pizza to poké bowls, consumer choice is varied and unique dependent on region and culture. But data this year suggested that almost half (47%) of diners chose Western foods when using delivery services. This was followed by 35% choosing East Asian cuisines such as Chinese, Thai, Japanese and Korean and the remaining 18% choosing other local world foods including Mexican, Turkish, and Indian dishes.
Of course, to truly grasp the context of this data it is vital to look at the local popularity of different cuisines in different regions.
In Portugal, Spain, France, and Brazil we can see that Western foods including pizza, pasta and burgers are particularly dominant, while the UK and Mexico have a more balanced proportion of consumers choosing both Western and other local foods. In Asia, we see a much greater penetration of local foods.
It is unsurprising, therefore, that when looking at the number 1 choice of dish across the world, we see stir fried noodles taking the top spot in Mainland China, and Korean Fried Chicken leading the field in South Korea. And while there will certainly be local variations and adaptations to meet regional preferences, pizza continues to reign supreme in adding more buyers across Spain, Brazil, and France.
But we have seen year on year how dynamic the delivery sector really is. Taking the UK as an example: just three years ago 30% of delivered meals included a pizza, with 25% comprising Asian cuisines and 14% of meals including burgers. Now, burgers are the most ordered delivered meals in the UK, with over 27% of market penetration in 2022.
When looking at how people are buying burgers and pizzas in the UK, it is clear that ordering pizza is still very much connected with treat or occasion. While consumers choosing pizza delivery still constitute the largest base of buyers, they order less frequently (6 times per year on average) than those consumers choosing burgers (8 times per year).
Two factors to consider here is the disparity in average ticket price, and the average number of products included in these two meal options. For burgers we see an average spend per act of £10 with 4 products included in the order, this compares with an average spend of £21 for pizzas with 1 product included per order.
For consumers, versatility and affordability are affecting their purchase decisions. And with aggregators making ordering food even quicker and easier, the outlook is positive for burger brands going forward.
So, how are aggregators helping brands utilise this versatility and affordability formula to increase customer loyalty?
Democratising deliveries with aggregators
With convenience and versatility
dominating demands for
delivery services, aggregators
are instrumental in increasing
Growing platform pressure
As this year’s report has demonstrated, the speed and convenience of meal delivery has been paramount to its continued growth. And aggregators are a key factor in helping connect outlets to their customers and make their service as smooth as possible.
In 2022, we have seen that the market penetration for aggregator use increase since 2020. Popularity for these platforms is most prevalent in Asia where over 80% of all meal delivery buyers use aggregators.
This year, the most common reason for use was convenience, with half of consumers stating this as a key deciding factor in ordering through an aggregator. But the benefit for buyers also includes the deals and promotions that these platforms are often able to run, with 34% of respondents citing promotions as a reason to use aggregators.
Aggregators’ market penetration and prevalence amongst consumers has attracted the attention of large tech companies across the world. WhatsApp is an emerging player in the space, with 40% of meal buyers in Brazil ordering through WhatsApp at least once last year. The platform also accounts for around 15% of all meal delivery occasions in Brazil in 2022.
Discounts, delivery fees and deals
We know that promotions are a significant influencer of buyers choosing aggregators, but what are the specific benefits people look for from their delivery platforms?
Discounted ticket prices have a big impact on purchasing behaviours. Globally, 50% of meal delivery customers actively look for discounted items when using aggregators to purchase orders. Mainland China is a key market where this demand appears with 70% of buyers seeking this type of promotion.
Two case studies from this market of aggregators tapping into this demand are Meituan and Eleme. For ￥15/ month, Meituan offers broad and comprehensive services beyond simply meal delivery with daily coupons that can increase in value within a set period of time. As a member of Eleme, for ￥12/ month, users can save more than￥20/ month through games and entertainment offerings.
Delivery fees are also a major consideration for many consumers, with 45% of the global population citing no delivery fees as a motivator to use an aggregator. This benefit is perceived as particularly important in the UK, where 60% of delivery service users seek no delivery fees on their purchases. As such, we are seeing increased pressure on operators and aggregators to remove delivery fees and apply discounted ticket prices in all regions.
A peek into
the future of
With rising costs and a tricky
economic climate ahead,
what will the impact be on
Foodservice going forward?
In our final chapter, we’re going to take a look into the crystal ball of Foodservice, starting with changes we can expect in the short-term consumer habits changes through to some longer term, structural changes for the sector more widely.
Keeping it simple: how food habits are changing
We have seen a number of coping strategies due to pressure on consumers’ purses. We have seen OOH food consumption meals take priority over snacks, and OOH used as weekend food – potentially as a treat – rather than during the weekdays. And we’ve seen consumers downtrading to QSRs.
A different response we saw in France as a response to rising prices is simplification in bakeries and sandwich shops.
Consumers are less likely to buy a sandwich with other items such as a drink or a dessert, sticking instead to the staple item. OOH occasions are featuring less products as a result.
Meal replacement as a trend
With a concerning economic climate, some consumers are having to cut back entirely.
In Brazil, for example, prices have risen sharply. We compared prices in Q1 2020 to Q2 2022 and the price of sandwiches has risen 35% in Brazil, biscuits are up by 34%, and sweets and chocolates are both up by 23%.
This has led to a drastic shift in eating habits: Brazilians are having snacks instead of full meals at lunch occasions.
We would describe this as the ultimate downtrade: consumers aren’t downtrading their occasion, their channel or even their menu, but substituting a full meal to a single snack to manage such steep price increases.
As is evident in the graph, this is changing the attitudes to meals vs snacks in the country, where snacks are now, in 2022, seen as far more important than meals (where we saw the reverse story in 2020).
Amidst rising costs, such drastic action is likely to become more widespread.
Both this and the response example in France show that the foodservice industry needs to keep a close eye on changing consumer behaviour. These two examples are different reactions to the same issue of rising costs. Having country-specific and channel-specific data, as well as tracking behaviour across your own footprint, will become increasingly important in order to hit consumer needs.
Meal delivery: more than a moment
When we look at Ecommerce in grocery more widely, we see a return to ‘normal’ habits. The pandemic, as we know, caused many consumers to seek grocery delivery options, as they were more nervous to shop instore for hygiene and Covid transmission reasons. But we see that this spike in online grocery consumption is regulating – particularly when we look at figures from Europe.
Ecommerce had a share of over 14% during the peak of the pandemic. In Western Europe, e-commerce has now dropped to below 10% of total FMCG value sales.
We would expect, perhaps, to see meal delivery follow a similar trajectory. But post-pandemic, meal delivery continues to grow in buyers and frequency. In fact, meal delivery is still at 24% of all Freshly Prepared Meals.
Why is this? We surmise that it is because the service has changed buyers’ perception. Originally a treat or reward, the pandemic caused more consumers to explore meal delivery as more of a standard meal option – and a stand-in for cooking. It seems that this perception has stuck with consumers, as we don’t see a return to our pre-pandemic ‘normal’ as we do in Ecommerce grocery.
There is huge potential here for Foodservice – and we expect to see this trend grow. With fast delivery and ‘everyday’ style menus (rather than a focus on ‘treat’ food) Foodservice can capitalise on consumers appetite for ease.
Foodservice outlets will also win out if they make every step of the customer journey simple and low-cost: from WhatsApp ordering through to loyalty schemes and free delivery, we expect to see growth in this area.
Competition is hotter than ever in Quick Service Restaurants
In Foodservice, the first thing to say is that there will be more competition in the sector than ever. In the chart on the right we look at two major QSR chains across three different markets, to depict changing buyer loyalty.
As you can see, loyalty is harder and harder to garner. Across the three markets, the number of buyers choosing to visit both chains is growing. The chain in yellow is the number one chain – and this is also losing exclusive buyers. This means that the spend per consumer in a given outlet will generally drop, as their spend is split across different outlets.
For QSR, understanding consumer behaviour will be key, in order to keep loyalty figures high, and to build strategies for enticing new shoppers. Penetration drives value growth – so that is where brands should focus their efforts. The QSR channel would do well to reinforce Eat In occasions – particularly in Europe where we see this area at its strongest in terms of recovery.
QSR ultimately over indexes on non-traditional consumer platforms, such as take away and meal delivery – whereas Full Service Restaurants and Bars have gone back to their pre pandemic, on-premise levels quicker. This could open up the QSR channel to risk. We’re now more likely to see riders waiting to pick up orders than consumers lining up to eat out.
By focussing on the eating experience and creating rewards for eating in may be a way to win over more buyers. Consumers will only get more choice as the Foodservice market becomes more crowded and loyalty becomes harder to win, so tactics like this could de-risk the future for QSR.
A tough future for
Of course, there will also be many pressures facing shoppers in the coming months and years. Inflation is a global problem, and the price increase will inevitably force up prices. At the same time, there is a pressure to increase salaries or face losing personnel – both of which are tricky in a landscape where gaining shoppers is harder than ever before.
These pressures will be felt most by independent bars and restaurants, who face the above as well as battling with the growth of chains and QSR – all amidst a year on year drop in value share in Horeca.
When we compare the independent outlet share to the market share of chains, we see that there is a more balanced picture of market share in Great Britain, where recovery is more split across the sector, with 44% of Horeca value coming from chain restaurants and 56% coming from independents.
This risk is even higher in France and Spain, as markets who index most highly on on Independent restaurants.
Looking at the past two years of change in the sector, we expect a lot more disruption to come.
As financial situations change, we expect new ways that consumers are being savvy with their funds – all while enjoying what the Foodservice industry, and the OOH eating experience has to offer.
We expect new innovations, new types of eating experiences, and a continued battle for that all-important customer loyalty (one that is getting harder and harder to win!).
Will QSR open up to the in-person experience? Will independents find a way to win out? Where will meal delivery take us next?
Get in touch and find out.
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Who: Age / SEL / Region
When: Moment, day, people present
How: Ordering method
Why: Reasons for using
What: Full ranking of dishes ordered in meal delivery
What makes you decide between ordering methods?
Do you use promotions and what type?
+15 attitudinal statements 1 (disagree) to 5 (agree)
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