Not every channel shrunk over the last 18 months. Quick Service Restaurants have shown a strong competitive advantage - and is the only channel to see its value sales grow.
The OOH Foodservice sector is still just 75% of the size it was in 2019. But one channel has grown not just its market share, but its actual value sales too. Quick Service Restaurants (QSR) is the only channel to have done so when looking at Q2 2021 vs Q2 2019.
What are the reasons behind this growth?
1. Affordable – usually, the QSR spend per trip is one third of what we spend in Full Service Restaurants. Promotions are a key tool for QSR – 40% of QSR buyers that have used a promotion are new to the channel.
2. Innovative – operators focus on limited editions and continued changes to their menus. One such example was the Rebel Whopper, with 45% of its buyers in Spain being new to Burger King.
3. Crossover – QSR penetration is higher among younger consumers, but the channel’s ability to persuade families is one of the most important parts of its success.
4. Versatile – 30% of QSR trips are at breakfast or mid-afternoon. For example, we’ve seen a big push by McDonalds in developing their snacking offering thanks to McCafé.
5. Accessible – QSR was already the best adapted to the multi-platform reality. 46% of 2019 spend came through collection and delivery, which has risen to 75% today - significantly higher than any other channel.
As more Meal Delivery operators pursue a multi-platform strategy, the digital landscape becomes more and more competitive. Third-party aggregator (e.g. Uber Eats and Deliveroo) penetration is already over 80% across markets in Asia, and outside this region most markets have seen grow of over 20% penetration-points. Put simply - third-party aggregators are booming.
As Meal Delivery becomes more digitally-driven and accessible, the competition is increasing exponentially.
Household names are pivoting to take advantage of this new digital market. For example, during the pandemic the largest Full-Service Restaurant chain in France, Buffalo Grill, launched a digital brand of burgers, taking advantage of its existing structure of restaurants and acting as a ‘dark kitchen’.
And the commitment to Meal Delivery has even reached haute cuisine, such as the collaboration between delivery partner Goxo (Glovo) and luxury restaurant La gran Familia Mediterranea in Spain, which has helped generate an even greater diversity of occasions while raising the average price in the sector.
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But the digitialisation of Meal Delivery comes with its own challenges:
1. Loyalty – consumers only dedicate 5% of their Foodservice budget to the top five venues, whilst the average loyalty to the top five grocery operators is 20%. This is even a bigger issue when consumers use third-party aggregators, where promotional offers are even more evident.
2. Availability – pizza and burgers represent 65% of Meal Delivery occasions, but just 15% of On-premise occasions. However, the fall in Shared Enjoyment occasions is putting more pressure on these menu options. As restrictions to On-premise made operators temporarily reduce their options, consumer choices multiplied for Meal Delivery, adding more stress to the industry.
3. Profitability – only 25% of Meal Delivery orders include a drink, while only 20% of them include a snack or dessert. This likely explains why the average spend per occasion is 30% lower compared to On-premise occasions.
In Asia, meal delivery is more developed than the rest of the world, forming a weekly habit for consumers. Which is why it makes sense to look here for inspiration from brands which are taking the meal delivery experience to the next level to drive profitability.
Hai di lao is the leading Hot Pot brand in Chinese Mainland and is now expanding throughout the rest of Asia and the US. Customers can order their hotpot from the official website and App, or third-party meal delivery Apps. If they order a meal over 198 RMB and pay an extra delivery fee (normally 28 RMB), the delivery man will help set up the table for customers and come back the next day to pick up the container. It’s an added touch of convenience that sets the brand apart.
This example not only helps increase the profitability of each delivery, but continues to raise the convenience of Meal Delivery, as consumers no longer need to worry about cooking or cleaning.
