Balancing plates and pockets
Is meal delivery inflation’s fork in the road?
In a world where every choice feels like a strategic decision, the tale of meal delivery, takeaway food, and dining out unfolds as a gripping narrative. This transformation, driven by convenience, lifestyle preferences, and rising costs, is not limited to any single region but stretches across continents, profoundly affecting how we eat. So, what happens when the invisible hand of inflation starts reaching into our dining decisions?
In Europe, while it's tempting to think that the cost-effectiveness of eating out is driving its increased popularity, the reality is far more complex. It's a calculated dance between convenience and cost. Consumers are certainly increasingly choosing to eat out, and they appear to be finding ways to do so at a lower cost by opting for cheaper options within the dining-out scene; downtrading. This could be one reason why the overall price isn't significantly driving the growth in value for out-of-home (OOH) dining. Additionally, there's a rising trend for quick, informal meals that people can eat on the go, which also offers a more budget-friendly and convenient way to eat.
Global In-home vs Out-of-home
Of the 12% of the value growth for in-home, 10% is coming from price increases. However, for the 13% growth in out-of-home, it’s more balanced between the natural growth of occasions (6%) and price (8%), healthy signs for the industry.
Let’s use the United Kingdom as an example of cost pressures on people. Broad inflation hit highs of +10% earlier in the year, and grocery inflation — the cost of putting food on tables — hovered at around 17%. It is only in recent months we’ve seen it slide back to 12% levels, meaning despite the rate of increase, costs remain stubbornly high.
While it's tempting to think that the cost-effectiveness of eating out is driving its increased popularity, the reality is far more complex
But as those cost pressures have played out against in-home eating in the UK and elsewhere in Europe, our data reveals that trips to eateries for snacks and non-alcoholic drinks increased by a notable 17% in Q1 2022 compared to the year previous. By Q1 of 2023, that rate had settled to 8%, lower but, interestingly, still growing in cost-conscious times. This is a sign that overall footfall continues to increase, and people are back to more “on-the-go” and impulse occasions throughout the day.
But the rise in out-of-home dining has not been without change. The French, for example, are making calculated decisions about what enhances their out-of-home experiences and what detracts from them. The economic pressures force a more discerning approach. Even the small things, like opting for tap water over bottled, or bypassing 'routine' menu items like salad or soup, become part of a larger effort to maximise the value of an outing.
But, as is often the case, context is key. There has been a recalibration of habits playing out. There has been a decline in delivery meals, perhaps unsurprisingly as we return to more normal post-pandemic habits. But it’s not a true decline. It’s a natural rebalancing th
at is more about a return to pre-COVID baselines. For example, in Spain, one third of the shift away from delivery comes as consumers return to on-premise dining. Another third comes from cooking more at home. The final third comes because we’re collecting meals ourselves to save on delivery costs. It seems takeaways were 26% cheaper than delivery costs; a compelling reason to shift.
This pragmatic approach on collection broadly appears to be a coping strategy, enabling consumers to manage costs while still enjoying the convenience of not needing to cook. For the Foodservice industry, it also keeps them in the market while the cost-of-living challenges rebalance.
In contrast to Europe, Latin America presents a nuanced narrative amidst a reverse trend to Europe. Here, high inflation has long plagued grocery prices. Consequently, consumers in these markets are more accustomed to balancing the books and recalibrating their purchases at supermarkets and the like. In other words, for them, high grocery prices are the norm. This backdrop has forced a different behaviour from Foodservice outlets in the region.
Unlike their European counterparts, restaurants have charged ahead with price increases to offset reduced footfall. This has placed consumers in a challenging predicament: should they bear the burden of high dining-out costs or grapple with the perennially rising expenses of groceries? It appears, they’re still choosing carefully, but choosing both, nevertheless. Collection is up a solid 8%, eating in is up 1% as they shift their balance from delivery.
In Asia, we observe a notable shift in where freshly prepared meals are consumed and how they find their way to households. Asia, often recognised for its familiarity with aggregator food deliveries, stands as an outlier in the global dining scene.
For lunch and dinner occasions:
The preference for eat-in dining at restaurants has surged from 30% to 38%. This demonstrates a resurgence in the tradition of enjoying meals at restaurants, a clear cultural preference in the region.
There has been a decline in meal deliveries from 36% to 30% year-on-year. This decline could be attributed to an effort to manage and control delivery costs that often come with aggregator services. Consumers in Asia seem to be seeking more cost-effective and efficient ways to enjoy their favourite restaurant meals.
Simultaneously, the collection of meals is on the rise in Asia, taking share from delivery, as it is elsewhere. We observed a 2% increase in meal collection between 2022 and 2023, signifying a shift towards enjoying restaurant-quality food within the comfort of one's home.
The interplay between these trends underscores Asia's unique approach to Foodservice consumption.
Stick to meal delivery for its convenience, regardless of cost changes.
Seize the opportunity to dine out more often, to embrace the social and sensory experience.
Opt for a balanced approach, mixing dining out and meal delivery to suit my lifestyle and budget.
