Future of food delivery

The no. 1 thing that’s saving your favorite food businesses this COVID-19 season

  • Grab food
  • Deliveroo
  • FoodPanda
    1. 1. Has seen a 10 percent week-on-week increase in order across its various food and grocery delivery platforms. (2)
  • Redmart
    1. 1. “Orders exceeded 300 percent of RedMart’s weekly average and we are currently seeing unprecedented demand,” said a Lazada spokesperson. 
    2. 2. Shoppers are spending up to 10 times more on food staples [on Lazada].
  • Uber (UberEats)
    1. 1. Gross bookings surged to $4.68 billion in Q1 2020, an increase of 52% compared with the first quarter of the previous year.

This report will outline the following:

  1. Who are the most successful ‘winners’ in this industry at the moment?
  1. Are F&B Delivery companies helping or harming local restaurants?
  1. Will the trend of using contactless payment continue after COVID-19?
  1. Will F&B delivery be the same again after COVID-19?
  1. What are successful commercial F&B businesses doing to reach areas with low reach/accessibility?
  1. Will the food delivery industry slow down after the pandemic has passed? Will people stop using online F&B Delivery once the pandemic is over?
  1. What are other industries doing to help the commercial food and beverage industry survive during the pandemic?
  1. What are the trends in food delivery in small towns vs. big cities?
  1. How many jobs have been created? (on a positive note)
  1. What % of the economy is dependent on the commercial food & beverage industry? In 2019, before COVID-19, and in 2020’s first and second quarters? [market share]
  1. What % of sales for food and beverage industries are now coming from food delivery orders? Comparing that with 2019 and 2020.
  1. How many people order food and beverages by using food delivery services compared to pick-ups and dine-ins?
  1. How many restaurants are going to shut down after COVID-19?
  1. What types of food are increasing in demand during the pandemic?

The food delivery industry has always been expected to grow robustly in recent years, however, the COVID-19 pandemic has been a catalyst for the digitalization of many of these commercial F&B firms. Due to the worldwide orders of lockdown in 2020, the food and beverage industry has been impacted immensely by consumers obeying the rules and regulations. Restaurants and other fast-food commercial establishments have had to adapt quickly to these changes. One way for these commercial food companies to survive is to collaborate with technology – hence the F&B delivery industry has skyrocketed during the COVID-19 pandemic.

Are F&B Delivery companies helping or harming local restaurants?

“However, it is known that they both extort restaurants — Grab takes a 20 to 25 percent fee from merchants per order and FoodPanda charges 30 percent — which is a terrible burden for restaurants at the moment since they are only allowed to serve food by pickup or delivery.”

A question I often receive is will the trend of using contactless payment continue after COVID-19?

To which I respond, there are 

Will F&B be the same again after COVID-19?

2 outcomes:

  • (1) People have realised how easy it is to deliver online and will in the future, more than ever, resort to the easy method of ordering online
    • This can be linked psychologically to perhaps us developing to be more isolated after COVID.
  • (2) Food delivery businesses will decline heavily as more people will want to go out more after being isolated and quarantined for months.

So the real question that I know you are anticipating is: will the food delivery industry slow down after the pandemic has passed? Will people stop using online F&B Delivery once the pandemic is over?

No.

“On May 1st, when (Malaysian) Prime Minister Tan Sri Muhyiddin Yassin announced that almost all economic sectors will be allowed to reopen from May 4, many thought the demand for food delivery service will slow down, however that has not been the case.” 

Food delivery riders state that “they had made the same volume of deliveries during MCO and CMCO.” (3)

So where is the food delivery industry going in the future? 

Currently, “Statista Market Forecast (2020), he said Malaysia’s online food delivery market was valued at US$192 million at present, comprising 6.2 million consumers.”

“According to research firm Statista, Malaysia’s revenue in the online food delivery segment is expected to hit US$211mil (RM904.7mil) in 2020.

Global market intelligence and consulting services company Acumen Research and Consulting reported that Malaysia’s online food delivery market is expected to grow at a compound annual growth rate of 19.2%, and be worth over US$319.1mil by 2026.”

A more recent source, published August 6, 2020, by ‘The Edge Markets’ has a higher projected value:

“The country’s online food delivery service market is expected to grow 17.9 percent annually to reach revenue of US$370 million in four years, said Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed.”

What are other industries doing to help the commercial food and beverage industry survive during the pandemic?

According to The China Cuisine Association and Deloitte China’s survey on the Impact of COVID-19 on the Chinese catering industry, the main pressures for the commercial F&B industry are:

  1. What are the trends in food delivery in small towns vs. big cities?
  2. How many jobs have been created? (on a positive note)

References

  1. Investing.com, ‘Uber Q2 Earnings Preview: Food-Delivery Unit In Focus As Rides Disappear’ [6 August 2020]
  2. Radzi Razak, ‘Demand still high for food delivery riders even under CMCO as most still prefer using online delivery service’, Malay Mail [8 May 2020]
  3. The Edge Markets, ‘Online food delivery market to see robust growth over next four years’  [6 August 2020]
  4. Zhaki Abdullah, Channel News Asia, ‘Delivery services see spike in business because of COVID-19’ [ 19 February 2020]
  5.  Zunaira Saieed, The Star, Corporate News, Cuscapi teams up with local partners in food delivery line’ [27 June 2020]
Note:
  1. How Food Scenes Around the World Are Coping Amid Coronavirus” Eater.com
  2.  Note that the difference between the Malaysian MCO and CMCO is that the Conditional Movement Control Order was ‘a relaxation of regulations regarding the MCO, with its main goal was to reopen the national economy in a controlled manner. The CMCO was scheduled to start from 4 May.’ According to Wikipedia.
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