Chapter 3
Innovative new takeout and delivery trends are driving increased growth.
As competition heats up in the area of off-premise dining, customers have higher demands for takeout, delivery, and other forms of food and beverage prepared away from home but not consumed in restaurants and other foodservice locations. According to Technomic, in fact, 22% of consumers now say that food and beverages for carryout or delivery are more a part of their routine than they were two years ago. And takeout and delivery now constitute 57% of foodservice orders, vs 43% for dine-in.
Among both restaurants and onsite locations, 20% offer delivery, and 22% of places that offer delivery use third-party services.
That signals more room in the marketplace for next-generation takeout and delivery models, including ghost restaurants and other dedicated delivery-only concepts; third-party national and local delivery services like Uber Eats and 2DineIn.com; enhanced ordering and payment technology; and packaging and equipment that addresses both quality and consumer desire for more eco-friendly options.
Sources: Technomic, What Consumers Want from Off-Premise (2019); Datassential/IFMA Consumer Planning Program 2017/2018, Delivery Dynamics
For foodservice operations looking to grow their business (and that, of course, would be every one of them), off-premise meals are a bright spot. In near-seismic behavioral shifts, diners increasingly opt to eat at home although not necessarily cook at home. For many time-pressed, convenience-driven consumers, takeout and especially delivery are showing their muscle as preferred means to get food on the table.
Third-party delivery services such as Grubhub, Uber Eats, Caviar, and DoorDash are fanning the flames of interest and also making delivery easier than ever for app-happy consumers. Grubhub, one of the earliest such services, reported $5.1 billion in food sales in 2018, on a list of 100,000+ U.S. restaurants. Uber Eats counts major brands like McDonald’s and Starbucks as partners while Waitr Holdings, Inc., focuses its business on smaller urban and exurban markets.
Despite their growing prominence, however, meals placed and delivered by third-party services are dwarfed by those that are handled directly by restaurants. Delivery fees may be the deciding factor in growth. Some chains have a flat rate for orders while third-party services are exploring “subscription” services with a monthly fee for unlimited deliveries.
21% of consumers say they are increasingly replacing carryout orders with delivery, due to the convenience. In addition, 36% report increased use of delivery in addition to their usual dine-in and carryout orders.
Office Coffee Delivery In offices, both productivity and morale benefit from onsite coffee service, which is enjoyed by 68% of at-work coffee drinkers. Amid a proliferation of premium coffeehouses, workers have high expectations when it comes to office beverage service, and more employers are outsourcing theirs through specialty providers. Freshly brewed coffee, hot cocoa, and tea with a complete selection of sweeteners and creamers are essential. Some companies are also adding light snacks, smoothies, and fruits. Source: Packaged Facts, Office Coffee Service in the U.S. (2018)
78% of delivery orders are placed directly through a restaurant, rather than a third party, largely for reasons of trust.
GEN Z SPOTLIGHT Even though not all Gen Zers are old enough to order their own delivered meals, their orders totaled 552 million meals last year, just 1 million less than those from Millennials. Source: The NPD Group, Gen Zs Are Getting Older and Making Their Mark on Restaurants and Eating Trends (2019)
Sources: Technomic Delivery & Off-Premise Consumer Trend Report (2019); Hartman Group, Gen Z 2018
“Have device, will order” is the mantra for today’s convenience-seeking patrons when they get hungry or thirsty on the move. Larger smartphones and more robust digital ordering systems have helped make it so, as consumers increasingly look to purchase food and beverage items for grab-and-go takeout or delivery.
Nearly 6 in 10 digital orders source to mobile apps.
Half of consumers use technology to order food and beverages from restaurants and are most likely to visit restaurant-specific websites or apps.
Online and mobile ordering systems (whether self-branded or third-party) that will allow customers to order food and beverage items, grab-and-go food takeout, or delivery are growing in popularity. There are also social media-based ordering functions, for example, through Twitter or on Facebook via a chatbot.
Not surprisingly, online ordering skews heavily toward Millennials and Gen Z, who heavily favor mobile devices over traditional PCs, according to Datassential. Gen X and Boomers, meanwhile, tend to split their online ordering behavior nearly evenly between PCs and mobile.
GEN Z SPOTLIGHT They’re more likely than the general population to use multiple digital sources for digital food and beverage information, including Facebook (used by 25% of the cohort), Instagram (22%), and websites (20%). Source: Datassential Generations of Change (April 2018)
Sources: Datassential/IFMA Consumer Planning Program 2017/2018, Emerging Concepts & Disruptors; The NPD Group, Checkout E-commerce (2018); The NPD Group/Delivering Digital Convenience Report (2018); Datassential/IFMA Consumer Planning Program 2017/2018, Food Delivery; Technomic, Gen Z: What is the Next Consumer Generation Eating and Drinking? (April 2019)
With more than half of restaurant-made meals eaten off-premise (fully 58%, according to Technomic) and usage expected to grow, performance-oriented to-go packaging has never been more important.
Restaurant users are pretty specific about what they expect: containers that don’t leak, drip, or spill; are easy to transport; don’t change the taste of the contents; and that maintain the appropriate temperature of food and beverages are the four top-tier traits.
Packaging accounts for 30% of all waste generated while single-use items such as plastic eating utensils, paper plates, and napkins add an additional 10%.
With growing frequency, eco-friendly options also rate high in consumers’ minds and 27% overall say they’re more likely to visit restaurants that make an effort to be sustainable; for carryout-dependent Gen Z, it’s 31%.
Restaurants are listening. Global powerhouses like McDonald’s, Yum, and Dunkin’ have committed to addressing deforestation and other sustainability issues. Some third-party delivery services such as Grubhub allow customers to indicate whether they want single-use items such as plates, utensils, and napkins included in their orders.
Sustainable and eco-friendly options matter to colleges as well. With its students ordering 350,000 takeout meals annually, the foodservice department at University of California, Merced launched a program in which all to-go meals are packed in reusable containers, which are cleaned and sterilized for reuse. The 25-cent fee is refunded when the packaging is returned, via easy drop-off bins located around campus.
Although they account for just 11% of market usage, earth-friendly natural fiber containers are the favorite choice with consumers, according to Datassential, outpacing options such as Styrofoam, plastic, cardboard, and aluminum. Fully 76% of consumers named them the top choice.
Consumers are willing to pay 32 cents extra for eco-friendly packaging, up from 11 cents in 2016.
GEN Z SPOTLIGHT When purchasing food and beverages from the limited-service restaurant segment, just over half of purchases (51%) are takeout. Source: Technomic, Gen Z: What is the Next Consumer Generation Eating and Drinking? (April 2019)
Sources: Technomic Generational Trend Report (2018); Datassential/IFMA Consumer Planning Program 2018/2019, Food To-Go and Packaging; Technomic Delivery & Off-Premise Consumer Trend Report (2019); Environmental Protection Agency; Technomic, Gen Z: What is the Next Consumer Generation Eating and Drinking? (April 2019)