Restaurants v delivery apps in battle for 'last mile' | Sumfood

Posted in Food Technology, In The News on Oct 19, 2020

Covid-19 has forced us to rethink our relationship with food. Customers are shifting from bricks and mortar restaurants to the efficiency of home delivery systems.

For most of us this was in reaction to supermarket shelves being less full than normal or the regularity of shopping visits being curtailed. For others, the economic downturn has forced more people into food insecurity – one in five US households are now unable to access enough food; and a surge in demand is being experienced by foodbanks here.

Sitting alongside scarcity and food insecurity is the rather strange bedfellow of nationalism, and the drive to support local food production. Our social media feeds are full of artisan producers and the mantra of "buy local" is loud and persistent. As consumers, we are grappling with food choices about what we buy, where we buy it and how we can stretch our food dollar further.

There is another food battle that is happening at the same time: the fight for the last mile. This is the hospitality industry's fight for our loyalty as consumers shift focus from bricks and mortar restaurants to the efficacy of home-delivery systems. Which food "app" can get food to consumers quickest, most reliably, and cheapest? Of course, this shift in consumer behaviour brings opportunity for some – for example, a decreased need to invest in expensive real estate to secure food sales, the rise of "ghost kitchens", or the development of local food-delivery services. But we are seeing concerns in other parts of the world over who will "own" the consumer.

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While the notion of being "owned" goes against the grain for many consumers, we are entering a period where loyalty is openly talked about and encouraged. Anecdotally, it appears a pandemic is more likely to drive loyalty than any annoying loyalty card.

Everyone is out to understand and capitalise on our shopping behaviours and preferences.

Last year, at the Wall Street Journal's "Future of Food" event in New York, I heard about the concern that large fast-food chains had about losing the consumer to an app platform. In other words, they were concerned a consumer might lose interest in the "brand" of food they were buying and start to rely upon the delivery platform for food choices. When that happens, the ability of large food chains to target consumers is considerably reduced and the ownership of consumer data shifts from the restaurant to the platform.

Along with the potential impacts of distancing from the customer, US restaurants are facing commissions that range from 15 to 40 per cent. While we have seen some debate about the commissions being charged in New Zealand, there is no denying that the cost of developing and maintaining a fleet of drivers (so we can get our burger safely, on time and still hot) is not a cheap endeavour. The big players in the delivery services are playing a long game. Some commentators point to their strategy of expanding and creating dominant platforms which will then be able to maximise service and marketing fees.

That's a sobering strategy when you consider 98 per cent of the delivery services in the US are controlled by four providers. The model of large-scale tech investment that enables a platform to be built to maximise market share could leave us dependent upon a handful of companies for online food purchases in the future.

As was published in The New Zealand Herald on: 28th June 2020

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