Food delivery is growing ten times faster than the eating out sector, with increased penetration at breakfast and lunch presenting big opportunities to foodservice companies, the NPD Group has revealed.
According to the consumer market researcher, the delivery channel in Britain’s eating-out foodservice market (known as out-of-home or OOH) was worth £3.6 billion as of the year ending December 2016, up six per cent on the previous year.
While total visits to ‘eat out’ increased just one per cent year on year to 11.3 billion, the delivery sector jumped nearly 10 per cent to 599 million visits in 2016.
Normally associated with evening meals, delivery has room to grow at lunch and even breakfast time, according to the NPD. Currently, 65 per cent of all aggregator deliveries are for dinner but breakfast currently accounts for just five per cent of deliveries and lunch 11 per cent, suggesting there is a clear market opportunity for expanding these occasions.
Cyril Lavenant, the UK foodservice director at the NPD Group, said: “Ordering ready-to-eat food for delivery via an app or by phone is growing so fast that ‘eating in’ is becoming the new ‘eating out’. It goes beyond getting delivery of conventional ‘takeaway’ food because full-service restaurants are offering delivery too.
“We believe delivery will keep growing. The aggregators will surely view the current low level of penetration at breakfast and lunch as irresistible market opportunities. How soon will it be until we go beyond getting a basic take-away breakfast on the way to work and opt instead for a fancy breakfast delivered to our workplace on a work day or even order a breakfast to our home when we are not working?”
Lavenant predicts that the delivery channel could grow by nearly 50 per cent to reach £5.3 billion by 2020. This projection is based on a likely faster rate of 10 per cent growth in 2017 and the same amount in each of the three following years.
Most delivery sales (over 80 per cent of orders) come through the fast-food Quick Service Restaurant (QSR) channel, but pubs are now part of the picture too as they begin to partner with ‘aggregator’ brands such as Deliveroo, Just Eat, Hungry House and UberEATS. The aggregator brands are a big catalyst for the success of the delivery channel.
Although British pubs only account for four per cent of the delivery market, they increased their delivery visits by 59 per cent in 2016 compared to the previous year.
Across the wider industry, at the end of 2016, delivery accounted for more than one in 20 (5.3 per cent) of British OOH foodservice visits, compared to 3.5 per cent in 2008.
Millennials (aged 18 to 34) use aggregators heavily, with the 18-to-24 age group in particular becoming a major source of demand. They account for 15 per cent of aggregator delivery visits compared to nine per cent of total OOH visits.