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THE RESTAURANT STATE
A Global
Analysis
Mobile ordering,
powered by
Want to know more?
preoday.com Contents
Why you need to read Contents
this white paper:
The restaurant and home delivery market is in the midst of an industry revolution -
your business cannot afford to be left behind. Overview
Preoday supports businesses, like yours, around the world and has its finger on the United Kingdom
industry’s pulse. This white paper will make sure that you’re up to date on the latest
trends in key regions across the globe. North America
Asia
What you will learn: Australasia
• The value of the restaurant market in each territory and how it’s predicted to
change in coming months and years
• In which regions digital ordering is experiencing the strongest growth, and why
Conclusion
• Which online ordering and delivery companies are competing to take control in
each market
About Preoday
• The role of mobile internet penetration in furthering the march of online ordering
2 Contents Contents
Overview In Summary
No one-size fits all is no real limit to the number of restaurants In Summary:
There’s no one sentence that can accurately they can sign up. However, as Deliveroo has • There is no single, unifying factor for success, but there is strong investment and interest in
describe the state of the global food and drink seen recently, rapid growth and investment online and mobile ordering everywhere, amid a rapidly changing market
market. Every region is experiencing different does not automatically result in profit. And • Food delivery is going digital with 25 percent growth expected between 2015-18 in key markets
highs and lows, trends and technologies. Grubhub? As of October 2017 its shares were • The aggregator model is seeing investment but its success is potentially short-lived
The economy of the USA is different to that falling rapidly and investors marked its shares • Businesses are increasingly considering their own branded platforms
of the UK and naturally, this impacts growth as ‘Sell’.
and changes in the industry. Equally, it is not
possible to talk generally about “food and Going off the aggregator
While the aggregator model has gained much
drink” trends; in order to draw out meaningful
insights we need to be more specific about of the world’s attention until now, white-label
the type of business. products could soon pull ahead as businesses
look to carve their own digital ordering
Here we look specifically at the restaurant identity. Such technologies not only facilitate Projected value of Annual value of
industry and break the facts down by region. order and, sometimes, delivery, but also the online delivery
market by 2022
the online pizza
delivery industry
We aim to answer the question, what do reduce in-restaurant queues for guests. Quick
restaurants need to be aware of so they service food outlets, catering to busy office
don’t fall behind in North America, the UK, workers in particular, are realising the benefit
Asia and Australasia? of click and collect meals.
Strong investment all round Of course, the rise of both aggregator and
of all restaurant orders that now
Across the world, the business of delivering venue-specific ordering technologies is being come from digital channels,
in India currently partnered
restaurant meals to the home is undergoing driven by consumer demand for convenience. outpacing phone orders (5
Global Figures** with the UberEATS food
percent) for the first time
rapid change as new online platforms race As people choose to stay at home, rather than delivery service
to capture markets and customers. Related head out for a traditional dining experience,
to this, there has been significant investment many are seeking more convenient ways to
in technology companies aiming to disrupt eat quality food. When out and about, they
the market with new ordering and delivery want to be able to grab their food on-the-go,
methods. rather than spending a significant portion of
their time waiting in a queue.
Aggregators in particular, have caught the
imagination of the industry, though we argue With these new online platforms making their of internet users who told
of commission costs research analysts they had
that their reign might prove short-lived. So mark around the world, the food-delivery charged to participating ordered food delivery in the
far Grubhub has been through six rounds of industry is in the midst of a dramatic channel restaurants by ordering past year; another 20 percent
platforms such GrubHub, said they plan to try it soon
funding, raising $84,100,000 in the process; migration. According to McKinsey & Co, we UberEATS and DoorDash
Deliveroo’s six rounds have seen it raise can expect online delivery to grow by 25
$859,597,403. The reason companies like percent per year from 2015 to 2018 in key of online orders
which come from a
this have seemingly done so well is that there markets. mobile device
**data sourced from PYMNTS.com
4 Contents The Restaurant State: A Global Analytics 5
United Kingdom
Where the takeaway market is mature but open to disruption Kitchens are going dark Deliveroo Editions champions ‘dark kitchens’:
Within the UK, Just Eat and Hungryhouse are delivery-only kitchens that exist solely in the
The UK has the largest share of the online But it’s not just home delivery people are perhaps the best known of the aggregator online space without any traditional shopfront.
takeaway market and is the most advanced looking for; there are more than 32 million order and delivery companies and have It says it provides restaurants with unique
country in Europe. We are therefore focusing people in work in the UK, and few have time to the widest reach, although more recently insights “that allow them to tailor menu items
on it as a leading light of the region and one take a relaxed lunch break. This demographic UberEats and Deliveroo have been gaining and pricing to the customer base, leading
which other countries are carefully watching. is one that increasingly uses its smartphone to headway with their disruptive approaches. to increases in sales of up to 400 percent”.
place lunch orders, avoiding lengthy queues in Deliveroo’s Editions programme, for instance, Whether true or not, the kitchens aren’t
order to collect favourite foods on-the-go. has opened up new lines for business for the universally loved and are facing significant
The UK by numbers online ordering industry. controversy. As the Guardian reports,
• Britain will spend £8bn a year on According to Vianet, consumers in the UK are Southwark Council told Deliveroo to suspend
takeaways by the end of the decade twice as likely to use their smartphone to pay Because London has particularly high operations at a site in Camberwell, south
for lunch than they were a year ago (a figure commercial rents (there’s been a doubling of London, on account of the company not having
• There are 32m people in the UK in that will include tap-and-go payments as well
work and many experience rushed business rates in some areas), it’s not possible appropriate planning permission. It remains to
as online order and payments). Additionally, for some restaurants to afford a property with be seen if and how this trend grows.
lunch hours
analyst house CGA revealed, during a enough cover seats to turn a profit. Noting this,
• 35 percent of mobile device presentation at the 2017 Lunch! show that
using weekly food-to-go users use a
smartphone to speed up food orders
Snapshot of Europe*
• The phone is the biggest threat to online 35% of 'Online Takeaway' market volume in 2017 (in US$)
takeaway companies - more than 40
percent of orders for takeaways are still
mobile 5000
made using a phone in the UK device using 4500
weekly food- 4000
to-go users 3500
Time-poor consumers look to takeaways
use mobile 3000
According to the NPD Group, outside of the devices to 2500
USA, the majority of growth in foodservice speed up 2000
traffic comes from the quick service food orders. 1500
restaurant (QSR) segment. In 2015 it was
predicted that Britain would spend £8bn 1000
a year on takeaways by the end of the And why? Because 500
decade. The given reasons were a surge we are constantly seeking 0
in smartphone use, alongside time-pressed more choice, greater convenience ia ce y ly ds ay l ia en nd m
str an an Ita lan rw lan
d ga ss ain ed rla do
households cooking fewer meals. Since that and faster opportunities to get what we want. u Fr rm
er o o rtu Ru Sp w e ng
A Ge th N P Po S itz Ki
prediction, if anything, the nation’s urge to Ne Sw ited
order online has grown. Un
*Data sourced from Statista
6 Contents The Restaurant State: A Global Analysis 7
United Kingdom North America
Disrupting the industry their own online and mobile ordering options Where take-out is king and big brands are investing in digital technology
Within localised areas of the UK, restaurants which help them cut down on excessive costs
regularly express concern about the costs of the and avoid commission on every order placed. Backed up with statistics
services provided by traditional aggregators. Using their own technology they can incentivise North America by numbers In 2015, for the first time, Americans spent
This is leading to the rise of new, commission- customers by offering discounts, and access • 70 percent of consumers think of online more at restaurants than at traditional
free services. Oxford Orders, for example, is the owned customer data for future marketing services as the most crucial elements of grocery stores. Since then growth has
first in a series of local marketplace solutions campaigns. Most important, they give the restaurant technology stagnated in the traditional restaurant
intended to promote regional restaurants by ability to control their customer service, such • Online delivery already represents 43 space, but not for order-ahead venues.
bringing them and other businesses together as delivery deals or menu creation, rather than percent of all delivery orders in the Here technology use is on the up. In fact,
under a single e-commerce platform. Because having it created by a third party. region and this is growing
according to Webstaurant Store there has
it won’t charge commission, and will only • In the last year, 18 percent of delivery
ever serve residents within a set location, it orders were placed digitally through a been a 50 percent increase in the use of
is expected to foster greater relationships website or app technology across the industry and 70%
UK - key takeaways of consumers now think of online services
between businesses and consumers.
• People don’t have time for relaxed • 85 percent of consumers would visit
quick services venues more often if they as the most critical element of restaurant
Despite incoming competition, Hungryhouse’s lunchtimes, particularly at work technology.
had an app
CEO Alice Mrongovius said last year that she • Using smartphones to order food is an • Pizza Hut’s digital mix of orders is
perceives the main threat to online takeaway increasing trend - consumers in around 50 percent, while Papa John’s Online delivery already represents 43 percent
companies to be the phone: the UK are twice as likely to use their and Domino’s are both seeing well over of all delivery orders in the region and if
smartphone to pay for lunch than they 60 percent penetration Cowen is correct, that number will continue
more than were a year ago
• Just Eat and Hungryhouse have been,
to grow. The investment firm has predicted
a 79 percent upsurge in the total U.S. food
40% of orders perhaps, the best known of the Own-brand digital ordering platforms delivery market by 2022, a number which will
for takeaways aggregator order and delivery
companies and have had the widest
are taking off
Despite the success of aggregators such as
take figures from $43 billion to $76 billion. As
a demonstration of this, in the last year alone,
are still made reach in the region
• New players are disrupting the
GrubHub and the rise of UberEATS across the share of orders placed online through a
using a phone industry, providing new types of
North America, many of the bigger brand
names in food have forgone such platforms
delivery service website or app increased
from 15 percent to 18 percent.
in the UK. services and business models
• Businesses are increasingly considering
to invest in their own technologies, or partner
with technology providers that offer white-
label platforms. McDonald's, Tim Hortons, Mobile solutions provider DMI released
Just one month later it was announced, rather investment in their own mobile and complementary data demonstrating the
online ordering services Panera Bread, Papa Johns, Subway, Dominos,
controversially that, Hungryhouse was being and others, are all seeing great success with growing dependence consumers have on
acquired by Just Eat. loyal customers downloading and regularly online and mobile ordering. Of the 2,500
using their own branded services. people it questioned, 63 percent had at least
Also gaining ground on the online ordering and one quick-service app on their phones and
delivery aggregators are technology providers Read our guide, Four Stories of Mobile and
As for the 'dark kitchens' created by the likes 35 percent said they use mobile every time
that build individual platforms for brands. Online Ordering Success, to gain insight into of Deliveroo in the UK, these have had mixed
Eateries such as Vital Ingredient and how other companies have benefitted from they visit a quick-service restaurant (or at least
success in North America. Delivery-only regularly). Perhaps most significant is that 85
Churchills Fish and Chips have launched having their own branded ordering platform. restaurant Ando has performed well in New York. percent would visit quick-services venues
Others have tried and failed to sustain successful more often if they had an app that appealed
services which suggests that the wider customer
to them.
experience and a strong brand association is
important to the American consumer.
8 Contents 9 Contents
North America Asia
A slice of the pizza pie programme, a move that is seen as a game Where consumers are keen but growth varies according to each country’s internet penetration
If there was one market in North America changer, not just in the USA, but further afield.
where digital ordering has been pushing India
forward faster than any other, it’s the pizza Making digital ordering affordable Asia by numbers (figures in US$)
market. The region’s leading pizza chains Of course, while online delivery growth should • Indians access the internet through Online delivery outpacing traditional
have seen enormous digital ordering growth. be good news for fast food restaurants, it can their mobiles nearly 80 percent of
be difficult finding an affordable service. As restaurant dining
the time In India, where the biggest market player
Pizza Hut's digital mix of in the UK, the leading aggregator solutions • The food order and delivery market is Foodpanda, the key driver for online
charge exorbitant commission fees which
orders is around 50% while take chunks out of a restaurant’s online
expanded by 30 percent from 2015
ordering is noted as a lack of time to go out
to 2016
Papa John's and Domino's are profit. However, also like the UK, alternatives • The online food and delivery business and dine.
both seeing well over 60% including own-brand platforms are gaining in is worth $15bn in India but 80 percent
popularity. Preoday is behind the upcoming Here the overall restaurant industry grew 11
penetration. launch of a new aggregator solution in North
of online orders in India originate
percent from 2015 to 2016 but was outpaced
from just five cities
America, set to provide a cost-effective • 20% of the world’s population lives by food order and delivery which expanded
solution for restaurants and to offer greater in China by 30 percent. As we reach the end of 2017,
access to customer data and intelligence than • The number of online users in the we would expect online orders to have
current market vendors. Chinese online ordering and deliver escalated further.
market has exceeded 200 million
• Ordering through apps and other digital
North America - key takeaways interfaces accounts for 40% of all
• Big brands are building their own digital orders
ordering platforms
• Where in-restaurant dining is
900
stagnating, ordering for home delivery
is increasingly popular 800
• Online delivery is already a significant part
of all delivery orders and is growing 700
That’s a figure eating into phone-based orders • Digital ordering is experiencing a strong 600
as well as in-restaurant ordering. upward trend - particularly in pizza
restaurants 500
Figures aside, Amazon’s entry into the food • Amazon Restaurants is an indicator of
delivery space is a clear indicator of the 400
the potential for the industry
potential this market holds. Amazon doesn’t
do anything unless it sees a clear path to 300
profit and room for significant expansion. 200
In September, the retail giant announced it will Visit our website to find out how you create
work with restaurant delivery service group your own aggregator or local marketplace 100
Olo to bolster its Amazon Restaurants delivery solution.
0
2000 2007 2013 2016 2021
Growth in India’s Internet Population (millions)
10 Contents The Restaurant State: A Global Analysis 11Asia
Internet access presents a barrier The success online food ordering companies China
While much of India’s population still lacks have found in the country is centered around
access to the internet, this is slowly changing. the country’s biggest municipalities; more than The biggest population on earth A cashless future
Greater internet penetration means more 80 percent of orders for these companies China is one of the world’s largest and most One factor aiding in the growth of mobile
people are connected to the World Wide Web come from the top five cities. Yet, despite populated countries; in 2013 it was estimated ordering in China is the country’s movement
than ever before. Moreover, when it comes to this, the online food ordering and associated that 20% of the world’s population lived towards being a cashless society. Already
accessing the internet, Indians are apparently within its borders. Boasting a population of paper money and coins are being used less,
delivery business is flourishing. Said to be
more mobile than the rest of the world. Half 1,379 billion, the national food and beverage with mainland Chinese stores and services
of the world’s internet users went online in worth a sizeable $15 billion, it is experiencing market is, as you might expect, gargantuan.
10 percent year-on-year growth. increasingly requesting payment from mobile
February 2017 using their mobile; in the UK With an average annual increase of 11.7%, in
and US, where more than 80 percent have 2015, its revenue has now exceeded 3 trillion pay apps like WeChat Pay and Alipay; $5
access to the internet, a third of internet Awash with potential Yuan (US$ 455,297.4m). trillian in 2016 according to data cited by
traffic is via mobile. In India, however, mobile That Google sees potential in the market Hillhouse Capital. This shift in attitude plays
is by far the most common tool: while those can be observed by the launch of its Areo The Chinese market is known to be naturally into the digital ordering of food;
in India are keen to use their mobiles to order restaurant delivery platform in April 2017; technologically advanced and this is reflected China is a country where a love of mobile
their food, they are demanding as to ordering UberEATS followed suit in May. Indeed, in the growth of online and mobile ordering in technology, speed and convenience is driving
perfection. Research by Business World market data suggests that restaurants using the country. Research from China-based Daxue industry changes faster than anywhere else.
showed that punctuality was clearly the most mobile apps are prospering; mobile ordering Consulting shows that ordering through apps
important factor for consumers with 87 percent systems get 23 percent more check-ins on and other digital interfaces accounts for 40% It really shouldn’t be a surprise that the
of those asked considering only a 10-minute an average, and 70% of all food delivery or of all orders. We are also told that 18.5 percent online takeaway market in China is the
delay acceptable. of the population, or 256 million people, used largest in the world.
takeout orders are places via mobile in the
online food ordering services in China in 2016,
country. a number that is expected to grow to 346
Difficult past, bright future?
Despite the success of the smartphone, the million by 2018. These are amazing figures
The Indian online ordering and delivery considering that digital ordering services
market restaurant in India has faced difficult market is brimming with potential despite already cover 1,300 cities; the market is
times. Consultancy firm, RedSeer commented still being in its infancy. When compared expected to reach a value of over
that: “The Indian online food delivery industry to other regions, its penetration is minimal
experienced many roadblocks in its growth
story in 2016, with multiple players scaling
and venues rely predominantly on the large,
multinational food aggregator platforms.
240 billion yuan
down their operations or shutting shop. This
was also visible in low investor sentiment
Online orders represent a tiny 2 percent of (US$37 billion)
wherein the industry saw a total funding of
restaurant takeaways compared to 13 percent in
the US, and 32 percent in the UK (according to
by next year.
less than $80 million in 2016 against $500 RedSeer). Still, much of this can be attributed to
million same period year before.” the country’s lack of internet access.
As internet and mobile growth continues,
online ordering should do the same, and
venues may start to look at alternative ways to
reach out to their mobile customers.
12 Contents The Restaurant State: A Global Analysis 13Asia Australasia
Market dominance Where market barriers are slowly being dismantled
You would imagine that such a large territory Asia - key takeaways
would support hundreds of industry vendors, The impact of online ordering to date has
• Online ordering is strongly focused
and yet the market is actually dominated by Australasia by numbers (figures in been measured by YouGov which found
on five key cities in India - there’s
just two core companies: Meituan Dianping, AUS$) almost half of Australians ordered food via
limited movement outside of these
backed by Tencent, and Ele.me, its main
areas • Australian restaurant industry revenue an app in 2016. Further evidence of growth
investor being Tencent’s rival Alibaba, also is expected to surpass $30 billion by within the market is provided by a National
the owner of the South China Morning Post. A • In China, there are 1,300 cities active 2022 Australia Bank report showing 5.8% of
third large operator, Baidu Waimai, backed by with digital ordering and this number • Just Eat bought out the Australian Australia's $20.1 billion online spend is
Baidu, was sold to Ele.me, meaning that the will increase company Menulog for $855 million down to take away sales.
market is now essentially a duopoly. • In India, limited internet penetration is • Half of Australians ordered food via
preventing the market from reaching an app in 2016 Market consolidation
This is something we don’t anticipate its full, considerable potential • 5.8% of Australia’s $20.1 Online and mobile ordering isn’t new to the
billion online spend is down to take region. Back in 2013, PayPal announced
changing; there seems surprisingly little room • Mobile is the only way forward in away sales
for new market entrants in China. As these China - nowhere else in the world is it that more than 2,000 Australian restaurants
• In New Zealand 53% of consumers let their customers use phone apps to
two companies start to corner consumers as pervasive has purchased takeaways thinking
in smaller cities we would expect them to order drinks and meals. Still, when the
• Despite its size, the Chinese market is that they are more affordable than
online ordering and delivery companies first
branch out with new offers products and controlled by two main players, cooking the same meal from scratch.
services that keep users loyal and block future entered the region, there were questions as
allowing little room for new entrants to whether the industry could sustain all of
disrupters. Chinese companies are known to
evolve, replicate and adapt at speed when
• In India, Foodpanda is the largest the emerging companies. To an extent this
player, but the market hasn’t settled Australia has proved true, companies have come and
challengers try to break in; it will be this that
and others may yet find dominance Small but confident gone and international giants have absorbed
ensures the two players remain the major
Forecasts for the market are positive. smaller, local businesses. In 2015, for
market forces.
Financial researcher IBISWorld predicts example, Just Eat bought out the Australian
revenue growth of 2 percent for the company Menulog for $855 million while
If you’d like to find out how mobile and restaurant industry in 2017/18 (reaching $21 Delivery Hero acquired Suppertime.
online ordering can help your business, billion) and expects that to reach 5.8 percent
check out our Complete Guide to Online in 2018/19, with revenue then surpassing $30
and Mobile Ordering. billion in 2021/22.
There is considerable confidence in the
market and again, the new breed of online
ordering and delivery technologies is making
the difference to the way people respond
and behave around mealtimes. Here though,
other names are receiving prime exposure;
Delivery Hero, Menulog and Foodora, along
with Deliveroo dominate the Australian online
food aggregator space.
14 Contents The Restaurant State: A Global Analysis 15Australasia Conclusion
New Zealand “New Zealand is following a trend that is well The state of the food and drink - or restaurant Preoday provides these added benefits at
established in other countries where healthier market - looks very different now to how no extra cost to you. You can discover the
The importance of health options and upmarket food delivery is growing it presented just five years ago. No doubt, top five reasons our clients love working
New Zealand is taking a similar path to the one and becoming commonplace.” another decade will see it represent with us and using the Preoday platform
seen in Australia, with many of the same market differently again. But at this moment, many here. Once you’d done that, send us
leaders in play. As in other regions, the uptake of The future looks bright for online ordering and companies are still figuring out how to make an email, we’ll be ready to answer your
online ordering and then delivery is increasing delivery in Australasia but the question as to online ordering, and then delivery, profitable questions on trends in the market and on
as a result of consumer time constraints. It whether the crown will go to the technology while still meeting customers' needs. How our technology.
seems that humans the world over are turning aggregators or to owned and venue branded close they are to discovering the answer
to takeaways to counteract increasing work apps remains to be seen. Venues are starting varies from region to region as you've now While some regions are ahead of others
commitments and time pressures. to develop their own branded ordering seen. in terms of revenue, technology or market
platforms, but they are perhaps behind the penetration, in all of them, mobile ordering is
Back in 2015, research showed that curve of the rest of the global industry. The best advice we can give any of these becoming a crucial part of restaurants' plans
companies is this: consider the opportunities and a way to enhance sales. Online orders
provided, not by aggregator technologies, often result in larger basket sizes and greater
53% of New but by own branded platforms. While the customer experiences lead to improved
Zeland's consumers Australasia - key takeaways Deliveroos, Just Eats and Grubhubs of the loyalty and a better rate of repeat ordering. If
purchased • The markets in Australia and New world charge commission fees for every order you picture the market a decade from now -
takeaways thinking Zealand are smaller than those in received, many white-label technologies in North America, India, the UK or Australasia
that they are more North America and the UK but are have predictable and manageable monthly - you should see mobile ordering sitting at the
affordable than expected to grow costs. And, while there are few added heart of the customer's experience, no longer
cooking the same • In Australia, company consolidation benefits to partnering with an aggregator, just as a point of differentiation.
meal from scratch. and acquisitions have led to a small white-label platform providers come with
number of dominant market players extras including access to customer data Preoday is active across the world. From
Since then, what has changed is that the • Online ordering and then delivery and in-built marketing functions such as push sport stadiums in Australasia, to theatres
locals are said to be setting aside their love notifications. The data restaurants collect can in North America and restaurants in the
is seen as a way to combat time
of full-fat food for health and mindful eating, help them determine customer preferences, UK and across Europe, we serve food
constraints
though Nielsen might disagree! adapt their menus, assess performance and companies of all types and sizes. We know
• Mindful eating is a trend that is even understand each customer's inclination your market and we can help you grow
expected to impact the online menus to spend. within it. Email us on hello@preoday.com
Menulog, which has a stronghold in both
Australia and New Zealand, and partners with of restaurants in New Zealand and let us explain how.
more than 850 restaurants in the latter, claims • A perception that takeaways are a
the health movement is so marked that is is ‘cheap’ option has driven orders in
deliberately partnering with more restaurants the region
that offer healthy options to meet demand:
Email hello@preoday.com to find out how we can support
your online and mobile ordering ambitions
16 Contents The Restaurant State: A Global Analysis 17About Preoday Preoday builds bespoke e-commerce platforms offering mobile and online ordering along with strategic solutions such as GDPR compliancy services. Preoday enables hospitality businesses to offer branded online and pre-ordering facilities to customers purchasing food, drink, merchandise and making bookings. It provides a white-label service to companies across the hospitality industry, from quick service restaurants and cafes, to theatres and stadiums. Preoday works both directly with hospitality businesses and partners including resellers, ticketing agencies, technology providers and food tech start-ups. For more information, visit www.preoday.com 18 Contents
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