The delivery battle is heating up

Restaurants and foodservice operators of all shapes and sizes are either grappling with how to use home delivery to their best advantage or they are at the least being caught in the cross-fire as the rival aggregators and delivery firms suck in more consumers as they battle it out for dominance.

From the point of view of companies such as Deliveroo, Just Eat, UberEats and the myriad of other smaller companies it is very much a fight worth having because the market for takeaway foodservice is on fire. It has grown by a massive 73% over the past decade to £4.2bn in February 2018 and the expectation is it will hit the £5bn level over the next two years, according to The NPD Group.

The debate has been raging for some years about the pros and cons of these companies. While they satisfy the insatiable demand for home delivery by consumers it is the economics when used by foodservice companies that have been under some question. Although restaurants have railed against the fees charged –and the rich data collected – by the aggregators it has not been plain sailing for these organisations either.

Be in no doubt about it, they are in the midst of their own tough battle. As they compete for customers – and restaurant clients – in a rapidly developing market where large amounts of investor money are committed, there has been a constant stream of announcements from the key players Just Eat and Deliveroo. These have introduced a raft of new services that have sought to highlight their points of difference in this hard-fought market.

In only the past week we have seen Deliveroo announce it is giving away £10m of share options, which extends its existing options packages beyond senior members of staff to all its 2,000 employees. It highlights just how intense the competition is to attract the required numbers of skilled personnel. Although the self-employed couriers are not included in this shares windfall, Deliveroo recently pledged to give all its 35,000 riders around the world free access to an insurance scheme. This followed similar action by UberEats in Europe.

There is an equally hard-fought scrap going on for restaurant partners. Just Eat last year tied-up with Funding Circle to offer its takeaway partners discounted access to loans that are potentially more attractive than traditional bank funding. It has also recently announced the offer of a 45% discount on electric scooters and access to exclusive green energy deals through a partnership with Make it Cheaper. Maybe these financially supportive initiatives from Just Eat should not be too surprising as its chief executive Peter Plumb previously spent ten years running Moneysupermarket.

Likewise, Deliveroo has also launched a support scheme for its restaurant partners that can help them cut their everyday expenses – including energy bills, recruitment costs, printing services and business rate reviews. There is also the opportunity for those restaurants that exclusively use the Deliveroo platform to access its staff benefits portal – that includes discounted cinema tickets and meals out as well as 25% off relevant training courses.

Two other recent initiatives at Deliveroo seek to further create an exclusive (and differentiated) restaurant base. The company has set up a rotating pop-ups proposition, which involves giving street food traders access to its Editions “dark kitchens” for 12-week stretches. The increasingly important Editions division is also integral to Deliveroo’s most recent announcement it is launching a £5m fund for investing in UK restaurants. The aim is to fund restaurants and celebrity chefs that want to expand into new areas of the country or develop new bespoke menus that can be delivered by its couriers.

At the heart of all these various initiatives is the objective of creating much greater loyalty around the aggregators – whether it is with their employees, restaurant partners, or customers. The leading players in the food home delivery market recognise they need to keep all these stakeholders happy in order to deliver on the expectations of their other key stakeholder – the investors that are fuelling the ongoing home delivery battle. Expect the constant stream of announcements and initiatives to continue.