Delivery trends in the food industry! – Supply Chain Game Changer™

It has never been easier for food companies and the food industry to reach their customers. Restaurant delivery has grown 20% in the last five years; Though estimates vary, online grocery sales will grow to as much as $220 billion by 2023 — 40% of all restaurant sales.

Online grocery stores may be lagging behind restaurants in adopting online delivery, but it’s definitely growing. Deutsche Bank estimates that the online grocery market will grow from $24 billion to $120 billion by 2025.

One reason for this growth is the recent proliferation of delivery models and fleet types: same-hour, same-day, and next-day delivery; Single fleets, multi-fleets, crowdsourced fleets and in-house fleets; Delivery from store, curbside pickup, delivery from robot warehouses and so many others.

With all of these opportunities comes no small amount of competition, and restaurants, grocers, and other food suppliers need to keep abreast of where the market is headed.

Based on real-world data and forecasts from industry experts, here are six key trends that are shaping food delivery and will continue to do so for years to come:

Key food delivery trends to expect in 2019:

  • Increased delivery to third party suppliers
  • Delivery fleets of the in-house restaurants
  • Prioritize tracking of delivery dates
  • Tech giants step into food delivery
  • Rapid growth of online groceries
  • A surge in grocery delivery subscriptions

Third Party Delivery

Third-party delivery continues to grow as its use grows in the restaurant and food industries.

Increasingly, restaurant chains are partnering with multiple third-party fleets to expand their delivery footprint across their locations, at any time of the day.

While this tactic expands the chains’ geographic reach and pool of potential customers, it also means that a significant portion of their supply operations is no longer under their control.

Some restaurants make up for this by using food delivery management software that gives them visibility and control over their delivery operations and KPIs, even for data sourced from third parties.

In the US grocery market, Instacart has a fairly strong influence on delivery services, although competing suppliers are slowly penetrating Instacart’s shopping carts. Getir, another third-party delivery app, also plans to expand its operations in the US in 2022. With their promise of delivering an “ultra fast” service with lots of special offers and Getir promo codes, the company sounds promising and could be one of those strong competitors.

As grocers become more aware of the risks of single-vendor deliveries, expect more grocers to use multiple fleets and manage their delivery operations in-house using grocery delivery management software.

Delivery fleets for in-house restaurants

Some companies are taking a completely different approach than the one outlined above by doing something pretty radical: building their own delivery fleets.

Panera started its own delivery operation back in 2016, bucking the trend at the time. Today, it’s one of the few restaurant chains that doesn’t give a large portion of its delivery revenue to third-party vendors.

Today, companies like Chick-fil-A are exploring in-house delivery and the great benefits it offers, such as full transparency and control over customer data and branding. To smoothly manage these operations internally, restaurants need delivery shipping software that uses automation to assign drivers to each order.

When delivery is at scale, with tens of thousands of orders per day (or more), the logistics behind it become increasingly complex, which is why chains that manage delivery across multiple restaurants see the most benefit from using delivery management software systems .

track delivery dates

With so much of the delivery flow in the hands of third parties, it’s no surprise that food suppliers are turning to data collection and analysis to better understand their delivery operations.

In April 2019, McDonald’s spent $300 million to acquire a big data startup. The billionaire conglomerate has understood that the best way to stay ahead of the competition is to measure, analyze and improve its performance.

Having this insight into your own delivery operations is invaluable, and the benefits span everything from relationships with external fleets and aggregators, to providing error-free deliveries, to supporting other areas of your business like customer care, marketing and branding.

Trend: Tech giants are moving into the food industry

In 2017, Amazon made waves by acquiring Whole Foods to conquer the grocery market. Now Uber is planning to release a food platform and push food as a business model.

Just this month, Google announced that it would enable food ordering directly from search and maps. Partner restaurants integrate orders with search and map functionality, allowing customers to order directly from the search results page. Deliveries, including refrigeration, will be carried out by the same fleets currently used by the restaurants.

Online grocery delivery is growing rapidly

For grocers looking to expand their delivery operations, the biggest challenge is beating the strongest online grocery players. It won’t be easy as most businesses in this traditional market don’t have delivery automation and often rely on a single delivery provider to reach their customers.

However, there is good news: On top of their existing customer relationship, brick-and-mortar grocers can offer competitive SLAs by using their convenience stores as fulfillment centers, as Co-op recently did.

Larger chains may also open dark supermarkets in urban areas to reach customers faster and create convenient fulfillment options like buy online, in-store pickup, as Costco plans to do.

Either way, online grocery delivery is inevitable: customers are demanding more convenience and control over how and when they order groceries, and grocers are bound to want the business growth that on-demand grocery delivery can offer

It will be interesting to see which grocers become strong players in the delivery market this year.

Trends in grocery delivery subscription

The trend of delivery subscriptions has found a perfect match in both specialist online grocery delivery and the millennial generation. Broadly speaking, people born between the early 1980s and mid-2000s are the largest age group in the US and are driving massive changes in the food delivery industry.

Millennials are the first generation to prefer staying at home to going out, and that often means dining out with a bespoke meal set delivered to their door. Prepared fresh meals, menu kits using raw ingredients, and other time-saving at-home grocery kits are top draws for the 55% of millennials who value convenience over consistent taste, according to the Food Information Council.

These subscription boxes are also aimed at consumers interested in trying new or different cuisines, which the booming grocery market has made possible. Add to this the increasing number of consumers looking for vegan, organic, gluten-free, paleo or ethical groceries, and you’ll understand the continued growth of specialty grocery subscriptions.

With online orders growing faster than ever, grocery operators have an unprecedented opportunity to increase profit margins and customer reach. The challenge will be to balance customer demand for fast, convenient and transparent delivery with the logistical complexity and cost required to meet those demands.

Food industry article and permission for publication here provided by Raanan Cohen at bringg.com. Originally published on Supply Chain Game Changer on August 28, 2019.

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