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How the world eats is changing dramatically. A little under two decades ago, restaurant-quality meal delivery was still largely limited to foods such as pizza and Chinese. Nowadays, food delivery has become a global market worth more than $150 billion, having more than tripled since 2017. In the United States, the market has more than doubled during the COVID-19 pandemic, following healthy historical growth of 8 percent.

The advent of appealing, user-friendly apps and tech-enabled driver networks, coupled with changing consumer expectations, has unlocked ready-to-eat food delivery as a major category. Lockdowns and physical-distancing requirements early on in the pandemic gave the category an enormous boost, with delivery becoming a lifeline for the hurting restaurant industry. Moving forward, it is poised to remain a permanent fixture in the dining landscape.

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This trend toward convenience has grown more pronounced during the pandemic. Between March and May 2020, when lockdowns in Europe and the United States were the most severe, the food-delivery market spiked. Significantly, it has maintained that trajectory, continuing to grow throughout 2020 and into 2021.

As the COVID-19 pandemic began to pose an existential threat to restaurants, delivery became a saving grace. Many restaurants that delivered through online platforms were able to grow their delivery revenue throughout 2020. Even so, their overall profits generally declined, occasionally resulting in negative margins (Exhibit 3). This trend may have been accelerated by dining restrictions imposed during the pandemic, but the gap between delivery-fueled revenue spikes and profit declines was already an underlying issue.

Increasing total sales through delivery may look like a smart way to dilute fixed costs, but restaurants that focus too much on increasing deliveries could cannibalize their in-house dining and compromise the quality of the dining experience, which could eventually reduce the base over which their fixed costs are spread.

The pizza segment sheds light on how the broader restaurant industry may grapple with the delivery conundrum. Most pizza restaurants have chosen either dine-in or delivery as their primary offering and have anchored their business models around it. It would not be surprising to see restaurants in other segments of the market also deciding to specialize in the experiences they offer, with those built around the dine-in experience potentially choosing not to play in the delivery space, because of their inability to compete on margin. This would leave dark kitchens and other delivery-focused businesses to compete for delivery volume.

Already, many platforms are expanding the use cases for their logistics networks. This activity is likely to increase, with platforms improving their overall economic profiles by delivering other, higher-margin products in new categories such as alcohol, pharmaceuticals, grocery, and more. These new categories attract new customer segments, increase average order value, and allow for the stacking of deliveries to help maximize efficiency of each delivery run.

Delivery drivers must complete a certain number of deliveries per hour to make the economics favorable for them. In fact, time is one of the most expensive components of single-point delivery, with the physical handoff to the customer typically taking one to five minutes. As food delivery takes off in less densely populated locations, including suburban and rural areas, the service becomes more costly to both restaurant and driver.

For much of the ongoing pandemic, many people have had few other restaurant options than to order delivery and have been willing to pay a significant premium for the service. More than a year and a half into the pandemic, a growing number of consumers (particularly those who are vaccinated) are becoming more accustomed to ongoing restrictions and more open to dining out. As dining options begin to increase, customers will likely expect more from food-delivery services, prioritizing the following features:

Using the data generated through delivery platforms, restaurants can build custom menus for each consumer, increasing opportunistic sales, total order value, and conversion rates. End-to-end customization helps ensure that customer preferences, such as food allergies, are taken into account for every meal and that food recommendations are more accurate.

In a digital world, restaurants that enjoy a great deal of brand loyalty in their communities have an even greater opportunity to consolidate their position and grow their business by creating spin-offs targeting new demographics or meal occasions. Au Cheval, for example, the diner-style Chicago restaurant and bar revered for its cheeseburgers, has spawned Small Cheval, which offers a simplified menu. The potential to leverage brand equity in this way is greater with digital ordering and delivery, as consumers turn to valued brands regardless of where they are located.

Food delivery is a courier service in which a restaurant, store, or independent food-delivery company delivers food to a customer. An order is typically made either through a restaurant or grocer's website or mobile app, or through a food ordering company. The delivered items can include entrees, sides, drinks, desserts, or grocery items and are typically delivered in boxes or bags. The delivery person will normally drive a car, but in bigger cities where homes and restaurants are closer together, they may use bikes or motorized scooters.

Recently, online food delivery through third-party companies has become a growing industry and caused a "delivery revolution."[1] Nascent technologies, such as autonomous vehicles have also been used to complete deliveries.

Customers can, depending on the delivery company, choose to pay online or in person, with cash or card. A flat rate delivery fee is often charged with what the customer has bought. Sometimes no delivery fees are charged depending upon the situation.[2] Tips are often customary for food delivery service. Contactless delivery may also be an option.[3]

The first food delivery service was for naengmyeon (cold noodle) in Korea, recorded in 1768. Haejang-guk (hangover soup) was also delivered for the yangban in the 1800s. Advertisement for food delivery and catering also appeared in the newspaper in 1906.[4][5]

A meal delivery service (MDS) is a service that sends customers fresh or frozen,[6] prepared meals delivered to their homes[7] and offices.[8] These services individually package pre-portioned meals to assist with eating a healthy diet. These services cook and prepare meals for customers. Meals may come in small tupperware containers and are often labeled with nutritional information. There are also many options for specific diet types like vegetarian and vegan. These services often operate on a subscription business model rather than by individual order as in pizza delivery or with the broader category of online food ordering.

Meal delivery orders are typically on demand, intended to be eaten right away, and include hot, already-prepared food. While some service providers offer subscription services, ordering for delivery usually involves contacting a local restaurant or chain by telephone or online. Online ordering is available in many countries, where some stores offer online menus and ordering. Since 1995, companies such as Waiter.com have their own interfaces where customers order food from nearby restaurants that have partnered with the service. Meal delivery requires special technology and care, since the food items are already cooked and prepared, and can be easily damaged if dropped, tilted, or left out for long periods of time. Hotbags are often used to keep food warm. They are thermal bags, typically made of vinyl, nylon, or Cordura, that passively retain heat.[11]

In the Philippines, most commonly delivered meals are from fast food chains like Jollibee, McDonald's, Pizza Hut, Shakey's, KFC, etc. Orders are being done through their delivery websites, mobile apps, or by phone. Time of delivery usually takes around 30 to 45 minutes.

In China, consumers mainly place food delivery orders via smartphone apps, with the number of users approaching 500 million people as of 2020.[12] The transaction scale of China's food delivery market is expected to eventually surpass US $129.17 billion, an increase of 14.8% year-on-year.[13]

Grocery delivery companies will deliver groceries, pre-prep or pre-made meals, and more to customers. The companies work with brick and mortar stores[14] or their own line of grocery items. These orders are typically larger and more expensive than normal meal deliveries, and are often not meant to be eaten right away, rather they are to replace items someone has run out of, like flour or milk. They are almost always done online, and typically take at least one day to deliver, though some companies offer same-day delivery. Many delivery services are required to offer delivery within two hours because frozen and fresh foods must be delivered before they spoil.

Grocery delivery differs greatly from meal delivery in the sense that it is usually sent as a parcel through common mailing services like USPS or FedEx, if it is only non-perishables. Since non-perishable items are normally packaged before arriving at grocery stores, they can easily be repackaged and delivered to customers without any special care. Sometimes, dry ice is added to keep perishable items fresh. Fresh and frozen foods complicate delivery which is done, usually by store/provider employees or third party services.

The grocery delivery business emerged, with hundreds of niche delivery companies springing up offering a variety of different services from weekly grocery restock to pre-planned, pre-measured family meals to simplify cooking. Online retailer giants have hopped on board too. Amazon.com, for example, offers AmazonFresh delivery service. Amazon purchased Whole Foods Market in 2017,[15] and by 2018 Amazon had added Whole Foods items to its Prime Now service, for 2-hour delivery in certain markets.[16] 2351a5e196