Online food ordering is seemingly on unstoppable rise. It’s following the modern trend in ordering patterns in every sector from supermarkets to organic food companies to books, clothes, and taxis. To take one example: in the year 2000 Dominos was getting 100,000 online orders, by 2015 it was taking in 600 million! They took their first mobile app order in 2010 and last year took around 350 million.
This trend fits with the idea that Ireland is heading for a more cashless society. New figures from the Banking & Payments Federation Ireland (BPFI) show that consumers are increasingly using cards instead of cash.
Last year, the value of debit card payments exceeded the value of ATM withdrawals as consumers opted to pay with a card rather than with cash. Irish consumers made debit card payments worth, on average, € 7,442 in 2015, compared with € 5,388 per head in ATM cash withdrawals.
The BPFI says that consumers’ traditional reliance on cash for low-value transactions is likely to lessen in the coming years with the wider availability of contactless cards. Cards are of course used in all online purchases including food ordering from takeaways.
Deliveroo
New food delivery companies that provide food from a variety of restaurants are making huge inroads against traditional restaurants that provide their own delivery service.
Deliveroo, a UK based start-up operating in many countries including Ireland, provides a delivery service from a range of restaurants with an average delivery time of 32 minutes. Unlike its rivals such as Just Eat, Deliveroo handles the delivery services on behalf of restaurants – opening up the home-delivery market to outlets that weren’t offering it as an option – in exchange for a sizeable cut of the revenue. The bulk of the company’s revenue comes from charging restaurants a 30% commission on orders, while customers also pay €2.50 per delivery.
They recently announced they are looking to set up their own kitchens in Dublin as part of a plan to bring their delivery network to more parts of the city. Deliveroo launched in the capital last year and has been expanding into other parts of the country since then. It’s currently in Cork, Galway, and Belfast and soon hopes to operate in Limerick and potentially Waterford and Derry. It currently has 200 restaurants on the books as well as 400 drivers and riders bringing the food to customers.
The company limits the radius in which it will deliver to a maximum 2.6km from the restaurant to the customer. Deliveroo has said the tight area ensures its food is received quickly, part of its pitch as a more ‘high-end’ delivery option.To get around the problem of a lack of suitable restaurants in regions where there is still customer demand, Deliveroo also plans to roll out its ‘roobox’ network in Dublin.
To get around the problem of a lack of suitable restaurants in regions where there is still customer demand, Deliveroo also plans to roll out its ‘roobox’ network in Dublin.The scheme involves the company buying up its own kitchen space to offer to existing restaurant partners so they can prepare their food fresh in under-served areas.
The scheme involves the company buying up its own kitchen space to offer to existing restaurant partners so they can prepare their food fresh in under-served areas. In London, Deliveroo has competition on the ‘high-end’ delivery sector from Uber Eats – presumably coming to a town near you soon – London is the second city in Europe, after Barcelona, to have access to the app, which uses the same tracking features and cashless technology as the original Uber. Customers can choose from the menus of an initial 150 restaurants in central London. The app shows an average of around 20 participating restaurants in the immediate area, their menus and photos of meals, and users can enter any special instructions or allergy notes.
Just Eat
Just Eat is a well-established platform that acts as an intermediary between restaurants and customers who want to order food deliveries online. They take a signing-on fee and commission on each order. Currently, there is a debate over the advantages and disadvantages of signing up to the service.
Two of the biggest federations of takeaways – representing Chinese and Asian restaurants – have questioned the benefits of such platforms. Apart from the negative associations that an underperforming restaurant can get if it is kicked off the site, there are other potential dangers. Yawar Khan, the chairman of the Asian Catering Federation, told The Independent that the websites “were good for our members when it started, as it would give a boost to their business, but now so many takeaways are on the platform, it is no longer a benefit, with many of the same customers returning, rather than new customers joining.”
Mr. Khan, whose organisation represents 1,500 takeaways, said it was now encouraging its members to take control of their own online ordering systems by setting up their own websites in an attempt to undercut Just Eat and Hungry House and avoid the high fees. Having your own app or ordering system eliminates the problem of having your immediate rivals visible beside you on the Just Eat platform. Just Eat typically charges each takeaway a joining fee and takes a cut of every order received – of around 12 percent. Extra charges can be added to allow a takeaway to appear higher up the list.
Mr. Khan added that Just Eat also pushed its listed businesses to offer 20 percent off online orders – which the takeaway must cover, further squeezing profits, although Just Eat insisted this was mainly Mondays to Thursdays during quiet periods.
Domino’s
Domino’s pizza is a more traditional business model of a delivery food business than Just Eat, Deliveroo or Uber Eats but the success of their smartphone app has led to their online ordering overtaking phone ordering in 2015. The app has been downloaded over 10 million times. An additional digital innovation that Domino’s are using in the US, that will presumably come here, is where hungry customers can tweet a pizza emoji to the companies twitter account to get their delivery.
The Future
The future will be a combination of restaurants using the well-known ordering apps like Just Eat and Deliveroo, and independent businesses designing their own ordering systems as a way of taking back control of their customer base and maximising the profits they can make by bypassing the fees to pay. One way to do this is to focus on a local strategy and take advantage of the fact that an independent outlet personally knows a lot of their customers. If you can use the big international apps to make contact with new customers and use your own system to keep them coming back you could have the best of both worlds.
