Industry Analysis

A Comparative Analysis of the Growth Rate of the Food Delivery Industry From 2010-2020

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We have compiled data on four areas for the food delivery industry. These are general data on the industry, data on the recovery from the 2003 SARS epidemic, data on recovery from the Great Recession, and forecasts for recovery from the COVID pandemic.

In this other post, you will discover A Comparative Analysis of the Growth Rate of the Corporate Events Industry From 2010-2020. Check out!

General Data

  • Statista reported that the online food delivery market size was $76.2 billion in 2017, estimated to be $136.4 billion in 2020, and projected to reach $182.3 billion in 2024.
  • The results of a survey from 2011 found that only about 25% of U.S. restaurants had some form of online ordering.
  • In 2012, online orders only accounted for approximately 13% of the $70 billion takeout and delivery market. Projections made in a 2015 article indicated that by 2022, online orders would exceed offline ordering. However, the 2012 data also reported that online food ordering was worth about $9 billion in 2012, but there was no breakdown by pick up and delivery.

Online versus Offline

  • A report published by Daedal Research in July 2014 had data on the global takeaway food delivery market, but all the relevant information was behind a paywall.

SARS 2003 Recovery

  • There was very little public data on the food delivery industry prior to 2012. However, we did find reporting from May 2003 that stated the takeaway industry was valued at £2.5 billion. To convert this to dollars, we used historical data on the exchange rate and found that the average exchange rate for 2002 was £1=$1.5. Therefore, in 2002, the value of the takeaway industry was $3.75 billion (£2.5 billion * 1.5). Although not fully described, it is believed this figure includes both pick up and delivery.
  • Reporting in the New York Times in June 2006 found that curbside takeout, “where customers can have meals delivered to their cars as they sit idling outside the restaurant,” grew about 10% annually in the U.S. in the previous three years. Although this is not the same as food delivery, it represents a time when takeout expanded from 100% delivery models like Dominos, to casual restaurants offering their food to go.
  • In the U.S., Outback increased “its takeout sales from $104 million in 2000 to $274 million in 2005, or 11 percent of the chain’s total U.S. revenue.” As with other reporting, the portion of this attributable to delivery only was not publicly available.
  • A study published in April 2008 looked at the economic impact of SARS on various sectors of the economy, one of which was restaurants. It showed that Hong Kong did have a dip in restaurant revenue in the first and 2nd quarters of 2003, but that sales had recovered almost to pre-SARS levels by the first quarter of 2004.

Hong Restaurant Revenue

  • In Canada, revenue in the accommodation and food industry was already declining prior to SARS. However, that decline was sharp in March and April 2003. It wasn’t until about 1 year later when the industry fully recovered.

Canada accommodation and food sector

  • The overall conclusion of the study was that although there was an impact on the economy, and specifically the restaurant industry, due to SARS, it was mainly in China and Hong. “It should also be noted that in many cases the losses were succeeded by (often equivalent) gains in the following month, quarter or year, such that over a year the effect was marginal at best. The impact from SARS, where it occurred, was therefore usually very short-term.”
  • It can be concluded from the data found that there was very little recovery needed in the food delivery industry because the impact from SARS was relatively minor.

2008 Recession Recovery

  • In the UK, Dominos reported that their takeaway business had grown by 75% in 2008, while Just-Eat, a website where consumers can find and order food from a variety of restaurants, had growth of 250%. It is not clear how much of these orders were delivered.
  • A white paper published by Cognizant in 2009 reported that online ordering had taken off in the casual dining space, while quick service restaurants had not yet embraced it. The paper did not delineate between online orders that were picked up and those delivered.
  • Since data specific to restaurant delivery was not found publicly available, we pivoted to look at the restaurant industry as a whole, hoping that some insights found would be relatable to the delivery segment. Reporting by Duff & Phelps from 2011 provided revenue numbers for the U.S. restaurant industry from 2006 to 2010, with projections for 2011. Of note, while revenue increased every year, real inflation-adjusted growth declined in 2008, 2009, and 2010.
  • According to the graph on page four of the report, it took until about the third quarter of 2010 before same store sales for all restaurant segments showed positive growth.
  • Reporting in the New York Times found that sales in the restaurant industry, in inflation-adjusted terms, had never experienced even two years of real sales decline. Due to the recession, there were three.
  • Tracking the Restaurant Performance Index from 2004 through today provides a clear picture of how the industry has fared in that time in the U.S.

Restaurant Performance Index

  • It can also be seen in the above graph that the impact to the restaurant industry due to COVID was more severe than the 2008 recession. The drop off in performance occurred much more rapidly and sales declined more steeply.

Post-COVID Forecasts

  • A report from Morgan Stanley highlights five trends they expect to see long term as the restaurant industry recovers from the pandemic, and one of them is continued increasing market share of digital and delivery. They propose that “delivery share may have moved forward 2 to 3 years due to COVID-19.”
  • Takeout accounted for about 90% of quick-service restaurant sales in 2020, up from 63%.
  • A survey conducted in April 2020 found that COVID “has had a net positive impact on frequency and spending on online food delivery and the majority of new users (57%) are likely to use it again.”
  • Similarly, meal delivery orders increased by 67% in March, while restaurant traffic overall declined by 22%.
  • Technavio produced a market report for the online on-demand food delivery services industry that included the impact of COVID. They project that growth in the industry will average almost 7% per year through 2024, although in 2020 there will be a decline of almost 5%.

Online food delivery growth

  • This report from Goldstein Market Intelligence has an in-depth section on how COVID will impact the online food delivery market, but it is behind a paywall.
  • Reporting by Statista found that in the U.S., consumers were more likely to place orders directly through restaurants’ websites rather than through third-party delivery services.
  • It was reported in September 2020, that in India the food delivery industry had recovered to 85% of pre-COVID levels. By October, they were at 100%.
GLENN TREVOR
Glenn is the Lead Operations Research Analyst at Simple Manifestation with experience in research, statistical data analysis and interview techniques. A holder of degree in Economics. A true specialist in quantitative and qualitative research.

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