Growth in the foodservice delivery market has slowed notably following the pandemic boom. Market growth in 2024 will be supported by inflation, continued expansion and innovation targeting increased transaction value and additional missions.
Day-part expansion
Pandemic-driven behaviours including a wider variety of day-part and weekday occasions reversed across 2023 and there is more to be done to cement habitual delivery behaviours in UK consumers. Dinner increased its share of occasions to 63.5% (+0.7ppts) in the year to February 2024, with shares of all other day parts bar lunch declining from already low bases. The growth in dinner was accompanied by share growth in consumers ordering delivery at the weekend for a treat – the opposite - habitual weekday missions – are needed to increase to drive higher frequencies of delivery in the UK.
Several operators are attempting to shift behaviours around delivery, capitalising on the growing share of lunchtime ordering, +1.4ppts to 17.5% of occasions. The launch of Pizza Hut’s new melts targets the weekday lunch day-part with messaging aimed at scrapping the standard sandwiches and upgrading your lunch. The launch taps into convenience missions for busy consumers while highlighting the joys of solo indulgence. Domino’s recently announced plans to expand its lunchtime offer with the introduction of a £4 lunch deal, targeting value-led consumers and positioning it as a competitor in the lunchtime meal deal landscape.
White label services
White-label platforms enable operators to offer delivery services directly through their own websites and apps. This keeps the customer’s interaction within the brand’s ecosystem, ensuring control of the customer experience, from browsing the menu to placing an order. This allows brands to maintain their identity and offer a seamless experience that aligns with their values and customer service standards.
Collaborating with Uber Direct, brands including Pizza Express, KFC and Burger King have seen notable growth in delivery volumes and have enhanced in-house delivery capabilities, providing customers with a branded ordering experience directly from websites or apps. This approach benefits from Uber’s delivery network while keeping the customer experience aligned with the brand’s values.
Aggregator operational efficiencies
Delivery aggregators are gradually turning the tides of unprofitability and are prioritising operational efficiency and automation. Strategies are including delivery model simplification, order pooling and algorithm optimisation to drive profitability and streamline services. Platform enhancement concentrating on personalisation, targeted promotions, and the development of cohesive, integrated ecosystems is driving efficiencies and sales across the key players Just Eat, Deliveroo and Uber Eats.
Uber is leveraging its multi-service platform to boost its cross-selling capabilities. Harnessing customer data from its Rides vertical to identify opportunities for promoting the Eats offerings, creating a seamless cross-category experience. Uber is using its data and scale to offer marketplace-centric advertising, which connects merchants and brands with their platform network driving profitability for the aggregator.
Foodservice delivery is forecast to reach a value of £15.7bn in 2027F, a compound annual growth rate (CAGR) of +3.1% from 2024F-2027F (Lumina Intelligence, March 2024). Opportunities around different day parts and expanded ranges must be realised to unlock further growth in delivery. Increasing customer order frequency through encouraging a wider repertoire of occasions will be a key lever of growth. Optimisations in delivery platforms and services including artificial intelligence-driven order assistants, to prompt additions and drive transaction value will be another market bolster.
For more information on Lumina’s Foodservice Delivery report, please click here.
