Arguably, the foodservice delivery channel was a winner all round in 2020, reporting year-on-year growth of +48% and accounting for £2 in every £10 spent on the eating out market. Scratch beneath the surface though and some clear outperformers emerge, so who were the winners – and losers – of delivery in 2020?

Digging a little deeper into the Lumina Intelligence Foodservice Delivery Market Report 2021, there are some mixed fortunes behind an overtly positive set of headlines. Overall, the channel grew to the tune of +£3.7bn in 2020, but of course certain sub-channels, operators and delivery aggregators outperformed others in this high growth, but extremely competitive route to market.

Starting with sub-channels, branded traditional fast food is a standout winner, having seen its share of the foodservice delivery market increase from 4.8% in 2018 to 14.2% in the Lumina Intelligence forecast for full year 2021. This is unsurprising given the UK’s love affair with fast food (demonstrated in the queues seen when major operators reopened in June 2020 following around ten weeks of closure), combined with the fact that fast food travels well and is low ticket, facing into several barriers often associated with foodservice delivery.

Within fast food, McDonald’s and KFC were the standout performers, with delivery accounting for an increasing proportion of the sales mix for both operators – particularly KFC – helping to off-set losses from the prolonged period of closure in Spring 2020. Having expanded their delivery footprints in the year, both operators saw their share rise.

Conversely, the more mature delivery operators such as Domino’s and Pizza Hut, saw their share of (a much larger) market decline as competition intensified. These branded delivery-focussed fast-food operators saw share fall from 29.2% in 2018 to an anticipated 21.5% for full year 2021. However, the sub-channel continues to see respectable growth rates and let’s not forget that Domino’s remains the single largest brand in the delivery channel with a share of 12%.

Another sub-channel that has been squeezed with the rapid growth of delivery in 2020, and is consequently losing share, is independent restaurants. That said, a greater proportion of independents are expected to offer delivery going forward where it makes sense to do so due to customer demand or to maximise kitchen throughput at quieter times of day. Due to the sheer number of outlets in this sub-channel, Lumina Intelligence expects independent restaurants to lead absolute growth over the next three years.

When it comes to the delivery of the food itself, a smaller proportion of restaurants are doing it themselves (down from 19.9% in 2018 to 17.1% in 2021 full year forecast). This fall is particularly marked in London, where a host of delivery start-ups are providing alternate options for restaurant owners.

The aggregators

Just Eat has the highest consumer awareness of the delivery aggregators, at 76%, and has a national stronghold beyond London. However, with the emergence of new players and the growth of established rivals, Just Eat has lost share from 35.7% in 2019 to 29.0% in 2021. UberEats made the biggest share gain over the same period, to 11.3% share, gaining an impressive +5.4 ppt outside London and +6.0 ppt in the capital. This puts UberEats ahead of Just Eat in London in terms of delivery operator share but wasn’t quite enough to knock Deliveroo off the number one spot in the region.

Interestingly, two-thirds of the top 100 casual dining brands are opting to use more than one delivery aggregator, an increase of +81% vs. 2019. Just Eat has boosted its brand portfolio in recent years, evolving from its previous focus on independent restaurants to work with the likes of McDonald’s, KFC and Pret a Manger. UberEats has also been very active in this space. Overall, 78% of the top 100 casual dining brands are offering delivery in 2021, a rise of 15%. All of the fast-food brands are active in the delivery channel, with a proposition that travels well and is affordable. Most branded restaurants also offer delivery, with more brands jumping on the bandwagon this year (+9%), but just four in 10 pub/bar restaurant brands offer delivery, with many operators opting for click & collect, takeaway or makeaway boxes instead.

This serves as a reminder that delivery isn’t suitable for every food type or for every operation. Whilst it’s been a critical lifeline through the pandemic with dine-in closed, this route to market must still be evaluated for effort vs. reward. Delivery aggregators successfully address the pain point of getting the food to the customer for operators but come at a high price in terms of margin erosion. As the market reopens and 2021 unfolds, Lumina Intelligence anticipate something of a rebalance and as such delivery will see a modest decline this year, while remaining well ahead of its pre-pandemic size.