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Impact Of Coronavirus (COVID-19) On The On-demand Food Delivery Market

Impact Of Coronavirus (COVID-19) On The On-demand Food Delivery Market

The COVID pandemic has had global repercussions on how the business has been happening. It has affected every one of our lives, and we’re still struggling to find a cure. And one of the businesses that got the hardest hit is restaurants.

Most of the countries now have warned people against eating out because of the outbreak. It means that the onus falls on food delivery services to step in and take responsibility. People who are under quarantine will not be able to venture out to shop for groceries. So it makes sense for On-demand food delivery services to adapt. 

Given the pace of today’s lifestyle, food delivery is an essential service for the average person. Restaurants cannot have patrons. So, it has become an even more critical part of the business ecosystem.

So let’s take a look at how this crisis has affected food delivery services.

The Global Pandemic And Food Delivery

Since its introduction, food delivery services are a steadily growing business over the past few years. People get food safely at their doorstep. So, they love the convenience of getting piping hot food delivered quickly.

In the United States alone, food delivery services revenues were USD 22 billion in 2019. It was a 10% growth over the earlier year’s numbers. But in 2020, the estimated revenue is USD 26.5 billion. That is 2x the growth in revenue from the last year.

It is safe to say that On-demand food delivery services are growing despite the pandemic. One reason is that they are smart about it. Food delivery brands have responded well to the pandemic. They have followed best practices and safe delivery methods.

How Are Delivery Services Responding?

Bars and restaurants have mandatory shutdowns due to the viral outbreak. But, food delivery services are responding with effective strategies. The goal of these programs is to maximize revenues for the restaurants. Also, it will keep the delivery agents and the customers safe.

Contactless Delivery

Due to Coronavirus, food delivery services introduced contactless delivery. It is one of the first things that all food delivery services implemented instantly. Contactless or drop-off delivery ensures there is no direct contact between the agent and customer. It significantly cuts down on the chances that the virus could spread.

Daily Payments

Some food delivery brands like UberEats have switched their payouts to daily payments for all restaurants. It is a huge step to boost the revenue of the restaurants.

Deferring Commission Fees

Grubhub has announced the suspension of commission fees for qualified independent restaurants. Restaurants will have significantly fewer overheads and improved profit margins.

Waiving Delivery Fees

UberEats has announced that they will be waiving their usual delivery fees. It means that the customer, as well as the restaurant, stand to benefit.

Two Weeks Paid Leave

There’s some respite if delivery agents are COVID-19 positive. The delivery partners have to undergo mandatory quarantine for two weeks. So, Delivery services like DoorDash and Caviar offer two weeks’ pay.

Free sanitizers and gloves

Food delivery services are providing free hand sanitizers & gloves to their delivery agents. It is a huge step toward safer delivery practices.

Challenges Faced By Food Delivery Services

The current COVID-19 situation is giving tough time to food aggregators. Food delivery services face many challenges every day.

Laws of the land

The government has passed many emergency laws. It is one of the biggest problems faced by food delivery services. It ranges from capping the commission of the delivery services to outright bans of the entire service.

A reason why the government is introducing caps to commissions is because of the pressure of the restaurant lobby. This method of price control is not a solution. It may lead to the suspension of delivery services or imposing the extra charges on the clients. Both scenarios are bad for customers.

Workforce availability

Agent availability is a prime issue in these times. It is something that we cannot avoid now. Agents are at constant risk of exposure to the virus. The governments are conducting regular checks. There is a high chance that they might have to be quarantined. So, the headcount may not always be consistent. It can be problematic when it comes to coverage.

Restaurants closing

Several restaurants have shut down because of the pandemic. The reasons many be dure to financial, staffing, or inventory problems. Delivery services rely on the availability of restaurants, which makes this a problem.

Delivery services have tried to ease the problem through quicker payouts. They are also waiving commissions, and it has worked for some establishments. But the smaller independent places have closed down.

Coping with volumes

Food delivery volumes have increased because of lockdowns and shutdowns across the world. But this sudden growth puts a lot of pressure on the restaurants’ capability to deliver. Another problem with managing large volumes is logistics. Delivery services need to provide customers with adequate coverage. It will help them to get their food delivered.

Inconsistent food quality

Inconsistent food quality is a general problem with restaurants. It has become worse during this pandemic. Many restaurants do not have delivery because their food tastes best when had at the table. But when food delivery services come into the picture, there will be a drop in quality. It could be because of spillage (curry) or improper packaging. Or, maybe because of its inherent quality when stored for a period (moist sandwiches).

Customers relate the quality of food or packaging to the food delivery service. That is the problem here. These frustrated customers usually are the reasons for low ratings on the platform.

Volatile pricing

Pricing is a problem, especially when there is considerable churn in the market due to the pandemic. Restaurants and eateries of all sizes are constantly adjusting their pricing models. The problem is that even after cutting down on prices, there is no guarantee of increased sales.

Again, customers equate fluctuating prices with the delivery partners. It is bad for business in the long run. It is another unfortunate aspect that delivery services have no control over. But they are still forced to take the brunt of it.

Competition

Nowadays more People are not opting for food delivery services. It means that other types of services can enter this space. A good example is grocery delivery, as well as meal kits. 

There has been a surge of people ordering from these types of services. However, Food delivery services have adapted to this demand. Now, popular delivery service apps like Swiggy, UberEats, and Zomato have grocery delivery. It gives its customers the option to order from their favorite supermarket as well.

Role Of Hygiene In Food Delivery

The food delivery service industry is extremely focused on hygiene. The aggregators maintain strict standards when it comes to the cleanliness of their couriers. But in the wake of the pandemic, hygiene has become even more critical. It is vital for the success of an On-demand food delivery service nowadays.

Food delivery services have opted for several preventive methods for their couriers. It is to curb the spread of the virus.

  • Providing PPEs (personal protective equipment) and sanitizer at no cost
  • Periodic sanitation
  • Sealing food packages
  • Daily temperature checks
  • Using UV light as part of the disinfection
  • Innovative contactless delivery methods

While all this is well and good, part of the responsibility of maintaining hygiene also falls to the restaurants. The management needs to ensure that they follow strict standards for food hygiene for their patrons.

Future Of Food Aggregators

The food delivery niche was always doing well. We have seen a significant uptick during this outbreak. People want access to their favorite restaurants despite challenging regulations. For them, it is a source of comfort during these tough times.

It’s not just the customers that benefit here. Restaurants opt for third party food delivery services. It lets them focus on improving their own business without getting distracted. In times of crisis, delivery services can adapt to deliver groceries and medicines.

A lot of the big food chains like Dominoes, KFC, and McDonald’s, just to name a few, are moving to third party deliveries. The pandemic has sped up this process. Most big brands are looking to make deals with popular food aggregators in their locale.

Want To Start On Food Delivery Services?

The global food delivery industry will be at $200 billion by 2025. Online food delivery services are “one of the only winners” during this viral outbreak. If you ever thought of starting on a food delivery business, now would be a great time to do that.

Talking about your food delivery service, we’d like to introduce Dinedoo. It is a premier food delivery services app that works on both iOS and Android platforms. We have included all the features that big-name brands use in their application. You can compare our app with food delivery apps like UberEats, Swiggy, and Zomato.

The Dinedoo app is highly customizable. You can change the look and feel as well as add different functionalities to it. It is intuitive, user friendly, and works seamlessly in any environment.

Opt for a customized app solution like Dinedoo for your food delivery services. It can save you a lot of money and time. Not to mention, you can buy and launch the app inside two days – there is no reason to wait around.

To Summarize

Food aggregators will thrive; all predictions point to that fact. North America and Europe already have over ten food delivery brands each. Asia accounts for a colossal 55% of the total food delivery market. 

Do you need proof of the importance of food delivery systems? Then you only need to take a look at the present situation. Food delivery services are getting ready to record their highest growth this year since their inception!

If you want to build a food aggregator company like UberEats/Grubhub, get in touch with us.