Canadians have hunger for online food delivery
‘Stay-at-home’ economy leads to sales seeing ‘exponential growth’, report says
Canadians ordered food takeaway in record numbers last year, as delivery apps such as SkipTheDishes, UberEATS and DoorDash try to beat each other to the door to get a slice of the $4.3-billion — and growing — business of delivered food.
Predictably, tech savvy 18- to 34-year-olds were the biggest users of third-party online delivery services, with 23 per cent ordering in at least once a week, according to Restaurants Canada’s 2019 Foodservice Facts published last week. Generation Z — those born in the mid-1990s — will likely be even bigger users, as they have never known a world without cellphones or the internet.
“The movement towards a ‘stay-at-home’ economy has led to exponential growth in delivery sales spearheaded by these same two digital-friendly groups,” the report said, noting that delivering foodservice sales via online and mobile apps and traditional telephone grew 44 per cent compared to last year.
“Its impact is most profoundly felt in major urban centres where population density makes delivery economically viable,” the guide noted.
A number of food delivery apps have proliferated over the past year, with Winnipeg-based SkipTheDishes leading the list of third-party food delivery services, according to a separate survey by Angus Reid Global and the AgriFood Analytics Lab at Dalhousie University.
The study of 1,500 Canadians between May 17 and 19 shows 29 per cent of Canadians used SkipTheDishes app at least once, while 14 per cent used UberEats.
DoorDash, the California-founded delivery service also recently announced its entry into Winnipeg — its 50th Canadian city.
The company became the top-selling U.S. delivery service in March, overtaking UberEATS and GrubHub.
While the food-delivery surge has been impressive, the Angus-Reid study concludes with the prediction that app use will peak, with the possibility of resurgence in 2022.
“Despite a high satisfaction rate of many leaders in the market, the intent to use delivery apps is slowly approaching its peak in some parts of Canada,” the Angus Reid study noted.
“A total of 31 per cent of Canadians intend to use a food delivery app within the next six months which is two per cent more than the current user rate. Only 37 per cent of consumers in Manitoba intend to use a delivery app over the next six months which is down from 45 per cent.”
SkipTheDishes CEO Kevin Edwards sees no signs of the industry peaking.
“If you just look at the rate of customer acquisition that we’re seeing, even in a mature market like Winnipeg where … our acquisition is at 30 per cent, it doesn’t really take into account customer frequency,” said Edwards.
“That’s where we see the biggest growth in the business. It’s not really just for special occasions anymore, it’s part of customers everyday lives.”
SkipTheDishes, which was taken over by U.K.-based global online food delivery company Just Eat Plc. for $110 million in 2016, is working on addressing industry complaints such as packaging and network efficiency, Edwards said. While he welcomes the competition that DoorDash would bring, he expects SkipTheDishes to soon become the first profitable food delivery app.
“We believe we have the best restaurant selection and we believe we have the best technology driving the network. They’re coming up against the number one service in Canada,” said Edwards.
While online delivery services are convenient for consumers, restaurants are worried that the service is cannibalizing their inhouse sales.
As many as 37 per cent of restaurant operators told Restaurants Canada that third-party apps/ websites hurt their on-premise dinner sales, and 27 per cent said it was denting their on-premise lunch sales.
“So, why do they do it? There is profit to be made according to 79 per cent of operators who use them. However, the vast majority felt that third-party apps/websites are only ‘slightly profitable,’ ” according to the report.
“Another 21 per cent said that they were ‘not at all profitable.’ For some, this may be a case where it’s necessary to bite the bullet and give the people what they want, then figure out how to make it work.”
The surge in online food deliveries is part of the expanding restaurant business in the country. Total food services sales in 2019 are expected to grow 4.2 per cent to $93.6 billion, and is estimated to surpass $100 billion by 2021, according to Restaurants Canada.
Its impact is most profoundly felt in major urban centres where population density makes delivery
... viable.