DELIVERING THE GOODS
Mobile meals market poised for growth
At 33, Katie Robertson is perhaps the prototypical millennial. She’s self-employed, an enormous food lover and is happy cocooning in her sweats and hoodie. She’s embraced food delivery services as her go-to for meals that she feels are tasty, convenient and even reasonable on the wallet.
“Being a busy entrepreneur, and I sometimes don’t have the time to go and eat, or even grocery shop for that matter,” says Robertson, a communications consultant and creator of The Chef Groupie podcast. “I can eat from more fine dining places, and my favourite restaurants, instead of ordering pizza and Chinese food, which was traditionally all we were able to order.”
Robertson, who orders through SkipTheDishes, spends up to $400 a month to order online, getting at least two meals out of every delivery.
Using an app on her phone, Robertson can request, say, a meat platter from The Local Omnivore, and use leftover sausage to make a nice omelette the next day. She saves money on the liquor she might have sipped in a restaurant, and also on groceries wasting in her fridge at home. Plus, the whole experience makes her happy.
“It’s also really great if you have a party or people over,” she says. “With five or six of us, all we have to do is agree on a type of cuisine, and then we all get to order whatever we want.”
BOOM IN MOBILE MEALS
Clearly, Robertson is on to something, as are the online food delivery services fighting for her business.
SkipTheDishes, with 850 Edmonton and area restaurants on their app, arrived first in 2014. But there are now at least three more companies jockeying for delivery space on our icy streets.
Some are small; Uber Eats arrived in YEG in 2016 and only has 250 restaurants in its stable. But the company, along with local competitors Foodora and DoorDash, is going after a big market. A 2017 report by American investment firm Cowen estimates consumer spending on delivered food will grow in the U.S. from $43 billion in 2017 to $76 billion in 2022.
Statistics Canada does not collect information on the size of the online food delivery market in this country, though it does note Canadians spend $5.5 billion a month in restaurants and bars nationwide. But Robert Carter, executive director of food service with the NPD Group, a market research organization, says the “digital door” (consumer spending on prepared foods ordered through a computer or smartphone) is worth $1.5 billion in Canada.
Carter says online orders have been helpful to full-service restaurants, particularly independents, who were hard-hit by the recession of 2008. A record number of independents closed between 2008 and 2015. But in the last couple of years, independent closures have slowed.
Carter says the digital door has “identified a revenue stream for these folks.”
“It’s very interesting. It’s helped put these independents on the same playing field as some of these larger chains,” he says, noting chains such as McDonald’s have only recently entered the digital door.
CANADIAN BIZ TAKES EARLY BITE OF MARKET
One glittering Canadian success story is Winnipeg-based SkipTheDishes. It reported an 11,000 per cent increase in revenue growth from 2013 to 2016, and received, in November, the Deloitte Technology Fast 50 award, which acknowledges Canada’s fastest-growing technology, media and telecommunications companies.
Started from scratch in 2012 by Saskatchewan native Joshua Simair, SkipTheDishes was purchased in 2016 by Britain’s Just Eat in a deal estimated to be worth up to $200 million. The company, still run by Simair, has 10,000 Canadian restaurants in its network and, in 2016, boasted projected revenues of more than $23 million.
Other operators would love a piece of that tasty delivery pie, and there has been a rush to occupy the food delivery space, which is still a tiny part of the overall market devoted to food sold through restaurants and fast-food chains. Carter expects the Canadian market to double in the next two to three years.
“Food has been one of the underdeveloped areas, and growth has been dramatic and consumers are responding,” he says.
Though young people are the biggest users of online delivery services, Dan Park, general manager of Uber Eats in Canada, says all parts of the age spectrum are represented. Seniors, he says, love the service, as they may be living on their own and tired of cooking for one. Parents send containers of soup to their sick offspring attending universities in other cities. Families can enjoy special Sunday suppers together without slaving over the Yorkshire pudding.
“More and more people want convenience,” says Park, noting Uber Eats “blurs the line between impulse and planning.”
“We can deliver food extremely quickly, so it’s something you can use every day to ... get lunch delivered to your office, or dinner for your family. Being able to press a button and get food in half an hour is something more and more consumers want, given their busy lifestyles.”
RESTAURANT REACTION
Online food delivery is not just an advantage for busy consumers, who might want a bag of burgers delivered to Accidental Beach in the summer, or a box of Timmies sent to the arena in the winter. It also appeals to Edmonton restaurant operators such as co-owner Arden Tse of Prairie Noodle Shop, a popular ramen restaurant on 124 Street.
“People want to have that experience at home, and then there is the weather, and parking is sometimes a problem where we are,” says Tse, who has ordering tablets in the restaurant for both Foodora and Uber Eats.
It also can be tough to get into the restaurant during peak hours, making delivery a savoury option. At 6 p.m. on a recent Friday night, the popular business was bustling with customers. But once it fills its 30 seats, it has maxed out the potential for sales within its four walls.
“During peak hours, from noon to 1 p.m., or 6 p.m. to 8 p.m., delivery is a way to increase capacity when we are packed,” says Tse, noting delivery sales make up about 10 per cent of the eatery’s business.
Prairie Noodle chefs Eric Hanson and Kevin Ostapek note that neither Uber Eats nor Foodora has a perfect system. Uber Eats will occasionally try to order food when the restaurant is closed, and Foodora has no flexibility to either speed up delivery orders when it’s not busy, or slow them down when the restaurant is slammed. By 7 p.m. on a Friday night, though, 17 orders between both services have added to the restaurant’s bottom line.
Some foods are seemingly perfect for a delivery service, says chef Andrew Cowan, co-owner of Northern Chicken, also located on 124 Street. Food delivery sales can make up 40 per cent of his business on a given day, especially if it’s a weekend and there is a big sports game on television.
“Specifically for our brand, it’s a deliverable product,” says Cowan. “It’s fried chicken, it’s not fine dining, so it doesn’t need fancy plating.”
Cowan uses both SkipTheDishes and Uber Eats, both of which do a lot of advertising, increasing the restaurant’s exposure. Each has its good points, he says. SkipTheDishes brings more orders, but Cowan says Uber Eats is more reliable when it comes to delivery times. He says customers love food delivery services.
“If you’re doing a family event, and you don’t want to cook, instead of pizza, you can get something really nice delivered to your home. And ordering a three-piece meal from us can be as low as $15.”
His wait staff complain, though, that they lose in-house tips when sales go to delivery services, where drivers may get the tips normally going to the waiter.
The services themselves are not cheap for the restaurant; the order and delivery platforms charge anywhere from 15 to 30 per cent of the menu price.
NOT ALWAYS A PERFECT EQUATION
Mark von Schellwitz, vicepresident, Western Canada, for Restaurants Canada, says while customers are demanding delivery options, the services are not affordable for many operators.
“I’ve talked to members who would love to be able to do it because it generates extra business. But some say they have to do precise calculations, because the apps take a big chunk out of the price of the meal. In some cases it’s worth it, and sometime it’s not,” says von Schellwitz.
It can also be hard for customers to do the math on the cost of delivery services.
There is a considerable, and sometimes confusing, variety of charges across various platforms. Uber Eats, which serves 10 cities in Canada, charges customers a flat delivery fee of $4.99, but there is another fee that can be applied during busy times and in busy areas. That extra fee can range from a couple of cents to a couple of dollars, depending on the weather, or if it’s late at night and there are fewer drivers on the road.
DoorDash, which launched in Edmonton in October, charges a delivery fee on top of a “service” fee, which varies from restaurant to restaurant and can be from five to nine per cent of the dish price, according to spokesperson Eitan Bencuya.
SkipTheDishes, on the other hand, works with over 250 restaurants in Edmonton, St. Albert and Sherwood Park that don’t charge any delivery fee.
How much the delivery drivers make also varies service-to-service. Customers have the choice to tip drivers, who are independent contractors with their own vehicles, with the four major Edmonton delivery services.
On top of tips, Uber Eats pays the driver $3 for a pickup, $1.30 for a drop-off and 85 cents per kilometre. Foodora, which arrived in Edmonton in October and uses bicycle couriers when weather permits, pays drivers $4.50 per order, plus $1 per kilometre. During the local launch phase, which will go on for several months, Foodora Canada managing director David Albert says all drivers are guaranteed a minimum hourly wage of $15.
“Our average wage in November in Canada was about $21 an hour, all in,” says Albert.
A FEW “BROKEN EGGS”
There can be errors and problems with all of the services.
I used Foodora recently, and one of the dishes that I ordered wasn’t delivered with the others. I tore out of my condo when I realized the mistake, and caught the delivery person before he left the curbside. He politely referred me to an email to report my concern. This made me suspicious (I am old school and wanted a phone number). But the email was promptly answered, and the missing dish delivered, arriving about 45 minutes after the initial order showed up on my door.
Restaurant owners report problems as well, ranging from containers that arrive at the customer’s home broken and oozing food, to having to remake an order because the driver took 45 minutes to collect it at the restaurant, and there was a concern about spoilage. Some of the in-restaurant order tablets and software are easier to use than others for restaurant operators.
How easily and quickly delivery companies deal with issues, both with customers and restaurants, will be part of what determines which companies make it in this fast-moving market, and which ones end up parked at roadside.
One U.S.-based service, DoorDash, already has created hard feelings within the Edmonton market by posting local restaurants on their website and promising deliveries from those restaurants, without securing the permission or co-operation of some eateries.
If someone logs on with DoorDash and selects a restaurant from Edmonton from which to order food, DoorDash will order the food for the customer and have a courier pick it up and deliver it. The restaurant may or may not know DoorDash is involved.
Garner Beggs of Cafe Linnea, a fine-dining restaurant that doesn’t offer meals for delivery, was infuriated to learn the popular and trendy eatery was tagged on DoorDash’s site. It took Beggs several days of emails to get a response from the company, which did remove Cafe Linnea from its roster upon request.
“It’s incredibly bad business practice and we would never sign up with them,” says Beggs, noting DoorDash was “essentially stealing our name to enhance their reputation.”
Reached by phone in San Francisco, where the company has its head office, DoorDash’s Eitan Bencuya, said if restaurants don’t want to be listed on the website, the company will remove those names.
Dani Braun, of the high-end Mexican restaurant Rostizado, did negotiate a delivery agreement with DoorDash in October 2017.
“Then they had a lot of issues with delivery times, and they didn’t seem to have a lot of drivers,” says Braun.
After hearing other restaurants, such as Cafe Linnea and Northern Chicken, complain about the company ’s practice of leading customers to believe DoorDash had restaurant partnerships that didn’t exist, Braun severed the connection with DoorDash after only a few weeks.
“We are so tight-knit in this community and this is a matter of respect and solidarity and we decided we were out,” says Braun, noting that a delivery service represents the restaurant, whether they are upfront about it or not.
Rostizado will reassess how to bring delivery service to its customers. But Braun says delivery is fast becoming an essential part of the restaurant business.
“A lot of people ask if we do deliveries, and we don’t want to be left behind,” he says.