Digital Dining: How food delivery is forcing restaurants to change

By Annie Bricker / Wamda


SOURCE: Wamda - Digital Dining: How food delivery is forcing restaurants to change

Food delivery apps have been a catalyst for change throughout the restaurant industry. What started as a response to the demand for convenience and variety has now changed the supply chain from marketing, to preparation, to restaurant layout and design.

In the past few years, the nightly dinner routine has changed drastically. With family favourites just a tap away, an increasing number of diners are opting to skip the dirty dishes and just order in. In the US, 3 out of 5 millenials report using delivery applications, and that number is growing across demographics. Similar statistics are true for the Middle East and North Africa (Mena) region where 60 per cent of smartphone users have a food-related app on their devices, and 50 per cent of those who do, use it to order food online. It seems clear that smartphone-based food delivery models have marked a major shift in the industry, however, it is not only the method of delivery that is changing. The reign of the delivery app has had a trickle-down effect that is changing almost every aspect of the retail food and beverage (F&B) industry. 

The change in the industry began with a tap, with the proliferation of delivery apps themselves. It seems every week a new option pops on to the market, each attempting to set themselves apart from the others with options like restaurant comparisons or bespoke offers and rewards. Ride-hailing app Careem recently joined the delivery game, citing a demand in the region.

“Overall, the food delivery market in Careem NOW’s target countries is predicted to grow to around $25 billion by 2022 as the global trend for how we order food is reflected in our region,” says Adeeb Warsi, managing director at Careem NOW. “Compared to more developed markets like North America and Europe, there’s still a huge potential for growth in this part of the world.”

However, delivery apps are only the tip of the iceberg when it comes to this industry shift. As the delivery scene changes, the physical layout of restaurants must adapt as well. With more deliveries on the line, restaurants have to dedicate more time and space to fulfilling at-home orders, causing a change in priorities. Location and footfall, two variables that can significantly drive operational costs, are becoming less important as delivery apps make kitchen location a non-issue.

Further to freeing themselves from high-rent locations, restaurants are looking to invest in industrial kitchens and even “dark”, “delivery-only” or “cloud” kitchens that function much like co-working spaces instead. Operating - or even leasing space and operations - from one centralised kitchen in a low-rent area is much more cost effective for restaurants than expanding operations with expensive, customer-facing retail footage or additional locations.

These kitchens service customers' growing demand for take-out and food delivery, often serving food from a number of different restaurants out of one kitchen Many of these kitchens are either owned or partnered with a delivery app, creating one, streamlined process from kitchen to door. Venture Capital group Fifth Wall recently listed this as one of its six sectors to watch in 2019 predicting that delivery-only kitchens will occupy more than 20 million sq ft in the US by 2022.

Dubai-based startup Kitopi operates delivery-only kitchens and says that the benefit is not limited to cost-savings on the part of the restaurant. With delivery-only kitchens, customers will feel a shift in the variety of restaurants available to them.

“The delivery applications and platforms have played a major role in the emergence of delivery-only kitchens. They are great tools for customers to discover food in their vicinity and get unbiased ratings from other diners,” says Mo Ballout, chief executive officer (CEO) at Kitopi. “When a Kitopi kitchen opens in a new area, residents get access to on average, 15 new restaurants over night, which they would have had to travel to get previously.”

As the back-of-house adapts to the increase in delivery orders, the customer-facing retail space must also change. Dubai-based KCal restaurants, a popular choice for healthy delivery, says it has felt a noticeable shift in the past few years.

“When we first opened our doors in Jumeirah Lakes Towers in 2010 we focused on dine-in, but as the market shifted, we increased the size of our kitchen reducing the space for dine-in customers in order to accommodate the increase in delivery orders,” says Mark Carroll, founder and CEO at KCal.

While dine-in customers may feel like they are becoming an afterthought, restaurants like KCal are using the quieter dining spaces to their advantage.

“We are currently in the process of redesigning our flagship store to evoke a much more relaxed café style design to embrace the recent rise customers overall in Dubai,” says Carroll. “However, our renovation will make special accommodations for our drivers and will be incorporating a central hub for our delivery team.” The food service industry is in flux, and as with any industry going through change, it has become a hotbed for innovation. Delivery app firms are now jumping in on actual food production and recently, in a move that seems to take the industry full-circle, Deliveroo announced the opening of its first brick-and-mortar restaurant. On the other side of the same coin, UberEATS works with 1,600 “virtual restaurants” around the world that have no physical presence and exist only on the UberEATS app.

As much as the industry has already shifted, the future of dining is taking delivery technology to the next stage. Many companies, Careem NOW included, are experimenting with drones for delivery, some are looking to artificial intelligence (AI) to predict ordering patterns and deal with customer service issues, and others are focusing on food safety during transport, with specialised packaging and alerts that are triggered when food is not delivered quickly.

With diners choosing to skip the cooking, one might envision a future of anonymous cloud kitchens and restaurants with no seating, but Mark Carroll does not think so.

“We won’t be moving away from a dine-in style. We believe that an important part of a healthy lifestyle is a healthy social life,” he says.