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Deliveroo’s Australian Exit Calls for Modernization in the Food Delivery Sector, says GlobalData

Following the news that UK-based delivery aggregator Deliveroo is withdrawing from Australia after just seven years due to touch economic conditions;

Hannah Cleland, Foodservice Analyst at GlobalData, offers her view:
“Deliveroo’s decision to leave Australia is a dramatic move, but is based on an all-too-familiar story for delivery aggregators. Since the pandemic, the sector has been plagued by driver shortages, tightening gig work regulations, and now more than ever increased inflationary pressures such as rising fuel costs.

“Despite these issues, consumer demand hasn’t fallen. GlobalData’s 2022 Q3 consumer survey reveals that 64% of consumers globally said they ordered food and drink from food delivery channels at least once a month, making it the third most frequented channel surveyed behind quick service/fast food restaurants and supermarkets.*

“Although consumers are continuing to tighten their budgets, delivery and takeaway are likely to remain a somewhat regular option as consumers will always seek the occasional convenience–driven ‘treat’ meal in favor of from-scratch cooking. However, consumers will increasingly look for the most cost–effective way to do this. At the surface level, techniques such as opting for collection or pick up and ordering directly from the brand (where there are no additional third-party fees) put delivery aggregators in a difficult position.

“A focus on a more modern and sustainable way of covering ‘last mile’ delivery can provide some solutions to the challenges faced by the food delivery sector. Cyclist couriers, for instance, will help alleviate fuel cost pressures, while drone delivery is an attractive alternative in the face of an industry labor shortage. Pick up lockers are another option that are currently being used by restaurant brands. These could provide opportunities for delivery aggregators to make the delivery process more efficient for drivers and cheaper for customers.

“Delivery aggregators disrupted the industry to provide a convenient modern solution for businesses and consumers, so it seems likely that their continued survival will hinge on keeping up with modern delivery trends. The sector desperately needs to increase ESG and technology investments if it is to survive long term.”