UK restaurant spotlight: delivery services continue relentless rise
Technology is driving change in consumer behaviour wherever you look. Whether it’s through smart devices, wearables or virtual and augmented reality, these new technologies are reshaping behaviours and spending habits.
Cardlytics’ latest UK spend index, which tracks the card spend of 3 million bank customers, shows how technology, including online delivery services, are impacting the restaurant industry.
Consumers are eating out less, instead dining-in via online delivery. Companies, such as Just Eat and Deliveroo, are providing delivery access to an ever-increasing number of restaurants through convenient apps, and high street restaurants are feeling the pinch.
Spend on delivery services was up by 17% year-on-year in Q1. This followed a 14% rise in Q1 2017. However, spending on eating out grew by only 3% year-on-year in Q1 2018, compared to 9% growth in Q1 2017.
Given the major growth witnessed in the years before, with spend increasing by 10% year-on-year in Q1 2017 and 17% in Q1 2016, it paints a picture of an industry that is beginning to stall.
Casual dining has been among the worst hit. It accounted for almost half of people’s restaurant spend only two years ago; it now sits at just over 40%. Spend on casual dining in Q1 fell by 1% year-on-year. The struggles of casual dining are evidenced by the well-publicised troubles of many household name restaurants over the last year.
However, amid the doom and gloom, there are reasons to be hopeful for physical dining:
- Takeaway opportunities: As popularity of delivery services continues to surge, the likes of Deliveroo are providing access to restaurants who haven’t previously offered their own takeaway services.
- Cold nights keep diners indoors: A particularly cold winter has made the landscape even more challenging for casual dining, while presenting a boost for delivery services. With the weather getting warmer, customers will be more inclined to visit physical restaurants.
- Get creative: With diners more disposed to dining out, restaurants would be wise to explore new partnerships and diversify their rewards and offers to entice back customers over the summer months.
What it all boils down to though is profitability. With margins being increasingly squeezed across the industry in 2018, restaurant owners are having to take a long hard look at their physical high street presence and examine whether their strategy is still sufficiently different to foster loyalty amongst increasingly discerning customers.
Ultimately, those that fail to make the most of the tools available to them – covering everything from smartphone apps to rewards systems – will continue to struggle.