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Global News and Perspectives

The Rise of Eats and Delivery in a COVID World

The food industry will probably never be the same again.

In a post-COVID world, people will be wary of eating out, for more reasons than one. Food hygiene is only one of them – there will be worrying questions on how to practice social distancing in a restaurant. Even if there’s 25% less seating, as it has been suggested, will people take on the risk? Also, restaurants will not be able to operate at these margins, so it might get more expensive to eat out. With millions losing jobs, eating out may simply not be affordable, or worth the risk. It’s a grim picture.

But, with disaster comes opportunity (for some) – as John D. Rockefeller said famously – “I always tried to turn every disaster into an opportunity.” So, if people are not going out, what’s the next best option? Home delivery.

Who you gonna call?

Uber Eats, Deliveroo, DoorDash, Cloud Kitchens, to name a few.

The sector, expectedly, is seeing immense growth – it’s filling a real need, and that’s always a good place to be when you are in business. In these times of social distancing, what works for the food delivery platforms is that they not only ferry food to your door, but they also do it contact-free. That’s really the magical word – contact less. The delivery gets alerted via the app and the box of goodies is left at your doorstep, all without meeting anyone. It’s the new way of doing things.

This is why platforms like Deliveroo (and Uber too) have enabled new features that allow their customers to choose a contact-free delivery option. It’s a beneficial for both the rider and the customer. Riders’ safety is also a top priority for these platforms – the company has offered to support any rider who gets infected with the virus. These organizations are also ensuring that all safety norms are being followed. They are in constant touch with the local health officers to keep abreast of any latest developments in the health and safety guidelines.

Uber to the rescue

Short of playing agony aunt, Uber seems to be solving every other need for people right now – delivering food, packages, mail parcels, groceries, medicines,  home movie night snacks, toilet paper – you name it. The company is not only looking to fill a need, but is also innovating to find opportunities for its out-of-work drivers. They’ve launched Uber Connect and Uber Direct to get necessities delivered to people quickly and are offering some of the opportunities here to their drivers who are twiddling their thumbs because of lack of work. So great is the demand that its food delivery business has surpassed its ride-hailing business for the first time in the US.

Partnering is the way to go

How is Uber doing it?

People are home – tired, afraid, frustrated and unable to go out. They are also working from home and simply want food, groceries and other essentials to get through their endless, lock-down days. Uber has seized this opportunity, since its well positioned to respond to the varied set of customer’s needs. It’s got the infrastructure, so diversifying has not been that hard to do. To this end, it has forged strategic partnerships, so it can to serve people better and, where possible, in a contact-less manner.

Different approach in different locations. Here’s how Uber has cast its net wide.

  • In France, Uber’s food delivery division has partnered with supermarket giant Carrefour to provide within 30-minute home delivery services for grocery products, including cleaning products. Currently, the service has started 15 stores across Paris but has plans to scale it up nationwide over the coming weeks.
  • In Spain, it has inked a deal with Galp to offer grocery services, including basic food items, certain medicines, beverages etc, across 15 cities.
  • In Brazil, it’s collaborating with various pharmacies, convenience stores and pet stores – in Sau Paulo for home delivery services of basic essentials.
  • In New York City, they’re working with Cabinet to deliver over-the-counter medication.
  • In Portugal the company is helping the national postal service CTT to deliver parcels to their customers.
  • And in Australia, they are working with Greencross to deliver pet supplies.

These apart, Uber has also partnered with South Africa’s Western Cape Department of Health and The Bill and Melinda Gates Foundation to deliver medicines.
It’s a pretty wide net.

Food and Delivery – uneasy partnership

Coming back to food-delivery specifically; there’s a big disruption happening in the space – while Uber Eats (and other platforms like GrubHub and Doordash) are gaining popularity, they are also pushing up prices. When delivery-platforms charge a fat fee from the restaurants, the latter are forced to raise prices. This, in-turn is leading to a tiff between the two, which is already causing some repercussions. Uber recently closed its Eats operations in some smaller markets like Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Ukraine, and Uruguay. Moreover, many restaurants are also boycotting Uber Eats in protest.

The negotiations will continue between the food industry and the delivery platforms, but who will come out on top? The restaurant industry is already beleaguered – will they be able to continue giving a big part of their diminished earnings to Uber Eats and their counterparts?

Something’s gotta give

Hard to say what the outcome will be – what will not change is the fact that people will not go out to eat (not yet), and that restaurants will not be able to sustain themselves if they give out high commissions. Something’s got to break the gridlock.

How this gets worked out is anyone’s guess. But the truth is that, even after COVID leaves (whenever that is), people are not going to venture into eateries freely – so the platforms will only see a rise in demand. How much room they can wiggle in is something only time will tell.

Room service, to your home

When luxury hotel chains start getting into the home-delivery of food business, it’s a sign of where the market is heading. Five-star hotel chain Oberoi recently created special menus (for Easter) and offered to deliver those to people’s homes. JW Marriott in Mumbai made similar offers as well. That’s not all. Hilton too has partnered with Swiggy and Zomato to get its food delivered to its customers, via contactless delivery. Taj Group has also toyed with the idea by letting people order hampers and picking them up contact-less from their hotels. Who would’ve thought?

Sink or cloud

The virus and its repercussions on the food industry has forced restaurant owners to think of innovative ways to stay afloat. One such way is to adopt the cloud kitchens model, which cuts costs dramatically while allowing the quality of food to not be compromised. Again, this needs tie-ups, so restaurants are reaching out to platforms like Swiggy to get their food to their customers. Cloud kitchens allow for more scalability, since costs can be controlled and one facility can service a large customer base. It’s an attractive model that may just help some businesses survive.

Change is the only constant

The food industry and its ancillary support groups will continue to evolve – as lockdown eases and even ends. What’s evident is that people’s reluctance to eat out will last long after the flattening of the curve. And even once things get back to normal, it will be a changed world. The insistence of high-standards of hygiene and following of social distancing norms will be hard for the service providers to implement. In India, it is estimated that 35-40% of the industry will not exist – the rest will have to adapt. In the end, delivery platforms like Uber Eats could come out as clear winners.

Date added
05.05.2020

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