The food delivery (r)evolution
Who doesn’t love a good take-away? Since the start of Covid-induced lockdowns food deliveries have become something of a British institution for many of us, though the UK food delivery market was already seeing substantial growth well ahead of the pandemic. The most recent figures show an annual increase in the sector’s value by a whopping £400 million ¹.
With consumers likely to retain an appetite for food delivery even when restaurants re-open to sit-in diners later this year, I’ve been asked how property might adapt to meet this rising demand. Dark kitchens are often mentioned in this context, but the reality is that their location near housing in urban areas has been contentious. Local residents and local authorities are now scrutinising planning applications for dark kitchens much more closely as the noise and disturbance generated by fleets of mopeds zipping around into the small hours are becoming more widely appreciated.
This suggests delivery will be largely based on individual restaurant premises. For restaurant operators who are often paying premium rents for the sit-in part of their business, and have invested eye-watering sums on their kitchen fit-outs, take-away sales are an important source of additional revenue (I’m aware of restaurants that simply would not open in specific locations without the guarantee of a delivery side of the business). Retaining control of the delivery of those sales (and thereby a greater proportion of the profits) is likely to be increasingly attractive, especially as the cost of delivery apps must be close to or equal profit margins for smaller restaurants.
Dedicated food delivery firms don’t seem too concerned about this right now. Take Deliveroo, 16% owned by Amazon, and which this month bagged $180 million of new funding ahead of a planned $7 billion IPO later this quarter. But I wonder whether the following three property-related factors might, in the long-term, decentralise delivery and place it back in the hands of individual restaurant operators:
Restaurant operators are looking at reconfiguring premises to a ‘one site, two doors’ operation that clearly delineates and helps avoid conflict between sit-in diners and take-away customers/delivery drivers. As an aside, the physical location of restaurants (and accessibility to take-away customers/delivery drivers) is going to be increasingly important, and it will be interesting to see whether occupational demand for premises located in pedestrianised areas, with limited access for delivery vehicles, will decline.
A new generation of foodhalls in market towns across the UK could act as delivery food hubs.
The largest restaurant groups who already operate drive-thru’s could tweak the model to run their own delivery service as they have the scale and marketing reach (Burger King, McDonalds, KFC and Costa all spring to mind).
One final point: rather than threatening bricks and mortar eateries, the growing appetite for food delivery (combined with currently lower barriers to entry, including more affordable rents) is likely to result in more restaurants and that can only be good for the High Street and the UK economy as a whole.
Article by Thomas Rose, Co-founder of P-THREE
¹ Source: Statista
