Nov 13 2019
The Takeaway and Fast-Food Restaurants industry has undergone a significant period of change over the past five years. The rapidly growing popularity of online ordering platforms such as Deliveroo and Uber Eats has provided a boost to revenue by allowing consumers to access the industry’s offerings with ease, a trend that has been encouraged by consumers’ on-the-go lifestyles. At the same time, ongoing economic uncertainty associated with the UK’s upcoming exit from the European Union is supporting demand for cheaper food offerings, encouraging some consumers to trade down from more expensive restaurants to takeaway orders. Over the five years through 2019-20, industry revenue is anticipated to rise at a compound annual rate of 1.5% to reach £19.7 billion.
As working hours and employment have grown, consumers have become increasingly time poor, which has encouraged demand for fast-food and takeaway restaurants by increasing the need for quick alternatives to home cooking. Consumers’ desire for convenience has been a major driver of the growing popularity of online ordering and delivery platforms, and many of the industry’s smaller operators have listed on these sites in order to capitalise on this growing trend. The consistent expansion of options available online has further supported demand. Just Eat claims to represent more than 30,000 restaurants in the United Kingdom, indicating the vast array of options now available to consumers online. The larger players in the industry have similarly been drawn in by the advantages offered by online delivery platforms. KFC, Subway and Burger King have all partnered with one or more of these sites, while McDonald’s, the largest operator in the industry, offers delivery from approximately 950 of its stores through Uber Eats. According to the fast-food giant’s latest quarterly report, 10% of McDonald’s orders are made through Uber Eats, which is significant considering the company only listed on the platform in July 2017. It was also recently reported that McDonald’s had launched its first kitchen-only branch in the United Kingdom to cater solely to the delivery market. Another of the major players in the industry, Domino’s , reported that online orders represented 79% of all delivered sales by value in 2018. Although the firm offers its own delivery service and is therefore not associated with an external online ordering platform, this nonetheless highlights the increasing importance of delivery orders to the industry.
'The larger players in the industry have been drawn in by the advantages offered by online delivery platforms'
Despite providing industry operators with opportunities for expansion, the rise of online delivery platforms has also created a number of threats. In particular, small independent establishments that offer their own delivery services have lost their competitive advantage and are now in more direct competition with the larger industry players. Further, external competition from companies in the Full-Service Restaurants industry has also increased, as a variety of popular chain restaurants such as Nando’s, Wagamama and Gourmet Burger Kitchen have listed on these online platforms. However, weak consumer confidence and low disposable incomes since the EU referendum in 2016 have caused demand for full-service restaurants to decline, and the industry’s revenue is expected to fall over the two years through 2019-20 as a result. A forecast rise in the revenue of the Takeaway and Fast-Food Restaurants industry over the same period indicates that weak economic conditions are promoting demand for lower-priced offerings.
As online delivery platforms expand further, fast-food and takeaway operators are expected to continue to benefit from increasing demand, with the industry’s revenue forecast to grow over the next five years. Despite rising competitive pressures, the industry remains well placed to capitalise on consumers’ growing desire for convenience, particularly as operators continue to expand their online presence.
For a printable PDF of Growing Appetite: Online Ordering Platforms Benefit Takeaways, click here.
IBISWorld industry reports used in this Industry Insight piece: