How mobile is transforming the restaurant order and delivery business

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To date the leaders of restaurant takeaway and delivery have prospered, largely, on an open approach, that allows customers to choose between mobile web and apps. But a new breed led by UberEats and Amazon Prime won’t allow mobile web access, as they attempt to drive people download their native apps.

Whether consumers want to find/order a meal to eat in, takeaway or have delivered, increasingly the tool of choice is the mobile phone. But many restaurant businesses – with a few notable exceptions – have been slow to capitalize on this shift, which has allowed third-parties to gain a foothold in the market.

This is happening in many major cities worldwide, but let’s concentrate on London, where Amazon, as of September 2016, is the latest to join to join a scrum of companies, including Just Eat, Deliveroo and UberEats, offering delivery services to hungry consumers from a portfolio of London restaurants (who foot the bill).

In the first of two parts, this column will consider:

  • The importance of mobile in the takeaway market.
  • Multiplatform offerings from the takeaway leaders.
  • Mobile web as a driver for app adoption.
  • The app only approach from the newbies.

The subsequent column will discuss:

  • The pros and cons of restaurants using third-parties to deliver their takeaways.
  • The importance of restaurants taking a holistic approach to mobile i.e. offering table reservations, order ahead, pick up as well delivery.
  • Lessons to be learned from the mobile web presence of market leaders.

How big is the mobile takeaway market?

11 million (over 17% of the UK’s total digital population) visited one of the top three food delivery sites via a mobile device (smartphone or tablet) or PC, during March 2016, according to consumer research by ComScore.

  • Just Eat Group (platform) has 6 million unique monthly visitors in total in the UK, 73% or 4.5 million are mobile only.
  • Domino’s Pizza Group (Chain) has nearly 3 million monthly users, 70% are mobile only.
  • Hungryhouse (platform boasting 10,000 UK restaurants) has almost 2 million unique visitors, 80% are mobile only.
  • Number 4 and 5 in the UK were Deliveroo (delivery service) and Papa John’s (Pizza Chain). ComScore didn’t estimate monthly users for these.

dna30_comscore_top_takeaways_by_device

 

Takeaways from ComScore’s research:

This proves how important mobile is in the restaurant business. It doesn’t matter if consumers are buying direct from Domino’s or Papa John’s or via an intermediary such as Just Eat, Hungryhouse or Deliveroo, mobile is the channel of choice.

This isn’t multichannel, 70-80% (depending on the vendor) of digital purchasers only use mobile to order.

It’s no coincidence that the two independents in the top five are Pizza restaurants. Pizza travels well. These businesses are built for delivery, they spotted the digital, then mobile, opportunity years ago and have transitioned with remarkable success.

Domino’s Pizza Group, the UK franchise of the international chain, has excelled in this regard. According to 1H 2016 resultsecommerce represents 81% of delivered sales in the UK and more than 62% of online sales are mobile. The recent introduction of a mobile responsive website led to a 62% increase in conversion.

The takeaway delivery intermediary

Takeaway ordering and delivery services fall into two categories:

1.Platform only

These companies have a searchable database of local restaurants with menus and reviews, they process the orders then pass them on, perhaps via a proprietary terminal, to the restaurant which cooks then delivers the meal themselves (with their own drivers), or holds it for collection by the customer.

The largest of these is Just Eat. According to company stats, in the first half of 2016, it processed 42 million orders – 78% of which are placed by mobile – for collection or delivery takeaway meals with 30,000 UK restaurants. Just Eat does not have its own fleet of delivery riders – but sources in restaurant business believe this is part of future plans.

Hungryhouse offers a similar service with 10,000 UK restaurants.

2.Order and deliver

These newer entrants do a lot of the above (but rarely offer collection), and also run their own delivery service. Delivery is often by self-employed couriers. In the UK these include Deliveroo, believed to be the leader, UberEats and now Amazon.

It’s unclear how many restaurants Deliveroo serves, but Uber and Amazon have about 150 each.

The Uber and Amazon is currently only operate in central London, offering approximately 150 restaurants each. Deliveroo is much more widely available, both in London and other larger UK cities. The number of restaurant partners is unclear, but there is an impressive list here.

Who pays?

All intermediaries charge restaurants a commission. But only Just Eat publishes (see H1 2016 results) its fees, which are currently 13%.

Other services keep fees a secret. Sources in the restaurant trade suggest the standard charge for Deliveroo is 20%-25% and UberEats around 25%. Competition to sign up bigger name restaurants, particularly with exclusive deals, means there is room for up-market/larger restaurants to negotiate deals.

With Just Eat and Hungryhouse delivery charges are set by the restaurant. Deliveroo charges customers £2.50 per delivery; UberEats is free delivery (currently); Amazon is “free”, but requires a paid membership.

We will look at the pros and cons of restaurants using takeaway intermediaries more closely in the next column.

Mobile strategies of the takeaway leaders

Multiplatform – web, mobile web and app.

Four of five vendors highlighted by ComScore have industry-leading responsive sites (Hungryhouse uses adaptive websites) as well as native apps.

A single glance at the web home screen, when viewed on a mobile device, of each shows they know exactly what their audience wants: to order food from a restaurant near them right now.

It’s clear all these companies are working really hard on perfecting their mobile presence. We will study them more closely in the next column. It’s clever how they use contextual relevance, anticipation of intention and subtle personalization to optimize user experience and drive conversion. It’s a level of sophistication that puts many companies’ native apps to shame.

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As you can see from the screenshots above, it is still common for mobile sites to encourage people to download a native app, certainly on the first few visits. But most have learned not to do this is not expense of mobile web sales, which can be substantial – particularly in the takeaway business.

According to the 1H 2016 results32% of total UK orders for market leader Just Eat are placed on the mobile web. That works out at 13.5 million orders. This is less than mobile app orders (46% of total), but it would be lunacy to jeopardize such a large proportion of your business… wouldn’t it?

Wot no mobile web?

UberEats, which launched in London in June 2016, has taken the opposite approach to the market leaders. It has taken the audacious decision to block – there is no other word to describe it – customers from making web purchases via mobile devices.

Visitors to ubereats.com/london on a PC are served an ecommerce site; visitors to the same URL on a smartphones or tablet are served a page that is no more than a promotion for the native app (it doesn’t even distinguish between iOS or Android devices).

The image below shows the web experience on PC, a tablet (Android) and smartphone (iOS), the latter two were rendered via Mobilizer. All the smartphones and tablets used by Mobilizer delivered the same results. The results were the same for US locations.

Uber confirms it is intentional that UberEats is only available via the native app.

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Uber appears to be using adaptive web design with device detection to stop people using their service via the mobile web rather than downloading the app. What ever happened to customer choice?

It will be interesting to watch if UberEats can succeed, or will continue indefinitely, with an app-only mobile strategy. It’s difficult to ascertain how well it is doing as the number of UberEats customers is a secret.

Cars v takeaways

Clearly, Uber Ride, which is app-only (in fact there is still no web-based service at all) was a massive success story. But that was different.

Back in 2011 (in the car ride business):

  • Uber was the innovator facing none or very little competition from other digital rideshare or taxi apps.
  • Uber rides were a lot cheaper, quicker and more convenient than hailing or calling a cab.
  • The gap between native apps and mobile web in terms of UX and functionality was much wider than today.
  • Launching an app and persuading people download it was considerably easier and cheaper.

In 2016 (in the restaurant business)

  • UberEats is a new entrant trying to break into a well-established and competitive digital market.
  • UberEats is a different app to Uber Rides (but it has a captive audience to target with ads).
  • There is no cost saving on restaurant meals, but free deliveries is likely to be a selling point.
  • Arguably native apps still have some technical/UX advantages over mobile web/web apps, but for the requirements of most mobile services this is rapidly becoming negligible.
  • The top players have many years head-start (10 years in Just Eat’s case) building their web and app business.
  • Selecting/purchasing a meal is a more involved process than ordering a car. It will be a challenge to stop consumers using mobile web for research and comparison.
  • The competitors have strong web presence – with huge and well-trafficked sites. A tiny brochure site with no reason for people to visit will struggle to compete for web search visibility (see below).
  • Substituting lack of mobile web presence, with paid search ads, could be a costly user acquisition strategy.

Web presence

The market leaders in the UK have a strong web presence which helps drive business and/or traffic to their apps.

The following graph was provided by Juan Gonzalez, Sistrix.

Sistrix calculates how visible a domain is in Google search results. With a web visibility index score in the UK of 15,420 (17,060 on smartphone) it would appear that just-eat.co.uk is a long way ahead of deliveroo.co.uk with 1,880 (1,910 on smartphone). Currently, the ubereats.com web presence appears very low at 0,023 (0,015 on smartphone).

dna30_web_presence_takeaway

 

Without the same mobile web presence UberEats has to rely on mobile advertising to drive downloads of the UberEats app and those who have downloaded to use it.

UberEats appears to be investing more heavily in mobile search ads (perhaps to counter its lack of web presence), than competitors, as it attempts to drive downloads of the new app. Research by Sistrix found that UberEats is purchasing search ads based on four times as many keyword combinations as either Just Eat or Deliveroo.

Wot no web presence at all?

Amazon has taken this one big step further. When it launched its restaurant delivery in September 2016, the service was only available to users of its Prime Now mobile app.

According to Amazon this service won’t be available via the mobile or desktop web, at all.

The service is also only available to subscribers to Amazon Prime (UK cost: £79 per year, £7.99 per month; US cost: $99 per year $10.99 per month).

Amazon has a big head start over Uber: its restaurant takeaway service is an extension of Prime Now, which has existing members, and various services e.g. grocery delivery – though the company refuses to say how many customers.

UberEats, as mentioned, is a separate venture to Uber Rides.

Nevertheless, it is fascinating to see Amazon a company that was built on web commerce, building a service that is exclusively available to users of its native mobile app.

The big question is: are the offering of UberEats and Amazon Prime Now services good enough to persuade people to download (and subscribe in Amazon’s case), when so many competing direct and indirect services are offering food delivery just one click away from a mobile search.

Just when you thought we’d put the mobile web v native app debate to bed forever, the whole thing became a lot more interesting.

 

Read the reports:

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This is Part 30 of the ClickZ ‘DNA of mobile-friendly web’ series.

Here are the recent ones:

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