09/27/2021

Restaurants May be Permanently Changing

Here's how

How the world eats is changing dramatically. A little under two decades ago, restaurant-quality meal delivery was still largely limited to foods such as pizza and Chinese. Nowadays, food delivery has become a global market worth more than $150 billion, having more than tripled since 2017. In the United States, the market has more than doubled during the COVID-19 pandemic, following healthy historical growth of 8 percent.

The advent of appealing, user-friendly apps and tech-enabled driver networks, coupled with changing consumer expectations, has unlocked ready-to-eat food delivery as a major category. Lockdowns and physical-distancing requirements early on in the pandemic gave the category an enormous boost, with delivery becoming a lifeline for the hurting restaurant industry. Moving forward, it is poised to remain a permanent fixture in the dining landscape.

Even as the food-delivery ecosystem continues to expand, its economic structure is still evolving. Considerations such as brand, real estate, operating efficiency, breadth of offerings and changing consumer habits will determine which stakeholders win or lose as the industry develops. Potential regulatory constraints, including possible changes to how drivers are compensated, will figure into the reshuffling. And while the industry has experienced explosive growth during the global pandemic, delivery platforms, with few exceptions, have remained unprofitable. As DoorDash chief operating officer Christopher Payne told the Wall Street Journal recently, “This is a cost-intensive business that is low-margin and scale driven.”

Please select this link to read the complete article from McKinsey & Company.