As we adjust to what has been coined ‘the new normal’, long-standing habits have been redefined to fit present social restrictions. One notable change is how we purchase food.
As supermarket delivery slots have become harder to secure with the many reserved for those most vulnerable, there has been an inevitable surge in demand for alternative meal delivery services. Typical delivery platforms, such as Deliveroo and UBER Eats, are constrained by a notable supply-side shortage. Many restaurants have been unable to adapt their business to delivery-only given high operating costs and a significant reduction in revenues, depressed further by food delivery platform fees. In an attempt to bolster supply and fill the void left by the absence of larger chains on the platforms, both Deliveroo and UBER Eats have introduced reduced commissions and faster payments to incentivise restaurants to stay open. The increasing pressure of Covid-19 on Deliveroo has been a significant factor in the CMA’s provisional approval of Amazon’s investment in the platform, with the latter claiming it would be subject to financial failure without the former’s sizable investment.
Alternatively, meal delivery kits, who have a handle on their own supply, have been propelled into the mainstream providing recipes and required ingredients to prepare meals at home. Mindful Chef, a recipe delivery box service reported a 452% uptick in orders since the country entered lockdown and additionally experienced a 387% spike in frozen meal sales as customers prepare for what is expected to be an extended period of social distancing. Similarly Gousto, another meal-kit manufacturer and retailer, reported a 70% year-on-year jump in sales for their first quarter. The company were reported to have closed a £32m fundraising round last week to expand its team and operations and to accelerate innovations for the company. Although, the piqued demand has been bittersweet due to a struggle to scale-up operations to meet the demand and, at the time of writing, Gousto have currently suspended accepting new orders.
Increase demand for recipe boxes further reflects a surge in popularity for cooking as a leisure activity, given increased time spent at home. This has been well reflected in recent popular trends; BBC Food reported record traffic since the start of the lockdown, including a 540% increase to its banana bread recipe (currently the most popular recipe on the site) and an 875% increase in traffic to its basic bread recipe.
The continued success of food delivery providers will likely depend on the broader implications of the virus on the economy, the largest challenge being unemployment. As the Covid-19 pandemic escalates, many more will be forced to turn to Foodbanks to access groceries. Trussell Trust, the UK’s largest foodbank network report mounting pressure daily as they look to cope with demand spikes rooted in the economic impact of the virus. Resultantly, there has been a marked increase in companies supporting the charity’s endeavours to provide for those most vulnerable. At the end of March, the financial technology bank Revolut, announced it had partnered up with the charity enabling its customers in the UK to donate directly via their in-app donate feature and British Gas has offered to help Trussell Trust deliver food parcels to ensure those in isolation still have access to essentials. Additionally, supermarkets have taken further measures to minimise food wastage with Sainsbury’s donating £3m to leading food charity FareShare and Morrisons setting aside up to £10m worth of groceries to donate to struggling foodbanks.
Nevertheless, it remains a possibility that behavioural changes spurred by current necessity will indeed have lasting implications. Covid-19 could mark a ‘point of inflection’ for online grocery services going forward and the potential for a structural shift in consumption away from restaurants in favour of deliveries beyond the end of lockdown.
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