Has COVID-19 forever changed the French meal delivery market?
The French food delivery market is extremely lucrative, worth € 180 billion and growing. Food accounts for 20% of our manufacturing output, which underlines its economic importance.
The market was turned upside down during the COVID-19 pandemic, which saw restaurants, cafes and bars close and the demand for deliveries increased.
Electrix, a manufacturer of recessed electrical cabinet for the food industry, explores how the pandemic has changed consumer needs and what the market could look like in the months to come.
Our changing food delivery habits
The COVID-19 pandemic has changed the world. As businesses closed their doors and we were confined to our homes, consumer behavior changed.
People were forced to turn to online shopping for non-essential items, but many also began to purchase essential supplies, such as groceries, online. Take-out deliveries increased as people sought solace in delicious home restaurant food. 29% of French households already had meals delivered to their homes on a regular basis, which naturally increases when we cannot go out.
We were witnessing a shift towards restaurants before the pandemic. In 2019, there was an 8.5% increase in the number of people eating outside the home, whether in bars, restaurants or cafes. 48% of those surveyed said it was the activity they were most eager to return to, rating it better than seeing family and friends or attending events.
Fast grocery delivery will become the norm
Demand for grocery deliveries increased as people sought to avoid contracting the virus in stores. Stores struggled to meet this demand at first, but they quickly adapted. Due to this huge response, we are now seeing companies offering grocery deliveries in as little as 15 minutes across the country. Interestingly, this activity hit a new high in Europe in the first quarter of 2021 rather than the first lockdown.
Cajoo, the first French company to offer immediate grocery delivery, went up for sale as its competition rapidly increased. It has gone from being an innovator to being one of many companies offering the same services in an instant as the demand for fast food deliveries is high.
It is important to note that these operations are expensive and require multiple locations. Cajoo is committed to paying its drivers a salary, while we have seen other suppliers reduce delivery costs in order to stay more profitable, which may impact driver revenue. One thing’s for sure: fast grocery delivery is here to stay.
Will people dine more at the restaurant?
Although lockdown restrictions have eased, the capacity of restaurants, bars and cafes is still limited as the vaccine rollout continues. We know dining out is the activity that the French public missed the most during the lockdown, but we’re seeing mixed results on people returning to restaurants.
In December 2020, an investigation was published into our intentions to dine out after the lockdown restrictions were eased, and the results were surprising. 51% of those polled said they intended to dine out less than usual, while 35% said they would as much as they did before the pandemic. While many restaurants have been full since the reopening, hospitality industry union UMIH estimated that the recent introduction of green passes could reduce visitor numbers by 15-20%.
It is clear that we are taking precautions as France continues its roadmap out of containment. While restaurant visits following the easing of restrictions are 50% above 2019 levels, consumers are currently eating less in restaurants. We expect this trend to continue in the coming months due to the backlash from the COVID pass, despite the fact that dining out is a popular activity in the country.
Fast food delivery will become more competitive
As people ordered more fast food during the pandemic, delivery services increased dramatically. Uber Eats has long dominated the take-out market in France, but we’ve seen Deliveroo triple its subscribers by offering unlimited deliveries for a small initial price of € 1, dropping to just € 5.99 at the end of 2020.
When France fully exits lockdown restrictions – regardless of when – we could see a drop in fast food delivery orders. The pandemic has increased competition among providers of these services as they sought to take advantage of increased demand, but we could see even more discounts as spending in this area inevitably declines.
A backlash for competitiveness?
With competition at an all time high in the food delivery market, we are seeing companies shrinking themselves and gaining key market share, such as the low delivery prices offered by Deliveroo. We know this can impact the earnings of its drivers, so could we also see a backlash to that kind of cutthroat competitiveness? Just Eat, which has a smaller market share, hired 4,500 permanent drivers in order to build an ethical brand.
Values matter to French consumers, and half would not continue to buy from a company that did not have the same values as them. We could see companies that take an ethical stance increasing their market share.
There is no doubt that the past 18 months have changed consumer behavior in ways we never expected, and this will impact the future of the market. The meal delivery market in France is highly valued and we are seeing new trends emerging as a result of our changing habits.