Food delivery orders in Canada increased substantially amid the pandemic
“Prior to the pandemic, the delivery channel represented around 4% of the total food services market,” said Asad Amin, vice president of market strategy and understanding at Ipsos, who runs the ongoing Ipsos Foodservice Monitor. “As a result of the pandemic, it has doubled and has increased to 8%, as the focus was exclusively on off-premise with closed dine-in. We saw a massive spike, especially at the beginning of the pandemic. This also applied to passages and take-away. “
Delivery apps are “a very sensitive issue in the food service industry,” he said. “The margins for full-service restaurants are initially low, especially for independent companies. But it’s a new ingestion channel that wasn’t necessarily available before, so it’s a very slippery slope. “
The focus of the debate about the delivery app are fees, which can amount to up to 30% of the order value. During the pandemic, the companies running these apps came under pressure to cut fees – not just from restaurant partners, but also from government officials.
“I have a message for the big third-party grocery delivery services like Uber Eats,” said Ontario Prime Minister Doug Ford as he announced the return to stricter rules on food service during the second wave in October. “It is time for you to do your part. Please consider lowering the commission rates you charge to restaurants affected by these new health measures. ”
In response to that plea and a general backlash from restaurants, delivery apps announced a fee reduction, albeit temporarily. However, the voluntary actions of these companies weren’t enough, and in December Ford capped fees to 20% of the order value and commission on delivery to 15%. The new rules applied to jurisdictions that prohibited indoor eating in Canada’s largest province. Ontario followed a long line of cities in the United States that limited such commissions during the pandemic.
This public scrutiny has so far done little to contain the massive growth of these services. SkipTheDishes, which was acquired by Just Eat in 2016, doubled its Canadian business in Q3 2020 from a year earlier with 23.5 million orders. Compared to the first three quarters of the previous year, the order volume increased by 72% compared to 2019.
The rise of the delivery app channel for home delivery of QSR and FSR orders has a direct impact on how food service marketers reach their audiences: the ability to run in-app promotions for restaurants exists today for an increase in orders to the companies that run these apps. In the future, the supply of non-restaurant items such as alcohol and immediate household necessities is likely to expand the range of services, which is a potential disruptive force in many sectors.