High-tech takeaways: How technology is transforming food delivery

Hungryhouse: featured on Dragons’ Den
Hungryhouse: featured on Dragons’ Den

Brits love takeaways - the UK market is now worth about £5.5bn in annual sales. Sonoo Singh takes a look at a newly transformed industry, where food delivery is powered by different technologies, the biggest players are flexing their muscles to extend their dominance in the market and competition is brutal.

Tech company. Tech-enabled food-delivery platform. Food-solutions service. Ask any of the big players in the online food-delivery market and this is how they describe themselves. London-listed Just Eat, German-owned Hungryhouse and venture-capital-funded Deliveroo are a few of the names that are plying Britons with more than just takeaway curries and pizzas. 

Driven by ever-increasing meal choices and an incessant demand from consumers for convenience, the online takeaway industry is fast becoming part of everyone’s mealtime decision-making. 

And the sector continues to get noisier. Last year saw the launch of Feast, which operates from 11pm to 5am to take restaurant-quality food direct to those working overtime in London or partygoers returning from a night out. Another service, Lunch Bxd, delivers healthy lunchboxes by bicycle to individuals and corporate groups in the capital. Meanwhile, a start-up called HeyMenu is set to launch in London next month, with a proposition to "provide up to 90% lower costs to takeaway restaurants than competitors, including zero commission".

But it was the arrival this summer of two US beasts, Amazon Restaurants and UberEats, both armed with logistics firepower, that has put a rocket under the market. 

UberEats launched with the promise that if your food does not arrive within 30 minutes, you get £20 off the next order.

Fight for dominance 

Despite the fierce competition, the main threat to online takeaway companies is actually the telephone, according to Hungryhouse chief executive Alice Mrongovius. More than 40% of orders for takeaways are still done on the phone in the UK. "It remains our biggest single competitor," she says. 

Launched in February 2006, Hungryhouse first attracted attention when its founders shook hands on a deal with Duncan Bannatyne and James Caan on the BBC’s Dragons’ Den. The agreement with the Dragons later collapsed, but the company went on to secure significant investment from alternative business angels. In 2013, it was bought by German-owned Delivery Hero – which itself only launched in 2011 but now operates in 33 countries and is dubbed one of the most valuable privately held internet companies in Europe. 

Mrongovius describes Hungryhouse as a tech-enabled platform that provides food solutions. The company acts as an online inter-mediary between consumers and restaurants around the UK. "We have no time to be a logistics company," Mrongovius insists, and she shrugs off the suggestion that incumbent brands in the market are nervous about the entry of Amazon and Uber. 

"Delivering food that people love is very different from driving people around," Mrongovius argues, pointing out that the online food market in the UK already has well-established players that understand the dynamics of "great takeaways at great value for money and great quality". She adds: "Every part of our business is about how much we love takeaways and making sure our business is driven by the customer experience we deliver."

Hungryhouse chief executive Alice Mrongovius

The role of branding

Hungryhouse recently unveiled a TV, digital and social campaign, "Love takeaway", created in-house. But it is not the only business that has been investing in branding and marketing in an attempt to move from a product-focused strategy to one that prioritises customers and their love of food. 

Just Eat marketing director Ben Carter says branding is hugely important in a market where the key players continue to build their dominance. "We can correlate our growth from last year to our marketing investments," he says. Just Eat recently relaunched with a visual revamp and new brand mission: "To make food discovery exciting for everyone." It has also unveiled an "ordering experience" through Apple TV, rolled out its first smart TV app and partnered Amazon intelligent assistant Alexa to enable customers to order using just their voice. On top of that, Just Eat recently invested £3.5m in UK start-up Flypay, a mobile app payments service and associate company of publisher Time Out Group.

The initiatives are part of the business’ commitment to invest £40m in marketing and technology in the UK this year, which Carter says is aimed at "increasing value" for its restaurant partners and customers by providing the best and broadest range of food. 

The FTSE 250 company is a market leader in terms of penetration. It was founded in Denmark in 2001 and now has 15.5 million-plus active users in more than a dozen countries. In the UK alone, Just Eat has 8.2 million active accounts and, according to Carter, more than 42 million orders were placed through its platform in the first half of 2016. Just Eat also holds the crown of being Europe’s biggest takeaway-ordering website.

Just Eat marketing director Ben Carter

Food delivery 4.0

Not all online food-delivery platforms are "aggregators" that assemble a collection of restaurants for customers to choose from. 

Businesses such as Deliveroo not only develop the software that allows customers to make orders and restaurants to process them but also manage a network of drivers and cyclists who deliver the food. Deliveroo launched in London in 2013 after co-founder and chief executive Will Shu moved to the capital from New York and found the city’s food-delivery culture wanting. The company sees itself as one of the key disruptors in the market. 

Managing director Dan Warne says he does not consider current names in the market to be Deliveroo’s core competitors but, instead, sees new entrant UberEats – which also uses its own couriers and, like Deliveroo, had a strike action on its hands over pay – as its closest rival. 

Warne explains how orders placed on the phone and delivered on mopeds represents "food delivery 2.0" – this is the Just Eat model that aggregates restaurants online; "food delivery 3.0" is the Deliveroo operating model.

"Delivering food that people love is very different from driving people around"

Alice Mrongovius, CEO, Hungryhouse

He believes Deliveroo is now entering "food delivery 4.0" by attracting restaurants with no history of offering deliveries, particularly high-end names, thus giving people access to businesses that remain inaccessible on the high street because they only operate in certain areas.

Deliveroo recently launched an off-site kitchen initiative called Roobox. Warne gives the example of Dulwich in south-east London, where the demographic "loves using the Deliveroo service" but lacks access to a huge volume of restaurants in the vicinity. Roobox provides shipping containers to restaurants from elsewhere to deliver their products to customers in Dulwich. 

The company has also expanded into alcohol deliveries after sealing partnerships with craft-beer brand BrewDog, Majestic Wine and several other independent groups.

Deliveroo sees itself as a tech company. Warne adds: "We will never become a business like Just Eat – a business that not just drives down the price but also serves the lower-quality side of the sector. We will always continue to excel in the quality of our food, our experience and our relationships with both our food content partners and our customers." 

Clearly, Deliveroo is on a mission to change the image of takeaways, once synonymous with the local Chinese, curries and pizzas. In another initiative that serves this mission, Deliveroo is offering Londoners the chance to experience Michelin-starred cuisine delivered to their door with the launch of an exclusive partnership with Galvin at Windows.

Deliveroo’s Managing director Dan Warne

Customer experience is key

With all these apps promising high-quality, ready-to-eat food delivered in less than 30 minutes, how exactly does a customer distinguish one from the other in this noisy sector? Mrongovius says there will definitely be cross-over from a consumer perspective but what makes a brand stand out is the customer experience. 

Carter agrees and, as one of the earliest entrants to the market, Just Eat has been in pursuit of "becoming the ultimate food-ordering destination". He argues that while technology is the enabler of everything the company does, Just Eat aims to deliver the best possible experience in discovering the best and broadest range of food across the country. Carter stresses: "It comes down to being the best – and that is what the customers will buy into." It’s a sentiment that Warne shares: "Get people excited about food and that is how you win customers."

However, a word of caution from Ross Neil, executive creative director at WCRS, who thinks these businesses could be fighting over nothing. "There is a land grab happening at the moment and everyone wants to look bigger than its rivals," he says.

"They call themselves tech companies, mobile-app companies – but it is just a format war. It is like saying: do I prefer having a conversation over O2 or over Vodafone? To the customer, it is just a tad meaningless. Online food services are conduits, with nano differences. And, as long as I get my curry or pizza delivered the way I want it and when I want it, the market will continue to grow."

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