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Until recently, ordering meals for delivery, even in major urban centers, required These platforms allow restaurants to provide customers with delivery services by 4 Eurostat, structural business statistics, Annual enterprise statistics for

Demographic user profile: U S Users by income Source: Statista Global Consumer Survey, September 2018 Online Food Delivery users in the

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Online food-delivery platforms are expanding choice and convenience, allowing customers to order from a wide array of restaurants with a single tap of their

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Delivering growth

The impact of third-party platform

ordering on restaurants

November 2019

Delivering growth | The impact of third-party

platform ordering on restaurants 2

Important notice3

Executive summary4

2.Technology and food delivery in Europe10

Delivering growth| The impact of third-party platform ordering on restaurants 2

1.Introduction6

1.1Potential impacts on restaurants

1.2Consumer trends and restaurants

1.3Analytical approach

4.Conclusions23

3.Impacts on restaurants in selected cities15

3.1Analytical approach

3.2Impacts on aggregate demand for restaurant meals

3.3Net impacts on restaurant financials

3.4Summary impacts

Appendix: Analytical method23

Consumer choice

Attribution

Restaurant sales and impacts

7 8 9 16 19 20 21
24
28
29

Delivering growth | The impact of third-party

platform ordering on restaurants 3

Important notice

below. regard. itscontents. outcomesestimatedinthescenarios.

Contractarereserved.

Delivering growth| The impact of third-party platform ordering on restaurants 3 4

Delivering growth | The impact of third-party

platform ordering on restaurants

Executive summary

Itisapparentthat:

1Headline figure publicly available from Statista: https://www.statista.com/outlook/374/102/online-food-delivery/europe

demandforconvenience. nothearaboutthemotherwise.

Madrid.

Delivering growth | The impact of third-party

platform ordering on restaurants 5 withrestaurantmeals. significantnetincreaseinturnover. markettrends.

The number of meals sold by across the restaurant sector Ȃboth chains and independent restaurants Ȃ

increased as a result of third-party platforms

London: around 606,000

extra meals each week overall through chain restaurants and 305,000 through independents (around a 4% increase across the board).

Paris: around 106,000 extra

meals each week through chains (10% increase) and

250,000 extra meals each

week through independents (4% increase).

Madrid: around 77,000

extra meals each week through chains and 99,000 through independents (around a 1.5% increase across the board).

Warsaw: around 48,000

extra meals each week through chains and 75,000 through independents (around a 2% increase across the board). Third-party platforms have driven an increase in revenues and profits across the sector partyplatformsdidnotexist.Engagementwith results:

Revenue is up around

£323m a year, around

1.4%, and profit is up

£189m.

LONDON

Revenue is up around

ȜE4P a year, around

1.1%, and profit is up

Ȝ18PB

PARIS

Revenue is up Ȝ23m

a year, around 0.3%, and profit is up

Ȝ36m.2

MADRID

Revenue is up 110P ]Ą

a year, around 1.0%,

MQG SURILP LV XS 46P ]Ą

a year.

WARSAW

Delivering growth | The impact of third-party

platform ordering on restaurants

1.Introduction

3The EU28 refers to Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland,

Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the UK.

4Eurostat, structural business statistics, Annual enterprise statistics for special aggregates of activities (NACE Rev. 2)

5GH 6LOYM GMNVOLQM FMUROLQH (OOLRPP MQG 5RNHUP 6LPPRQV 2016 Ȋ(QPU\ ([LP $QG 3ULŃH FRPSHPLPLRQ ΖQ 8N 5HVPMXUMQPVȋ

6+HMO\ -B-B MQG 0£¯UP¯Q PMŃ FRQ ΖRPMLUH 2018 ȊFMOŃXOMPLQJ UHVPMXUMQP IMLOXUH UMPHV XVLQJ ORQJLPXGLQMO ŃHQVXV GMPMȋ

7Other studies in different regions have also found similar findings, although they have also highlighted that these are not much higher than other services sector

start-ups; for example, in Western US: https://www.researchgate.net/publication/267695784_Only_the_Bad_Die_Young_Restaurant_Mortality_in_the_Western_US

sector.

Ȝ175billioninvalueadded.4

economicsizeoftherestaurantsector. tocutbacktheirrestaurantspending,canalso

Warsaw.

Delivering growth| The impact of third-party platform ordering on restaurants [Abridged version] 6

Delivering growth | The impact of third-party

platform ordering on restaurants 7 approachforthisstudy. futureresearch.

1.1Potential impacts on restaurants

viceversa,meanthattheplatformscangrowand otherwisehavebeenawareofthem. quantitativeanalysisforthisstudy.

8The FMPHUHU Ȋ%XVLQHVV ȂPOH ULVH RI POH UHVPMXUMQP GHOLYHU\ VHUYLŃHȋ https://www.thecaterer.com/articles/356657/business-the-rise-of-the-restaurant-delivery-service

9Deloitte Ȋ7OH UHVPMXUMQP RI POH IXPXUHȋ https://www2.deloitte.com/us/en/pages/consumer-business/articles/restaurant-future-survey-technology-customer-

experience.html

10Financial 7LPHV Ȋ7OH VPMUP-XSV NXLOGLQJ ȆGMUN NLPŃOHQVȇ IRU 8NHU (MPV MQG GHOLYHURRȋ https://www.ft.com/content/a66619b0-77e4-11e9-be7d-

6d846537acab?sharetype=blocked

Delivering growth | The impact of third-party

platform ordering on restaurants

1.2Consumer trends and restaurants

seatedtrendsinconsumerpreferences.Many purchasinggoodsandservices:11 commerce,withgoodsdeliveredtotheirhomeor from13%in2008to20%acrosstheEU28in2017. (includingNorwayandIceland).12 theirliveseasier,26%wantthemtobemore becomingmorecomfortablecommunicatingand managingeverydaytasksthroughsmartphone apps.1415 associated

11Nielsen Ȋ6L[ IMŃPRUV GULYLQJ ŃRQVXPHUVȇ TXHVP IRU ŃRQYHQLHQŃHȋ https://www.nielsen.com/eu/en/insights/article/2018/six-factors-driving-consumers-quest-for-

convenience/

12Eurostat, https://ec.europa.eu/eurostat/statistics-explained/index.php?title=File:E-sales_and_turnover_from_e-sales,_2008_to_2017,_EU-

13Nielsen Ȋ6L[ IMŃPRUV GULYLQJ ŃRQVXPHUVȇ TXHVP IRU ŃRQYHQLHQŃHȋ https://www.nielsen.com/eu/en/insights/article/2018/six-factors-driving-consumers-quest-for-

convenience/

14For example, financial planning Ȃ7OH ΖQGHSHQGHQP Ȋ$OPRVP OMOI 8. PLOOHQQLMOV RMQP PR GR POHLU ILQMQŃLMO SOMQQLQJ RQ M VPMUPSORQHȋ

15Forbes Ȋ3ORQH FMOOV 7H[PV 2U (PMLO" +HUH

V +RR 0LOOHQQLMOV 3UHIHU 7R FRPPXQLŃMPHȋ https://www.forbes.com/sites/larryalton/2017/05/11/how-do-millennials-

prefer-to-communicate/#4a07cee76d6f

16Hamermesh, D. S. (2019) Spending Time: The Most Valuable Resource, OUP USA.

17Headline figures publicly available from Statista, e.g. https://www.statista.com/outlook/374/102/online-food-delivery/europe

ONLINEFOODDELIVERY,$BN

6.7 UK 2.5

FRANCE

1.4 SPAIN 0.7

POLAND

1.0 ITALY 2.8

GERMANY

9.6

OTHER EUROPE

sectorgrowingbyover10%ayeartoaround$25bn acrossEuropeby2023. tothischangeinconsumerpreferences.

Delivering growth | The impact of third-party

platform ordering on restaurants 9

1.3Analytical approach

fromanumberofsources,includingdiningata availableorconvenience. consumedon-premises,buttheycouldalsobe turnoverand/orprofitintheindustry. restaurantindustrywillreflectboth: sector;and providedbyrestaurants. wherethird-partyplatformsdonotexist.

18The *XMUGLMQ Ȋ-XVP (MP MQG +HOOR)UHVO PMS LQPR MSSHPLPH IRU ORPH-GHOLYHUHG IRRGȋ https://www.theguardian.com/business/2019/mar/06/just-eat-and-hellofresh-tap-

into-appetite-for-home-delivered-food outsideurbancenters). forwhatchanneltheorderedmealssubstitute. (includingemploymentmultipliers). restauranteconomics. 10

Delivering growth | The impact of third-party

platform ordering on restaurants Paris

Warsaw

2.Technology and food delivery in

Europe

theforefrontofradicalshiftsinthemeansand (sometimespoorlyservedbyexistingtakeaway options).2122 third-partyplatformsmakeiteasierformore preferences. theeaseoforderingandpayment(seeFigure3). convenience/ casual-dining-market.pdf

Section0andtheAppendix.

Figure 2: Where the average consumer gets their meals over an average 7-day period25

London

Madrid

On-premisesdining

Delivery,directly-orderedfromrestaurants

Eatingathomeandothernon-restaurantmeals

Source: Deloitte survey, July 2019.

7%4% 3% 3% 1% 82%
8%4% 6% 3% 2% 77%
13% 5% 3% 2% 0% 77%
9% 8% 4% 2% 0% 77%
Delivering growth| The impact of third-party platform ordering on restaurants 10

Delivering growth | The impact of third-party

platform ordering on restaurants 11

Box1:Penetrationofthird-partyplatforms

Figure 4:Market penetration of third-party platforms Have you used a third-SMUP\ SOMPIRUP PR RUGHU IRRG LQ POHȐ

Figure 3:Reasons for using third-party platforms

What are the reasons you choose to order food using a third-party platform? 49%
28%
21%
14% 41%
1% 47%

28%26%

18% 42%
2% 41%
31%
22%
12% 32%
0% 62%
35%

20%21%

39%
0% 0% 10% 20% 30%
40%
50%
60%
70%

Ease of ordering and

Payment

Ability to compare and

chose from a wide range of providers

Quality of

food/wanted to try new cuisine

Wanted to try after

seeing an advert or discount

Didn't feel like

cooking/short of time Other

LondonParisMadridWarsaw

Source: Deloitte survey, July 2019.

Source: Deloitte survey, July 2019

57%53%49%62%

3%5%2%

3%7%6%9%

9%11%13%10%

22%22%31%16%

0% 20% 40%
60%
80%
100%

LondonParisMadridWarsaw

Last 7 daysLast two weeks

Last monthLast three months or less frequent

Do not use third-party platforms

Delivering growth | The impact of third-party

platform ordering on restaurants respondentsforWarsaw. companies-to-lower-fees-11561282202

2036487.html

interview-biju-bubble-tea/

DeliverooorGlovo).

platformssuchasJustEat,DeliveryHero,and

Takeaway.com).26

portals.27 allowsthemtoreachnewcustomersandpush

Madridand47%inWarsaw.28

platformsgenerallytakeapercentagefeefrom therestaurant.293031 revenuestreams:

Additivegrowth:Third-partyplatformsopen

overallmealspurchasedfromrestaurantsby lookingforaconvenientbuthealthmid-week that:

Delivering growth | The impact of third-party

platform ordering on restaurants 13

36Business ΖQVLGHU Ȋ7 UHMVRQV RO\ 0ŃGRQMOG

V FOLSRPOH MQG 6OMNH 6OMŃN MUH HPNUMŃLQJ PHMO GHOLYHU\ ȃand Olive Garden isn'tȋ

37Financial 7LPHV ȊGMUN NLPŃOHQV LV POLV POH IXPXUH RI PMNHMRM\"ȋ https://www.ft.com/content/d23c44fe-4b0b-11e7-919a-1e14ce4af89b

38Financial 7LPHV Ȋ7OH VPMUP-XSV NXLOGLQJ ȆGMUN NLPŃOHQVȇ IRU 8NHU (MPV MQG GHOLYHURRȋ https://www.ft.com/content/a66619b0-77e4-11e9-be7d-6d846537acab

39Financial 7LPHV Ȋ7OH IRRG LQGXVPU\ LV GXH MQRPOHU UHYROXPLRQȋ https://www.ft.com/content/1ce0cd5a-c1b0-11e9-a8e9-296ca66511c9

40Eater Ȋ8NHU (MPVȇ 3MPO PR GHOLYHU\ GRPLQMPLRQ 5HVPMXUMQP ΖQŃHSPLRQȋ https://www.eater.com/2018/10/24/18018334/uber-eats-virtual-restaurants

41The 7HOHJUMSO Ȋ8NHU (MPV H\HV 400

YLUPXMO UHVPMXUMQPV

MV LP PMNHV ILJOP PR GHOLYHURRȋ https://www.telegraph.co.uk/technology/2018/10/15/uber-eats-eyes-400-virtual-

restaurants-takes-fight-deliveroo/

42The 6SRRQ ȊIRQGRQ 8NHU (MPVȇ 1HR 5HVPMXUMQP $ŃŃHOHUMPRU 3URJUMP JLOO FRYHU Ȋ*MSVȋ LQ )RRG 6HOHŃPLRQȋ https://thespoon.tech/london-uber-eats-new-restaurant-

43Uber Eats sales data 2019, comparing month before launching virtual restaurant with two following months

Newcustomers

Expansionandinnovation

opportunitytoexpandandentrepreneursan

UKhaveseensalesincreasebymorethan50%.43

Delivering growth | The impact of third-party

platform ordering on restaurants 14 casual-dining-market.pdf grocers-hate-it-11552107610 fixedcosts,reducingoverallcostspermeal. chooseanotherrestaurantthatdoes. profitcomparedtoadine-incustomer. Delivering growth| The impact of third-party platform ordering on restaurants 14

Delivering growth | The impact of third-party

platform ordering on restaurants 15

Cost per meal

3.Impacts on restaurants in selected cities

Madrid,andWarsawinparticular.

aggregatedtogetanoverallnetimpact. approachareincludedintheAppendix. Figure 5: 2YHUYLHR RI POH VPXG\ȇV MQMO\PLŃMO MSSURMŃO Further information on the analytical approach is provided in the Appendix. # meals consumed across consumer choice set, (factual) # meals consumed across consumer choice set, (counterfactual)

Chain / Independent

market shares

Number of

restaurants by segment # of meals consumed in restaurant segments, factual and counterfactual

Attribution

mapping of consumer meals to segments

Financial impact for

average restaurant, by segment

Financial impact by

restaurant segment

Net financial impact

on restaurant sector

Delivery and platform

costs

Turnover per meal

X Y Z

Primary data

Secondary data

Model parameter

Delivering growth | The impact of third-party

platform ordering on restaurants consumptionbehaviorandhowitchangesinthe throughwhichtheycanorderorobtainfood(the outlinedinFigure6.

3.1 Analytical approach

(seeFigure7). aspossible. partyplatformsentirely.

Figure 6: Consumer choice set for purchasing food

mealsorderedusingthird-partyplatforms.52

01In-person

Dining

04Eating at home /

other alternatives

02Delivery

Direct ordering

Third-party

platforms

03Collection

Direct ordering

Third-party

platforms

This may be through

Delivering growth | The impact of third-party

platform ordering on restaurants 17 outsideoftherestaurantindustry. 54

9)arethat:

market.54AccordingtotheUberEatssurvey

67%inWarsaw,withthisslightlylowerat59%in

Madrid.

premiumfoodoptionsoffered, offeredtakeawayservices.

Substitutionforcollectionandon-premises

havebeenorderedandconsumedonpremises.11-

19%ofmealswouldotherwisehavebeennon-

platformcollectionorders. therestaurant. Figure 7: Overview of scenario-based consumer choice survey

JRUNLQJ OMPH RU GLGQȇP

have a chance to eat

Time constrained (e.g.

providing care for someone)

As a treat, or out of

convenience in any other situation

Outside normal hours

(e.g. after a late night out)

Social occasion (e.g.

spending time with friends and / or family platforms:

Consumerswhohave

usedthird-party platformsinthelast7 daysareaskedifthese scenariosapplyto them.

Ifascenarioappliesto

them,theyareasked toidentifywhatthey wouldhavedoneif third-partyplatforms werenotavailableinquotesdbs_dbs19.pdfusesText_25

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