The food delivery industry has grown 76% per year from 2015-2020, whereby Australians currently spend $2.6b annually. It is not uncommon for many QSR & casual dining restaurants to record 30% - 40% of their total sales in delivery.
Given it’s expansion, there has become an increasing importance to understand what drives greater delivery sales. Below lists some of Geotech’s general findings across several major players within the food industry.
What You Might Expect
Unsurprisingly, delivery is strongly dependant on both;
Inner-city suburbs with strong representations of younger time-poor professionals of high socioeconomics typically hold the strongest potential. Examples within the Victorian market include;
What You Might Not Expect
The characteristics of the restaurant itself (such as store visibility, access & parking availability) each impact delivery potential. All things equal, restaurants that are situated on greater traffic flows with clear pylon & blade signage record greater delivery sales. This is especially so if the restaurant is positioned on a major thoroughfare to & from employment hubs (where consistent brand exposure can be created).
This suggests that consumer choice isn’t entirely determined at home / on the app. The branding & exposure of the store is indirectly acting as an advertisement for delivery. Much like how having a bricks and mortar store often drives higher online channel sales for clothing, the same principles can broadly be applied to food delivery sales.
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The Impact of Cannibalisation
Calcuating the net benefit of sales when one (or more) stores cannibalise sales from another is a critical consideration for store sales performance. Just like dropping in a new store too close to another will cannibalise sales for sit down restaurant trade (with destination driven brands experiencing a higher degree of negative sales performance than impulse driven) so to will delivery impact store sales performance. We've heard some brands use a standard 3km radius as a means of calculating cannibalisation, (meaning cannibalisation impact is likely higher within the 3 km zone) however we know that this can be flawed. Customers don't always follow a logical path as per above paragraph. Sales performance, be it Sit down, Drive Thru or Delivery can be impacted by a number of factors so it's best to follow the general rule of thumb; store branding and signage visibility will play a part in whatever method a consumer may choose to engage with your brand. Sales will not necessarily follow a neat circle around the store.