Stagflation, layoffs, and recession woes
2022 was a difficult year for food delivery operators everywhere. Investors once enthusiastic about the lucrative potential of online food delivery became wary of interest rate hikes as global markets battled an impending recession . In Europe, venture capital investment going to food delivery companies decreased from a peak of 6.7 billion U.S. dollars in 2021 to less than 2.5 billion dollars in 2022. In addition, mounting costs incurred during the height of the pandemic were no longer sustainable during the post-pandemic crunch, and many food delivery companies resorted to mass layoffs to cut costs. With food price inflation reaching double-digit figures in the UK, more than a third of consumers were worried about paying for food as of May 2023. This was bound to strain demand for online food delivery services. For instance, the number of orders from Just Eat Takeaway.com in the United Kingdom and Ireland decreased from 289 million orders in 2021 to some 260 million orders in 2022.Consumer demand remains resilient
Despite challenges on the macroeconomic front and pressures from the cost-of-living crisis, demand for online food delivery in the UK showed remarkable resilience. While consumers have cut back on spending in many discretionary categories, their love for the convenience of food delivery did not falter. As of June 2023, approximately 51 percent of the UK population was buying food and drink online, a figure only three percentage points lower than the pandemic peak of 54 percent in March 2021. Additionally, the United Kingdom had the highest share of shoppers buying fresh food and beverages online in Europe, leading the ranking with a significant margin, at 52 percent versus 45 percent for the Netherlands.Nevertheless, consumers’ expectations may prove too taxing for food delivery platforms to fulfill. In a 2023 survey, approximately 46 percent of UK consumers cited delivery fees as the top criterion when choosing a food delivery platform to order from. In a time when most players in the industry are struggling to turn a profit, keeping delivery fees as low as possible may be a particularly difficult feat to achieve.
