Many consumers have reported using more food carryout and delivery compared to pre-pandemic behavior. In 2021, U.S. food carryout and delivery sales reached $694 billion due in part to the impact of the pandemic, which helped drive the demand for convenient foods eaten at home, as detailed in Food Carryout and Delivery in the U.S., 2nd Edition by Packaged Facts. The report describes a variety of unique food delivery and carryout trends to watch, including those highlighted below.
1. Continued Elevated Use of Food Carryout and Delivery
Food carryout and delivery have been convenient during the pandemic, and these options have helped consumers feel safer if they did not feel comfortable dining in due the coronavirus. In many areas, restaurant dining rooms were closed temporarily during earlier parts of the pandemic, leading to carryout and delivery being the only available restaurant options.
Consumers continue to report elevated use of restaurant carryout compared to pre-pandemic habits as of Packaged Facts’ February 2022 National Online Consumer Survey. Food delivery categories saw growth in the percentage of consumers increasing activity compared to prior surveys going back to June 2021, while restaurant carryout saw slightly fewer consumers reporting continued increases:
- One-third of consumers said they were ordering delivery directly from restaurants more now than they were before the pandemic, the highest reported in surveys conducted since June 2021.
- 35% of consumers reported using third-party restaurant delivery apps more than pre-pandemic habits – the highest percentages since these questions were first asked in June 2021.
- In the February 2022 survey, 38% of consumers reported ordering restaurant carryout more often than before the pandemic, down slightly from the peak of 40% in August-September 2021 survey results.
2. Ghost Kitchens
As more restaurants have seen continually increasing demand for carryout and delivery, kitchens focused on preparing meals exclusively for carryout or delivery have begun to take shape (often called “dark kitchens,” “ghost kitchens,” or “cloud kitchens”). They can increase operational efficiency by entirely eliminating the need for a dining area and the accompanying distractions – particularly during the pandemic, when some restaurants closed for dine-in service and were temporarily only able to offer carryout or delivery.
Additionally, restaurant kitchens may not be optimized to handle both increased traffic for delivery/carryout and typical dine-in traffic. Too much demand on a kitchen’s capacity can slow its ability to fill orders and increase wait times, which is bad for business. Thus, businesses may find that ghost kitchens focused on carryout or delivery increase the efficiency of their dine-in service.
Many of these establishments are opening as third-parties offering services to restaurants or grocery stores (rent-a-kitchen), while existing foodservice companies may open their own dark kitchens to expand operations for carryout or delivery while avoiding outsourcing.
For instance, Kitopi (short for Kitchen Operation Innovation) provides delivery-only cloud kitchens. Locations take orders, prepare food according to partner specifications, and work with third-party delivery platforms to get the prepared meals to customers. The company functions like a franchise and does not require operators to rent kitchen space.
Similarly, in February 2020 Dine Brands announced that it planned to begin experimenting with ghost kitchens for Applebee’s. 2021 saw the company execute this plan by opening Applebee’s ghost kitchens used solely to fulfill delivery orders in Los Angeles, Philadelphia, and Miami. Applebee’s virtual restaurant concept using the ghost kitchens is called Cosmic Wings, while Dine Brands has also been testing a virtual grilled cheese restaurant called Thrilled Cheese and a virtual quesadilla restaurant called Super Mega Dilla.
3. Virtual Brands
Though ghost kitchen operations can lead to the use of virtual brands, such as Cosmic Wings as noted above, virtual brands are not necessarily run out of ghost kitchens. Some restaurants that are trying to reach more carryout or delivery customers may open up a virtual brand and cook the food in their existing kitchens. Virtual brands can help existing restaurants to increase sales in conjunction with usual dine-in sales.
Some restaurants have launched virtual brands that cover new concepts they do not otherwise serve to market products for which they are not known. For example, a restaurant with an established identity in lunch and dinner may begin to offer breakfast exclusively via a virtual brand, allowing it to test the market for the new breakfast foods.
Virtual brands also allow restaurants to offer foods for delivery when they are not open to the public, increasing sales during off-peak hours.
Some restaurants may simply be establishments from which consumers do not think to order delivery, so starting a virtual brand allows the restaurant to re-market its foods for delivery at an upcharge. For instance, a local diner may launch a virtual delivery brand for the same types of food it makes in the restaurant because consumers do not think to order delivery from a diner, but may be more likely to order delivery from a virtual brand. Repackaging standard diner fare as a virtual breakfast or lunch concept can help such local businesses to better market their food online and increase the prices compared to dine-in.
Restaurants can also test consumer reactions to variations on their standard menu items via a virtual brand without affecting their established reputations.
Another reason restaurants may open a virtual concept is selling outside their normal radius. For example, if a Chinese restaurant in one part of a city wants to expand sales to another part, opening a new virtual delivery brand may help the restaurant market its fare to new customers.
4. Drone, Robot, and Autonomous Restaurant Delivery
Drone delivery is in its infancy in grocery and restaurant delivery, but there are many opportunities to expand services and save companies money on delivery drivers. Drone delivery has been tested by U.S. grocers such as Walmart and Kroger over the last few years, and now restaurants are also getting in on the action. The Federal Aviation Administration (FAA) has recently approved rules for delivery services to people’s homes, so drone delivery is becoming a reality in select test markets.
For instance, in June 2021, El Pollo Loco, a chain of restaurants based in Costa Mesa, California, announced it would be the first national restaurant company in the U.S. to test drone delivery service from restaurant kitchens using services from Flytrex. The company is callings its drone delivery service “Air Loco” and expects that it will be faster than traditional delivery.
Drone delivery will also save customers and companies money by avoiding delivery fees and commission charges from third-party delivery companies, respectively. Andy Rebhun, Pollo Loco’s Vice President and Digital Officers is quoted as saying, “I believe drone delivery is one of the more sustainable and cost-effective mechanisms for food delivery in the future.”
Similarly, in September 2021, Flytrex and Brinker International – parent company of restaurant brands such as Chili’s and the virtual restaurants It’s Just Wings and Maggiano’s Little Italy – announced drone delivery had begun in Holly Springs, North Carolina. In April 2022, Brinker International announced it expanded the partnership with Flytrex to offer five-minute delivery of food from its brands in Granbury, Texas, a suburb of Fort Worth.
Some companies are also beginning to offer robot food delivery, though the concept is currently limited to areas without crowded sidewalk traffic such as college and corporate campuses. Big cities such as New York City and San Francisco are not ideal for robot traffic.
For instance, Starship Technologies has a fleet of robots delivering food on 20 U.S. campuses as of November 2021. Customers type codes into their phones to open the robots’ lids and retrieve their food on arrival. At the end of 2021, Starship Technologies had recently completed two million deliveries across its operations in England, Estonia (where it is headquartered), and the U.S.
Additionally, self-driving or autonomous vehicles may eventually be used for food delivery. They could be used in conjunction with robots that actually bring the food to the customer’s door, or similarly allow customers to retrieve their orders with a unique code. Without delivery drivers, companies will be able to save money and serve larger areas than are currently feasible with delivery robots that travel on sidewalks.
Additional analysis of the food carryout and delivery market can be found in the April 2022 Packaged Facts report Food Carryout and Delivery in the U.S., 2nd Edition.
About the blogger:
Cara Rasch is a food and beverage analyst for Packaged Facts. She studies consumer and industry trends in this space and has a B.A. in economics from Allegheny College.