Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 378

Add extra fries: the growing appetite for food-delivery services

Restaurant and grocery delivery companies are the latest feeding frenzy for investors who are betting that appetites for food brought to homes and workplaces will keep growing beyond the end of the COVID-19 pandemic.

Investors looking to get a slice of the food delivery pie should keep their eyes peeled for trends around popularity and platform use, especially as the world starts to ease lockdown restrictions.

Food delivery giants UberEats, Grubhub, Just Eat Takeaway and Dominos are some of the top names but there is a plethora of platforms underneath fighting for a share of a growing market.

Total worldwide restaurant industry sales are projected to reach US$2.1 billion this year, with revenue expected to show an annual growth rate of 7.1% and project market volume of US$2.7 billion by 2024, according to Statista.

Closer to home, market researcher Roy Morgan says the number of Australians over the age of fourteen who use food delivery services has doubled to nearly 4 million since 2018, driven by the 25% of millennials and Generation Z who regularly order in.

Food delivery popularity during COVID-19

COVID-19 has driven the most recent boom in food delivery as restaurants, bars and cafes were shut down by lockdown regulations but remained open for takeaways.

As some people turned to baking their own bread and getting creative in the kitchen, others turned to food delivery services in order to get their ‘comfort food’ kicks. In fact since the pandemic started, UberEats reported the term ‘comfort food’ had broken through the top searches on the platform.

Menulog, Deliveroo and UberEats have all reported rapid growth in new restaurants on their Australian platforms, user numbers and delivery numbers since March.

In August UberEats announced that its delivery revenue grew 103% year on year, as a result of more people ordering from Uber Eats than ever before.

While Menulog recorded a 54% increase in orders on the platform from Melbourne customers, and Deliveroo chief executive Ed McManus said 1700 new restaurants joined the platform in the weeks following lockdown closures in Australia.

This includes higher-end restaurants and venues which prior to the pandemic typically had long lines of customers waiting outside their doors, such as Melbourne's Chin Chin.

The buzz around food delivery has spurred acquisitions overseas, with European platform recently buying JustEat for $6.2 billion. Shortly afterwards the newly named JustEat Takeaway pounced on GrubHub for $10.6 billion, after a deal with UberEats fell through. Last year, low-brow delivery service DoorDash also bought high-brow delivery service Caviar.

Since their low in March, Grubhub shares have climbed 142%, which coincides with its revenues in July of $459 million, a 41% year on year increase from $325 million in the second quarter of 2019.

Not all foodies are sold

Despite the growth of the food delivery services industry during the global pandemic, not all Australian consumers and restaurants are sold.

Rather than relying on the food delivery platform giants, which charge high commissions for using their platforms, some restaurants are encouraging customers to pick up orders themselves or offering cook-at-home meals.

In an industry where net profit margins often fall in the low single digits, this commission structure works for highly-profitable restaurants for which delivery represents additional incremental sales and profiles. But for moderately profitable restaurants, low order volumes can be detrimental to the bottom line.

Some industry experts believe once the pandemic has passed and restaurants are allowed to operate as usual, hype built around food delivery services may die down or return to past performance levels.

The innovative future of food delivery

It’s easy to forget the food delivery sector is relatively young: Deliveroo launched just six years ago, Glovo four years ago, and UberEats entered the market in 2016.

But all are working on new products to further smooth the food ordering process.

Restaurants such as Dominos have already started planning for the future, allowing customers to order pizza through social media platforms such as Twitter by simply tweeting a pizza emoji. The pizza giant has also launched an app which allows customers to order pizza through their smart watches.

Pizza Hut partnered with Accenture and Visa to develop an in-car food ordering system, allowing drivers to buy pizzas while on the road. The secure medium lets customers order food by voice, eliminating the need to check the screen.

Automotive manufacturers Ford, Toyota and GM have successfully trialled autonomous vehicles for food delivery services across the US, in what promises to be a flood of driverless vehicles being employed by online food platforms.

In April 2019, Google’s parent company Alphabet was approved to trial drone delivery in Canberra to over 100 eligible homes. UberEats were also given the green light to trial drone delivery in San Diego this year, after a successful pilot at San Diego State University in partnership with McDonalds.

The growth of the online food delivery industry has also given way to a virtual restaurant model known as ‘dark kitchens’ or ‘ghost kitchens’ that exist only to deliver food. Some established breakfast or lunchtime venues can rent out their unused kitchen in the evening, and new ventures can trial their wares without major overheads. Deliveroo has launched its own dark kitchen precincts, called ‘Deliveroo Editions’, which are easily accessible by their delivery riders.

Room to grow

There’s still a whole lot of room for growth in the food delivery service industry including plenty of space for new contenders and appetite for fresh offerings, but that will be matched by battles for market share as well as other hurdles along the way.


Josh Gilbert is an Australian analyst at eToro. This article is general information and does not consider the circumstances of any investor.



Leave a Comment:



Apps and ‘dark kitchens’ are changing food delivery

What do 11 stock market crises over 148 years tell us?


Most viewed in recent weeks

Stop treating the family home as a retirement sacred cow

The way home ownership relates to retirement income is rated a 'D', as in Distortion, Decumulation and Denial. For many, their home is their largest asset but it's least likely to be used for retirement income.

Two strong themes and companies that will benefit

There are reasons to believe inflation will stay under control, and although we may see a slowing in the global economy, two companies should benefit from the themes of 'Stable Compounders' and 'Structural Winners'.

Welcome to Firstlinks Edition 433 with weekend update

There’s this story about a group of US Air Force generals in World War II who try to figure out ways to protect fighter bombers (and their crew) by examining the location of bullet holes on returning planes. Mapping the location of these holes, the generals quickly come to the conclusion that the areas with the most holes should be prioritised for additional armour.

  • 11 November 2021

Reducing the $5,300 upfront cost of financial advice

Many financial advisers have left the industry because it costs more to produce advice than is charged as an up-front fee. Advisers are valued by those who use them while the unadvised don’t see the need to pay.

Welcome to Firstlinks Edition 431 with weekend update

House prices have risen at the fastest pace for 33 years, but what actually happened in 1988, and why is 2021 different? Here's a clue: the stockmarket crashed 50% between September and November 1987. Looking ahead, where did house prices head in the following years, 1989 to 1991?

  • 28 October 2021

Why has Australia slipped down the global super ranks?

Australia appears to be slipping from the pantheon of global superstar pension systems, with a recent report placing us sixth. A review of an earlier report, which had Australia in bronze position, points to some reasons why, and what might need to happen to regain our former glory.

Latest Updates

Investment strategies

Maybe not the four most-costly words in investing

A surprisingly high percentage of respondents believe 'This Time is Different'. They may be in for a tough time if history repeats as we have seen plenty of asset bubbles before. Do we have new rules for investing?

Investment strategies

Firstlinks survey: the first 100 tips for young investors

From the hundreds of survey responses, we have compiled a sample of 100 and will publish more next week. There are consistent themes in here from decades of mistakes and successes.


What should the next generation's Australia look like?

An unwanted fiscal drain will fall on generations of Australians who have seen their incomes and wealth stagnate, having missed the property boom and entered the workforce during a period of flatlining real wages.


Bank results scorecard: who deserves the gold stars?

The forecasts were wrong. In COVID, banks were expected to face falling house prices, high unemployment and a lending downturn. In the recovery, which banks are awarded gold stars based on the better performance?

Exchange traded products

In the beginning, there were LICs. Where are they now?

While the competing structure, ETFs, has increased in size far quicker in recent years, LICs remain an important part of the listed trust sector. There are differences between Traditional and Trading LICs.


Should you bank on the Westpac buy-back?

Westpac has sent out details of its buy-back and readers have asked for an explanation. It is not beneficial for all investors and whether this one works for some depends on where the bank sets the final price.

Investment strategies

Understanding the benefits of rebalancing

Whether they know it or not, most investors use of version of a Strategic Asset Allocation (SAA) to create an efficient portfolio mix of different asset classes, but the benefits of rebalancing are often overlooked.


Six stocks positioned well for a solid but volatile recovery

The rotation to economic recovery favouring value stocks continues but risks loom on the horizon. What lessons can be drawn from reporting season and what are the trends as inflation appears in parts of business?



© 2021 Morningstar, Inc. All rights reserved.

The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.