The Disruptive Power of Foodservice Delivery Apps in Latin America
Market disruption in the foodservice industry in Latin America is not happening in the kitchen or even on the table, but on the street.
Home delivery sales of foodservice in Latin America have quadrupled over the last five years, becoming the second-fastest-growing region in the world, after Asia Pacific. Socio-economic drivers coupled with a unique foodservice landscape have led delivery app players to expand both geographically and in terms of what they offer. New offerings include more personalized and value-added services alongside new business verticals such as modern grocery delivery, transportation, e-wallets, or cash on demand. The rapid development of ‘’last mile’’ services also means that there are strategic lessons to be learned.
Source: Euromonitor International
A unique opportunity for the foodservice industry
High entry barriers, government regulations (or lack of), long term financial solvency, delivery apps couriers and interfaces present unique challenges to navigating a rapidly evolving landscape for these “last mile” companies.
Chained and independent restaurants, meanwhile, must consider how to incorporate big data provided by app analytics to identify and react to consumer trends and whether expansion means adding a dark kitchen.
A highly trafficked, virtual marketplace is an opportunity for any restaurant, but the endless listings and meal options make it crucial to make the right decisions based on the restaurant’s needs. For example, restaurants that have enough operational strength to respond to a high volume of orders can feasibly work with each of the available delivery apps. However, it is harder for stand-alone players to do so, as they would be forced to compromise on quality and customer experience to fulfill a larger number of orders. Finding the right balance between supply and demand is key when allying with a delivery player.
Source: Euromonitor International
Although restaurants may prefer to work with a delivery app that specializes solely in foodservice and which has excellent quality customer support, it is up to the user to dictate the winner and loser. The delivery app that has the largest offering of restaurants, both independent and chained players, will naturally have the advantage in any market.
If your favorite restaurant isn’t on one app, you’re more likely to use the app that does have it. Therefore, exclusivity agreements with “local heroes” – independent restaurants that generate high traffic – are as important to apps as multinational chains are.
Building a client base
New entrants must quickly prove to investors that they are competitive; the access to funding (or lack of it) is crucial. The Latin American foodservice industry has been disrupted by the amount of liquidity injected into the market since 2018.
On the ground, this means customer acquisition and restaurant retention. For consumers, this translates into Free delivery, promo-codes and loyalty rewards. For restaurants this means exclusivity deals with minimum guaranteed sales, no sign-in bonuses and more investment in operations.
However, industry experts also believe that there is, to some degree, an artificial factor related to the current level of cash-burn, which may not be sustainable in the long term. How can delivery apps ensure the boom doesn’t go bust in the long term?
To learn more, please visit: What Are Ghost Kitchens and Virtual Restaurants?