Food Delivery Apps have gained significantly in popularity over the last few years. On the back of significant investments by Venture Capitalists, many of these companies are burning large sums of money in acquiring customers.
So who are the users most likely to be using Food Delivery Apps?
In my previous post, I mentioned that there are possibly 9 types of people who ‘eat out‘. Let’s look at each of these and understand if their motivations for eating out lend to them being regular users of Food Delivery Apps.
- Necessity – These are people who have no other choice than to eat out. This group includes students, working professionals, traders and others who simply do not know how to cook, or don’t have the wherewithal to do so. This set of eaters would typically go for the most convenient and reasonable priced option. I would argue that these would constitute the prime segment for home delivery of food.
- Eating out while at work – Similar to the first segment above, but would also include professionals who prefer to eat out while at work, rather than carry food from home. This is another segment that might switch to Food Delivery Apps for their office lunches, at least occasionally.
- Socialising with business teams – Eating out is a very widely accepted form of social gathering. Many working professionals would eat out as part of team outings, business meetings, etc. This segment would, typically, prefer fine-dining restaurants. Highly unlikely to switch to ordering on Apps, unless it’s for a working lunch.
- Traveling on work – Slightly different from the first segment in that these users would typically be on expense accounts. They might not always spend on fine-dining restaurants, but would not mind spending a bit more for good food with a nice atmosphere. They might also be open to trying different cuisines. My guess is that only a small percentage of such users would order on Apps. Factors influencing the decision would include if they already have the app installed, have facilities to eat comfortable at their place of stay, if there are no easily accessible restaurants nearby, etc.
- Hanging out with friends – Eating out is a good way to connect with people. Friends can typically be expected to catch up at good quality restaurants, not necessarily fine dining, where they can enjoy a leisurely meal. Many groups in this segment might prefer hanging out at pubs, bars, cafes, but might still end up at a restaurant for a proper meal. There would be certain sub-segments in this group that would prefer the convenience of ordering and eating in while meeting up with friends.
- Eating out with family – Very similar to the above segment, but likely to involve kids. So the preference would be for family-friendly restaurants. Highly unlikely to be replaced by ordering in as a large part of the fun (at least for the kids) is in the experience of visiting a restaurant.
- Special occasions – As the name suggests, these would usually end up in fine-dining restaurants or rare / different cuisines. Quite possibly the least likely of all the segments to order in.
- A treat for the kids – Specific to families with young kids, this would involve a visit to a fast-food restaurant with kid-special meals as well as ice-cream parlours. Another segment where a significant sub-segment might prefer the convenience of eating in, especially if it’s an impulse decision.
- Gourmands – People who live to eat. Highly likely to frequent new openings, unique cuisines, etc. I would guess that
- Occasional Indulgers – This is a new segment that, I believe, is expanding due to the prevalence and convenience of ordering via Food Delivery Apps. These are users who would not have ventured out into a restaurant for eating (preferring to eat in) but end up ordering in occasionally either for a change, felt lazy to cook, had no food at home, etc.
So here’s my ordered list of the above segments based on the percentage of users within each that I believe would switch to a Food Delivery App (in descending order):
- Necessity – have no choice, and find the options available on a App superior to their usual haunts
- Eating out while at work – saves time, if not money, alleviates boredom from having to eat from a limited set of options.
- Occasional Indulgers – this is the big question mark. How much adoption can Food Delivery Apps make in this segment might play a deciding role in securing the long term viability of the business.
- Treat for the kids
- Hanging out with friends / family
- Traveling on work
- Eating out with family
- Socialising with business teams
- Special Occasions
What are your thoughts? Do you agree with the above ordering? Please let me know!