Online rivals fight for space at the food delivery trough
The days of playing broken telephone with restaurants, and waiting for your meal to arrive at the right address on a wing and a prayer, are fading fast as online ordering takes off.
And the battle for market share is hotting up between South Africa's two largest services, Mr D Food and UberEATS.
At Mr D Food, previously known as Mr Delivery, online orders have soared to 95% of total orders for the year ending June 2017, compared with 20% last year. Its app has been downloaded more than 200 000 times in the past six months.
UberEATS, which launched in South Africa in September last year, had its app downloaded 100 000 times in its first six months of operation here.
Devin Sinclair, head of Mr D Food, said part of its appeal was its cash-on-delivery payment option.
"For the South African consumer, being able to buy cash is still a huge drawcard ... We consider ourselves in a race against UberEATS, but first our focus is doing what we do well and delivering an excellent customer service experience."
Mr D Food has been in the food delivery business for 25 years. Sinclair would not say how much of its online business was new, as opposed to existing customers transferring their orders from its call centre to its app, but he said business was booming month to month.
"We have a network of more than 1 400 restaurants, hundreds of drivers, and we deliver to over 1 900 suburbs around South Africa," he said.
"With projections that there will be 20 million smartphone users in South Africa within the next three years, we anticipate continued exponential growth."
Customers who previously bought from Mr D Food several times a year were now returning to its app several times a month, Sinclair said.
The business, which was bought by Takealot in 2014, has been rebuilt to embrace the move to mobile in an attempt to capitalise on the explosion of the global online food delivery industry.
Naspers, which has invested R960-million in Takealot and owns a large stake in it, has caught on to the global trend. It has put more than $500-million (about R6.7-billion) into online food delivery businesses since May this year - $425-million in Germany's Delivery Hero and $80-million in India's Swiggy.
UberEATS is already a significant global player operating in 100 cities in 27 countries.
"South Africans have truly embraced online food delivery. They are all about finding easy and reliable ways to discover the food they love at the push of a button," said Uber sub-Saharan Africa spokeswoman Samantha Allenberg.
The service, which operates in Cape Town, Johannesburg and Pretoria, has more than 700 restaurants on its platform and aims to expand UberEATS to other cities in sub-Saharan Africa.
The company ventured into food deliveries after the success of its pioneering Uber rides app.
But, globally, Uber has had a tumultuous year. The company is putting reforms in place in the face of fierce competition and a string of internal controversies, including regulatory probes, a sexual harassment scandal and the resignation of CEO Travis Kalanick following pressure from investors.
In late 2015 Uber's global rivals Lyft, Didi Chuxing, Ola and Grab banded together to fight the ride-sharing giant's surge but quietly abandoned the deal, which would have allowed riders to book using the other's platforms.
This week Didi Chuxing, which acquired Uber's operations in China last year, invested an undisclosed amount in Estonian-owned Taxify, an Uber rival in Africa and Europe.
Now UberEATS is offering the company an opportunity to extend its reach.
Allenberg said: "We are the only truly global third-party delivery app and that is a big advantage because people are using the same Uber account no matter where they are in the world, even when they are exploring local cuisine.
"The introduction of new services and choices is good for consumers. Competition encourages better value and helps raise quality standards.
"The competition that UberEATS has introduced [into the local market] has also encouraged innovation by existing platforms, which were predominately call centre-based," she added.
Sinclair said Mr D Food, in moving to mobile, saw an opportunity to grow revenue and leverage the company's delivery fleet to service customers who order from online retailers Takealot and sister company Superbalist.
"What we did was rebuild the whole business from scratch really, but it wasn't just about taking the business online.
"Ultimately what we wanted to do for customers was make it simpler, easier and to make delivery faster," he said.
Though some restaurant chains like McDonald's offer an in-house delivery service, Sinclair believes this is a minor threat.
"Ultimately, we consider ourselves specialists in the customer experience and in the delivery experience, whereas for others it is a bolt-on to being a specialist as a restaurant," Sinclair said.
Part of the value proposition both Mr D Food and UberEATS make to partnering restaurants is the opportunity to reach more patrons without the additional costs of increasing capacity in a physical restaurant or creating their own delivery infrastructure.
But Orin Tambo, a senior analyst at capital market research and financial services firm Intellidex, said the growth of these two platforms locally did not necessarily translate to increased restaurant sales.
Eating into incomes
"The sales of listed restaurants are flat because consumers are cash-strapped. It all goes down to what is happening in the economy," Tambo said. "[Consumer] confidence is declining because the economy is not performing well."
According to business intelligence company Euromonitor, less than 1% of food orders were placed online in South Africa in 2015, but Tambo said the online food delivery industry was likely to see continued growth with changes in consumer behaviour.
"People are busy. They don't want to spend time driving to Debonairs.
"Most sit-in restaurants don't have delivery options, so consumers are receptive [to delivery services]."
Globally, the industry has already mushroomed with publicly listed companies GrubHub in the US and Just Eat in the UK.
A six-month study, covering 16 countries but not South Africa, by business management consultancy McKinsey & Company found online had penetrated the total food delivery market by over 30% last year.
McKinsey has projected that global online delivery will grow by 25% yearly this year and next, and will taper off to 14.9% annually for the following two years.
Both Mr D Food and UberEATS have varied cuisines and healthier food options on their platforms, giving the lie to perceptions that people eat junk food when they order in.
"[Consumers are] ordering a salad for lunch, muesli for breakfast, smoothies in the afternoon.
"As the desire for convenience grows the frequency of using the service grows. Instead of it being just the guilty pleasure, it's becoming more entrenched in people's lifestyles," Sinclair said.