The Spanish food delivery industry, once on an unstoppable growth trajectory largely due to the Covid-19 pandemic, is now navigating through a period of contraction in 2023. A recent study by Simon-Kucher reveals a notable decline (-8.9%) in active user engagement between January and April 2023.
This shift in dynamics can be attributed to changing consumer preferences, with a growing inclination towards in-restaurant dining experiences, reflecting a gradual return to pre-pandemic habits. In 2022, there was a noticeable +4 percentage point increase in the share of restaurant dining compared to food delivery.
Moreover, the report highlights a significant change in consumer behavior patterns amidst the ongoing inflationary challenges. While inflation itself is a critical factor, it’s the perception of this inflation that profoundly influences consumer spending patterns. Simon-Kucher’s quarterly inflation observatory reveals that delivery channel users are currently experiencing inflation rates more than three times higher than the actual rate. This perception is driven by what the industry perceives as unsophisticated price changes, particularly in leading traffic products.
Carles Munich, Senior Director of Simon-Kucher, explains, “Despite inflation stabilizing in recent months, consumer perception of inflation continues to rise. The break in the price optics, the halo effect, and the confirmation bias are behind this multiplier factor.”
The amplified perception of inflation has manifested in the consumption habits of delivery users. Compared to 2022, these users have reduced the frequency of their orders by 10% and are investing up to 20 more seconds per session in search of offers and promotions.
Burger King and Glovo: The Pioneers
In the realm of business benchmarks, Burger King, the undisputed leader, achieved penetration levels of 15% during the peak of the pandemic. In 2023, it shares the stage with Glovo, both boasting an average of 3 million active users per month. However, it’s worth noting that they reached figures close to 3.5 million at the end of 2022, driven by the festive indulgence during the Christmas holidays.
As consumer trends evolve, major players in the food delivery sector have intensified their efforts to minimize user churn. They employ aggressive and sustained retention initiatives, including targeted communications such as push notifications, reminder emails, and gamified promotions to encourage recurring orders.
Miguel Afán, a partner at Simon-Kucher, emphasizes the importance of careful planning in promotions to avoid product competition and traffic cannibalization. Poorly executed promotions can significantly impact profitability.
Glovo’s Growth Amid Challenges
Glovo stands out as one of the few delivery players that achieved positive growth in the number of active users over the last 12 months. Notably, Glovo has invested in the acquisition of new users through paid downloads, enhancing the visibility and positioning of its app in app stores.
Víctor Lorenzo, Manager at Simon-Kucher, believes that the food delivery business in Spain is at a turning point, influenced by unfavorable macroeconomic factors like inflation and endogenous factors such as apparent market saturation. He suggests, “Now is the time to look for formulas to make it profitable,” as 65% of Spanish consumers have used food delivery services at some point, and the industry seeks strategies for sustainable growth beyond the pandemic-induced boom.
As the Spanish food delivery sector adapts to these challenges and shifts, it is poised to explore innovative avenues for long-term profitability and sustainability.