The rise of FoodTech – and why it’s here to stay when COVID-19 fades
Posted on December 2, 2020
By Mohamed Chaudry, CFO, Foodhub
No one can overlook the part that FoodTech has played within the hospitality sector in 2020.
It has been the saviour of many businesses throughout the pandemic, empowering platform diversification, remote payments and safe, digital booking. But even in August and September, when many of the COVID-19 restrictions were lifted and hospitality venues were able to regain a semblance of pre-pandemic normality, most small businesses maintained the technology-powered services they’d developed and embraced through lockdown.
Partly as a safeguard against a potential ‘second wave’, as we’re now seeing. But also, partly for convenience, customer preference and enhanced revenue potential. While the pandemic can be said to have accelerated the digital revolution for the food industry, in my view, its remit and potential stretches far beyond the necessity-driven services of 2020, into a sector-changing agency.
Where did FoodTech start, and how has it evolved in 2020?
Although FoodTech is being heralded as a relatively new phenomenon, it’s actually been around in various forms for a couple of decades.
The Just Eat multi-establishment delivery service was probably the first of the major players. Launched in Denmark in 2001, it now operates in 13 countries globally. Its premise was to allow small eateries without the technical or physical infrastructure to provide an online order and delivery service, affording businesses with new revenue and customers with new convenience.
It’s a model that has since been replicated and developed by numerous other brands, including our own. But these apps have become an accepted – expected, even – part of the food service industry… and have presaged the on-demand culture.
In 2020 SaaS (software as a service) FoodTech reached something of a zenith. Rather than simply providing convenience, online services became integral to the survival of hospitality businesses of all sizes. And a vital resource for a locked down population grappling with the psychological impact of restricted living as much as the practical.
Takeaways and restaurants turned to these platforms to support their newly founded takeaway and deliver services. Enterprising small businesses opened Facebook shops. Our own forecasts at Foodhub are to reach 40 million online food orders this year and, with the expansion into America, we are projecting 100 million online food orders by the end of 2021.
The more gourmand establishments, with a reputation to support, developed postal meal box services, with digital ordering and payment systems; then, as restrictions eased, digital booking in and in-house ordering systems were developed for the slow and brief return to normality.
But this has just been the surface, public face of FoodTech. There has been far more work bubbling away under the surface, with much more still to come.
Where is FoodTech going?
The Business Research Company estimates total SaaS market growth to USD 220 billion in 2022, from 134 billion in 2018. That’s a massive leap for a mere four-year period. And one that few other sectors can emulate. But what’s powering that growth?
FoodTech, like most other advancements, has been fuelled by convenience and necessity. But it also bears economic benefits. Takeaway restaurants often carry fewer overheads. Digital service systems are often cheaper and easier to implement than non-digital alternatives. While integrated analytics systems make cost savings simpler to monitor and execute. All of these factors will continue to drive development within FoodTech. And the potential within the sector is enormous.
We have the impending advent of serviceable drones, which opens up the possibility of largescale contact-free food delivery. Stock prediction and inventory management are already at play in other sectors of the economy, and there’s no reason why they can’t be adapted to service the small-scale food and hospitality sectors, as well as the large.
While food production opens up a whole range of new opportunities, from the fabled 100% meatless Impossible Burger 2.0, to general AgriTech, searching for ways to enhance crop yields for an ever-growing populace.
During the UK’s first lockdown, food delivery growth increased by 45%. While the draw of dining out is still strong, COVID-19 has made the population cautious. And having fine food delivered appeals simply because it’s easier – sometimes you want to eat your truffled hen’s eggs in your pyjamas in front of Netflix, rather than dressing up and driving.
While for businesses, tech presents the possibility of diversification, cost efficiency and sustainability. In my view, in three years – with social distancing still being part of life – we’ll be seeing a 20% reduction of dining out.
And it will be at least partly due to FoodTech. Some will argue that this is a bad thing. I see it as simple evolution.