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Foodservice Industry Embraces Digital Commerce

By Kelsey Weber

 

The pandemic has challenged all of us, but the foodservice industry has been hit particularly hard as the impact of stay-at-home orders, limited travel, social distancing practices and remote learning led to a 29.8% decline in foodservice operator spending in 2020, according to the International Foodservice Manufacturers Association.

 

But the industry is resourceful. Foodservice manufacturers, distributors and operators have demonstrated the tenacity and creative thinking necessary to weather this storm, with operators turning to online takeout orders and delivery, selling restaurant meal kits and groceries, and offering new outdoor dining options. Still, as of April 9, the number of seated-dining patrons was down 17% from the same time in 2019, according to Open Table.

 

As vaccine distribution increases and many parts of the country loosen restrictions, the foodservice channel is preparing to support operators and diners who are looking to return to a new normal — and digital commerce will play a crucial role. Ordering online or via an app for delivery was already on the rise, but the pandemic has accelerated the behavior. Morgan Stanley’s estimate that online food delivery would account for 13% of the addressable market by the end of 2023 was revised to 2020. The company now estimates food delivery to reach 16% by the end of next year.

 

Additionally, even before the pandemic, operators were increasingly ordering food and supplies online — and the pace of online ordering has only hastened. Nearly one-fourth of operators surveyed by Waypoint in March said they are making more online purchases for their foodservice operation compared to a year ago. Indeed, one large distributor’s ordering portal now represents some 85% of its sales.

 

But it’s not just distributors seeing online growth. By August 2020 nearly 9% percent of manufacturers’ foodservice sales were made online, compared to approximately 5.5% in 2019, according to Cleveland Research Company. In response to the increase in online traffic, manufacturers intend to increase their investment in foodservice e-commerce business this year by 15-20%.

 

As more business moves online, quality digital content is increasingly important in making a sale. Many distributors have instituted online content guidelines for manufacturers, with some implementing fees for those with incomplete digital content on the distributor’s portal. We expect more distributors to follow suit.

 

Additionally, more than one-fifth of operators surveyed by Waypoint said images of a product and its packaging are the No. 1 piece of information they look for on a product page before making a purchase. One-third said price was the No. 1 piece of information they sought.

 

With the ongoing adoption of new ways of working and an increase in online business within the foodservice space, manufacturers and distributors must enhance their digital capabilities — or fall short in their efforts to recover from the industry’s most challenging year.

 

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