A survey of 500 respondents based in Singapore showed that more than half ordered food delivery at least once a week. In addition, 40 per cent of the respondents had a problem with an order, and they were more likely to blame the restaurant than the delivery service providers (DSPs).
Conducted in February 2020, the online survey was led by National University of Singapore (NUS) Business School Visiting Professor Sherri Kimes, in collaboration with the Singapore Productivity Centre (SGPC). The online survey aimed to determine how Singaporeans were using DSPs and recommended strategies for restaurants to refine their delivery strategy. Respondents surveyed had to have ordered food delivery at least once in the past six months.
The study found that food delivery may be gaining popularity in Singapore, with 94 per cent of the respondents citing convenience as the most important reason for using a DSP. Moreover, they were willing to pay an additional 15 per cent delivery fee for this convenience, especially if the menu prices for takeaway were lower and the price differential was framed as a discount. In addition, every one in five respondents used subscription services offered on DSPs. Among the reasons for subscribing, free delivery was the most important, particularly for younger respondents.
It was further revealed that 71 per cent of respondents placed their orders through their mobile phones and 86 per cent of customers ordered from restaurants they found on food delivery apps. While it is popular, customer service and recovery may be an issue. About 40 per cent of respondents encountered problems with their orders and 57 per cent of these respondents blamed the restaurant rather than the DSP.
Prof Kimes, who is also Emeritus Professor at Cornell University said, “I found the pricing results to be particularly interesting. The fact that respondents were fine with delivery prices being higher than takeaway prices and that they were fairly open to delivery fees suggests that restaurant operators might have some leeway in trying to recover the commissions associated with the delivery service providers.”
“This study is highly relevant to F&B operators as it provides insights on consumer behaviour and sentiments towards food delivery services. This can help operators to adapt and adjust their delivery operations to ensure both dine-in and delivery experiences are favourable for their customers. In addition, the study also revealed the consumers’ willingness to pay for food delivery. This would help F&B operators work on pricing strategies and encourage more sales,” said Mr Michael Tan, SGPC Chief Executive Officer.
Based on the findings, the study gave the following recommendations to restaurants and DSPs to improve productivity and services:
- Restaurants should have mobile-friendly menus while DSPs should use a convenient interface and provide fast delivery.
- Restaurants should make sure that they are listed on DSPs, and DSPs should have as many restaurants on board as possible.
- Restaurants should double check all orders. The two most common problems cited –missing items and incorrect orders – are factors restaurants can control.
- While restaurants need not worry about charging higher prices on DSPs, they need to frame their pricing as a discount. For example, restaurants can show that their takeaway pricing is 15 per cent cheaper than delivery pricing, instead of the other way around. This is because people frame gains and losses differently.
Prof Kimes will be writing a paper based on the survey findings. In addition, she plans to work with SGPC on a new survey about food delivery in Singapore – this time from the F&B operators’ perspectives.
Prof Kimes said, “My past study on restaurant self-service technologies in the United States showed that customers and restaurant managers can view these technologies rather differently. Hence it would be interesting to see if there is a similar disconnect on food delivery. We hope to use the results from both surveys to help F&B operators better understand how best to position themselves.”