The fifth wave of the pandemic is taking a toll on many industries across Hong Kong's economy and restaurants in the city have borne the brunt of government policies. Currently, restaurants in Hong Kong are not allowed to offer dine-in services after 6pm resulting in a lessened in-store footfall of customers for these businesses. A Deliveroo Hong Kong survey unveiled that a majority (73%) of local restaurants were less optimistic about the economy and the F&B industry for Q1 2022; with only 26% of restaurants surveyed were confident about the revenue of dine-in business during Chinese New Year. While, the Hong Kong government is about to roll out the vaccine pass, half of Hong Kong’s 16,000 licensed restaurants say they are still unprepared for it, detailed a report from the South China Morning Post.
Moreover, labour costs and rental still remain a major challenge for restaurants. Around 44% of respondents surveyed by Deliveroo say that they had their rental increased, while 55.9% said their rent remained unchanged. Additionally, 68% of restaurants reported that there was an increase in labour costs.
On the consumer front, with restrictions in place, many dinners in Hong Kong have turned their attention to food delivery services - not only to satisfy their appetite for their favourite cuisines but also to offer some help to the struggling catering industry.
In an exclusive interview with MARKETING-INTERACTIVE, Deliveroo Hong Kong's general manager Andrew Hui (pictured right) said the company has been expanding its service scopes to meet the evolving needs of customers and merchants amidst the restrictions and challenges. For example, the company extended delivery hours until 11:30 pm to better serve customers and enable restaurants to capture more business opportunities.
Deliveroo Hong Kong also rolled out an on-demand grocery delivery service in October 2020, aimed at providing customers with greater access to a plethora of grocery products and household items. Some notable brands in Hong Kong also collaborated with Deliveroo Hong Kong to offer groceries, such as supermarket chain ParknShop, Japanese retail chain Don Don Donki, and retailer Marks & Spencers.
Hui, who joined the company six months ago and previously spent eight years at Starbucks, last holding the role of GM, predicts that the delivery market will continue to grow in the future, adding that 75% of Hongkongers expected using food delivery services more regularly in the future. He said:
Our mission is to be the definitive online food company – the platform that people turn to when they are hungry or thinking about food. The key to achieving this is being available when and where consumers want to order.
The company's consumer survey conducted last year to uncover the behaviours of customers also found that 78% of consumers in Hong Kong said they had ordered from food delivery platforms at least once a week since the beginning of the COVID-19 pandemic. They also spent an average of HK$1,324 a month on food delivery services in 2020, up 21% when compared to 2019. As such, Hui believes there are several reasons for the company to be optimistic - especially given many companies operating in Hong Kong have reverted back to allowing their staff to work from home.
"Deliveroo Hong Kong's on-demand grocery delivery service will provide more convenience for busy Hongkongers, giving people access to the food they want and need with just a few clicks. They even do not need to leave their home," Hui said.
Moreover, according to an internal survey, there were some reasons for customers to order takeaway food. Around 29% of respondents said they wanted to try something that they couldn't make at home; while 27% said they hoped to support their favourite restaurants during the pandemic.
How to grow the business?
Hui said the results reflected that there is still a lot of potential in the food delivery market. To strengthen its service offerings, Deliveroo Hong Kong launched multiple Editions sites across the city. It opened one Editions sites at Tseung Kwan O last December, home to more than 400,000 residents as the company hopes to tap into the growing population in the area.
Located in Capri Place, the site covers an area of over 5,266 square feet, offering an assortment of local and international menu options to the entirety of Tseung Kwan O’s ten districts, such as Tseung Kwan O, The Hong Kong University of Science and Technology, Lohas Park and Tiu Keng Leng, to name a few. The new site can serve about 414,000 residents, workers and students across the region. It is expected that the Tseung Kwan O district will be home to more than 470,000 residents by 2024. In 2021, the company opened four new sites at Cheung Sha Wan, Kwai Tsing and Tuen Mun, in addition to the latest location at Tseung Kwan O.
Hui said, "Edition kitchens are an essential part of Deliveroo’s offer to restaurants. These sites offer restaurants an opportunity to expand business at a lower risk. Restaurants can utilise Deliveroo Hong Kong's insights to identify locations with the desired customer demographics as well as customers' preferences. Expanding through Editions also carries lower cost than traditional brick and mortar premises."
"Our ultimate goal is to capture as many of the 21 meal occasions (three meals a day, seven days a week) as possible, but most people don’t want to have food from restaurants for every meal. So we have extended our offerings to include a broader range of categories, such as supermarkets, grocery stores, and delis," said Hui.
During the interview, MARKETING-INTERACTIVE asked Deliveroo Hong Kong to name some interesting findings among Hong Kong customers, to which the platform said interestingly there has been a rising demand for vegetarian options and restaurants over the past few years - and the company believed that the trend will continue in the future.
Hui added the company has seen a phenomenon of customers eating takeaway food at their workstation. "The 'al desko' lunch trend is likely to take place when people work from home. Many people continue to work during meal break to buy time, leading to the rise of this trend."
Marketing campaigns to engage customers
Last year, Deliveroo Hong Kong worked with four members from MIRROR and ERROR to announce the news of its partnership with supermarket chain ParknShop. In the 19-minute video, Deliveroo Hong Kong features Lokman Yeung and Anson Kong from MIRROR, as well as DeeGor Ho and Poki Ng from ERROR to help sports commentator Christopher Chan cook three dishes to surprise his wife and daughter by ordering ingredients from ParknShop via Deliveroo Hong Kong's app. The video showcased Chan's cooking process under the guidance of Anson Kong, who is renowned for his cooking skills in real life.
The company values local elements and believes that a down-to-earth attitude is the key to a successful expansion in the local market. Elaborating on the campaign, Hui explained, "MIRROR and ERROR possess a positive and energetic image and are loved by the public. Through our collaboration, we hope to increase the popularity and exposure of restaurants, maximising customer satisfaction by connecting their experience with popular culture that is beloved by many customers."
Apart from MIRROR and ERROR, Deliveroo Hong Kong also collaborated with other celebrities. The company produced a festive video featuring actor Louis Koo and singer Sammi Cheng before Chinese New Year.
In the video, they teach customers how to handle difficult questions when attending family gatherings during the festive season. It rolled out another video in collaboration with TamJai International, featuring celebrity Master 7, DJ "Ah Jeng" and actor Kenny Wong. The video was aimed at promoting the exclusive offer that allows customers to enjoy a 20% discount when ordering food from TamJai Yunnan Mixian on Deliveroo Hong Kong.
Challenges and legal issues
However with competition in the delivery space heating up, platforms such as Deliveroo have also come under the spotlight to ensure fair play in the market. Recently, Hong Kong's Competition Commission said that it was investigating delivery platforms Deliveroo and foodpanda for their possible breach of the Competition Ordinance.
In a statement, the Competition Commission said it will examine whether the delivery platforms had required exclusivity from restaurants or induced restaurants to agree to exclusivity by including terms or conditions in their agreements with restaurants. The terms or conditions discourage restaurants from partnering with other online food delivery platforms.
Deliveroo Hong Kong said that they were cooperating fully with the commission and will continue to do so, adding that the company is transparent and responsive in the communication with the Hong Kong Competition Commission.
Moreover, some couriers of Deliveroo Hong Kong's rival foodpanda Hong Kong also went on strike last November to protest against the decreasing order fee. The strike sparked concern about couriers' rights in the city. Hui said Deliveroo Hong Kong offers a lot of measures to protect the couriers. For example, it offers couriers free accident and public liability insurance. The company also launched its "Rider Safety Month" initiative to raise awareness of safety for our riders.
Also in 2020, Deliveroo Hong Kong invested a total of HK$1 million to support riders, including distributing over 260,000 protective face masks to riders. Further support was offered to riders and their family members through the ZA Relief Fund launched by ZA International, allowing riders who was diagnosed with the virus to apply for an emergency aid of HK$20,000 until they are able to work again.
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