1. Striking the right balance

QSR’s are usually met with the trade-off between focusing on their own app vs a marketplace app. Each have their own pros and cons. Broadly, having one’s own app creates better control of the brand, greater engagement with the customer but it is a high cost and effort activity in terms of building a userbase and capabilities. On the other hand, marketplaces provide the capabilities and presence that the QSR may need but this is at the cost of high competition as well as costs and commissions. Own apps give strength to a long-term strategy while marketplace apps help in the short to medium term. Thus, restaurants need to increasingly balance between focusing on their “Own Apps” and listing on “Market places”.

Restaurant Profitability Analysis: Own App vs. Market Place

2. Food service sector has lagged other sectors in own app penetration

E-tail Sector has significant presence of category specialist such as Shein, Namshi, H&M, Kibsons, Apple, Samsung etc. whereas the online food service sector is primarily driven by marketplaces such as Talabat, Zomato, etc. However, in recent times owing to the pandemic, restaurants have started developing their own online capability to drive sales. In this race, QSR players such as McDonalds’, Dominos’ pizza, KFC, etc. are well ahead of other restaurant types.

Note: 1. Own App defined as the companies who have e-commerce apps excluding marketplaces (such as Amazon, Noon, Talabat, Zomato, etc.)

3. QSR Own Apps to be the focus going forward

Given the trend we see and the benefits of having one’s own QSR app, we expect that as the food services sector matures, food service players, especially QSRs (Quick Service Restaurants) will increase focus on own apps – 3X growth in penetration is expected over the next four years.