The Economics of Meal Delivery

10.09.2020
2 min read

A recent report, written by the Union Bank of Switzerland (UBS), noted that in some countries, the cost of ordering a ready-made meal is already close to the cost of cooking at home. In this report, UBS calculated that if you were to consider all the expenses undergone in the cooking process, from cost of equipment to time spent on preparation, then the long-term costs of having a meal delivered to your doorstep are not that much higher. In fact, in the coming years restaurant-delivered food may become 25% cheaper than home-prepared food, and even 40% if drones and professional kitchen automation drive the operating cost of meal cooking down further (1).   

Below we discuss what underlying forces are driving this shift away from the domestic kitchen and what these numbers mean for the future of home-cooked food. All of this begs the question: could the kitchen itself have an expiry date?  

The ever-changing global trends

Before we delve deeper into how the kitchen could become potentially redundant, let’s first have a look at the forces that that are causing the global community to possibly reject home-cooking.

Growing Population

According to the UN, the global population is set to exceed 8.5 billion people by 2030, representing a 14.1% rise over the course of the next ten years (2). So, what does this mean for the kitchen? There could be the possibility that in order to conserve space, without infringing on new territory, kitchens could be reduced in size or food could even be made elsewhere.  

More Urbanisation   

By 2030, it is estimated that the total urban population may increase 25.4%, making up around 61.2% of the world’s population (1). Of course, as urbanisation takes place and infrastructure improves, it become easier for food delivery services to operate and deliver food quicker to their customers, making the process easier as a whole.   

Ageing Population   

Not only because of demographic shifts, but the increased efficiency in various technology, the miracles of modern medicine and a generally healthier lifestyle have allowed for people to live longer. Increasing global life expectancy means that in 2030, we could potentially see those aged 65 and over increase by 53.4%. Those in the later stages of their lives will, statistically speaking, be the wealthiest. Having either compounded or inherited their wealth over the years, this group may find they have the resources to spend less effort cooking and more time ordering. (1)   

Consumer Preferences  

As well as natural changes that are occurring at the moment, the global population are starting to actively change their own lifestyles too. A decrease in a consumerist culture in favour of a more experience-led life, greater awareness for ethically consuming food and greater opportunities to travel and experience international cuisines are just some instances where people have radically changed their approach to life and, possibly, could prefer to eat elsewhere than cook for themselves.

What the future could bring

Now that we’ve briefly discussed the various causes for a shift in consumer preferences towards a more delivery-based food consumption system, let’s have a look at what the possible scenarios are for in case we really do see the kitchen become redundant.  

Short-Term Leasing

According to the UBS report, the change in preferences in favour of a more delivery-based food consumption system may mean that cooking in a kitchen becomes more expensive in the long run. If we factor in the cost of time as well as the fixed cost of owning kitchen appliances, home-cooking may not make financial sense as cost per meal starts to increase. UBS predicts that a household may end up preparing a meal three times a week or less by 2030, ultimately dismantling the idea of a kitchen altogether. This could either lead to kitchens being rented out on a short-term basis or could lead to shared kitchen spaces. (1)

 

Kitchen Sharing 

By 2030, UBS indicates that kitchens may only be necessary for the bare minimum, from heating up food to making simple snacks. These kitchens will probably end up being smaller and more compact than traditional ones. Not only this, but UBS figures show that of the 25% of single-person households in the US and the UK, it might be more financially advantageous to share a kitchen than to own one (1).   

Trends such as minimalism, cube-living, micro units and the loneliness minister in the UK all point to the fact that a wider movement of co-living could be at play. Even sociologist, Eric Klinenberg, interviewed 300 single-households in the US and the UK and concluded that more young people are choosing to live alone than share their living accommodation, pointing to a potential market for the kitchen sharing space rather than an all-round roommate-style of living.(3)   

UBS has also noticed that a number of UK and US-based startups are exploring the idea appeasing the young mentality of living alone. CommonSpace and WeLive, for example, are offering smaller living accommodations for a cheaper price, while making professionally equipped kitchens, cinemas, games rooms and gyms also accessible in a shared space.(1)

Bottom Line   

Although it is hard to believe that the kitchen may one day become obsolete, it is even harder to argue with the numbers. People are growing older and richer. Urbanisation and population growth are happening faster than ever. Even the way we live our lives is drastically changing. Perhaps it isn’t so ludicrous to assume that the way we eat will also change.  

Once upon a time people worked in cubicles and also owned their cars. But now, in the gig economy, people can share both. Who knows, perhaps the traditional kitchen will become a luxury and may join the revolution pioneered by Uber, Airbnb, and the WeCompany? For now, only time can tell and all we can do is wait.