What’s the Current State of the Food Delivery Market?

December 20, 2018
Food Delivery Market

Technology makes people lazier. Today, we eat out and order delivery food more often compared to the past.

Staying in during a weekend you don’t feel like spending hours cooking. As usual, you get hungry. Of course, you can order pizza, but the variety of options is broader even if you live in a rural area or a suburban district. You want to have an elaborate meal without any hassle. For that you pick a phone, scroll local restaurants menus, choose your favorite pasta and Caprese salad – and here you go. Your dinner is waiting for you at your doorstep in less than an hour. It is fast and convenient. That’s how shipment services work.


The food delivery market

The food delivery market has expanded. The delivery apps make 40 percent of all downloaded applications. Takeaways are becoming a trend in the restaurant business, and the share of online food delivery is growing. The average sum that people spend on food delivery yearly is $210 billion. In particular, they spend $10 billion by ordering food online.

North America is ahead of other countries by the spread of delivery services. The European market, in particular in Sweden and Austria, is catching up. The markets of Asia, Latin America, and the Middle East are beginning to grow. China got almost one-third of the global food delivery revenue in 2018. A few food delivery services have achieved a global scale. Among them are Delivery Hero, Foodpanda, GrubHub, and Just Eat. They are widespread in almost all regions. Still, there are usually a few leaders on each national market.

Food Delivery Market

Who are the global leaders in the food delivery market?

Delivery Hero with its subsidiaries covers ten countries in the Americas, ten countries in the Asia Pacific, 15 countries in Europe, and nine states of the Middle East and Africa. It has a partnership with more than 150 thousand restaurants. In the delivery market, bigger companies usually acquire smaller ones to build effective partnerships and increase revenues. The Delivery Hero group consists of multiple international brands. Foodpanda in Asia and Eastern Europe, Foodora in Europe, Australia and Canada, Hellofood in the Middle East, Delivery Club in Russia, 24h in UAE, NetPincer in Hungary, Donesi.com in Serbia, Bosnia & Herzegovina and Montenegro, Pauza in Croatia, and Otlob in Egypt.

GrubHub operates in the USA and the UK, where it has about 80 thousand restaurant partners and is serving nearly 1,600 cities. In 2014, Grubhub bought a delivery company Seamless branched out in New York.

Just Eat operates in 13 countries in Europe, Asia, Oceania, and the Americas. It is one of the earliest companies with more than $500 billion in revenue. 90 percent of their profit comes from the 13-14 percent commission that the company takes from partnering restaurants.

Despite there are so many delivery giants, there is still some place for new players in the food delivery market. To enter the niche, one should know what customers want. Here are several factors that matter for users of the online ordering.

What do consumers want?

Researchers are still trying to answer what customers need. They conducted many studies on customer demands and behavior. Among the factors that consumers consider is the speed of delivery. Other factors important for consumers include ease of use, accuracy of orders, and credit card acceptance.

For millennials who are the primary users of online platforms, the major factor is convenience. They want to get the desired food in one tap. And they crave not only for the popular pizza or meatballs from a Chinese restaurant. The millennials’ healthy eating habits influence the tendency of online orders as a half of organic product buyers belong to this age group.

Also, there are several trends in customer habits. 82 percent of them order food from home. The highest-volume days for the online platforms are weekends (74 percent of orders are placed). Moreover, 80 percent of people show loyalty to services they have registered in.

Food Delivery Market

Isn’t it all online?

Despite the growing possibilities of food delivery apps and websites, a lot of people still place orders via telephone. According to McKinsey research and a study from Cornell University, about a quarter of customers order food online.

The study examined 372 US restaurants, which adopted the online order system. And here is what they found.

It turns out that takeout, delivery, and catering accounted for about one-third of the restaurants’ revenue. More than a half of it came from eat-in.

Respondents’ ordering capabilities included phone calls in 88.7 percent, walk-in in 93.3 percent, less than a quarter (22.9 percent) took orders through their website, and 6.7 percent used apps.

Morgan Stanley research brought more optimistic results. According to it, over half of restaurant delivery orders in 2017 were placed via online channels. Despite a phone is still popular, the number of online orders is growing.

What are the benefits for the restaurants?

The Cornell University study says that online operations have a positive impact on the revenue of the restaurants. Online delivery services increase order frequency and volume and thus help the restaurant get a higher average check. But many restaurant owners fear that they will lose personal interaction with clients if they take orders online. In fact, according to the mentioned study, customers are satisfied with the online delivery services that restaurants offer.

Moreover, online services are useful for restaurants because they can collect analytical data about their customers’ preferences to increase sales.

Types of platforms and perspectives

Today there are two main types of platforms to deliver online: private restaurant shipment, and aggregator services that build links between multiple restaurants and customers. Also, a new kind of service that connects users with groups of restaurants such as a group pizza restaurants or burger chains via one website or app is appearing.

If you decided to concentrate on the food delivery, you should consider a demand for such service in rural and suburban areas. Those people would love to order food online, but they have fewer possibilities so you can become one of the first local providers. Though developing logistics is not easy, there are chances to become profitable faster and to start operating globally.

The online niche of the delivery market is gaining popularity. It is still waiting for new players, so it makes sense to think about food delivery app development. Will you become the next Delivery Hero?

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