Global Online Food Delivery Market Growth Analysis and Forecast

It all started with pizza delivery in some regions. But not as an online delivery service rather by calling restaurants to order the food item.

There was no online ordering trend when Pizza Hut and Dominos entered the food delivery market. After their entry, the food delivery service got a boom and most of the things have changed since then.

According to different generations, food delivery service has changed its way of operation.

Let’s see the evolution of on-demand food delivery services:

1st Generation – Order on Phone

The first phase of food delivery was started on phone calls as mentioned earlier. The steps for this were, calling a restaurant, placing an order, preparing order by a restaurant, delivering it to the customer. Along with the quality of food, they also had to look after the delivery service.

Around billions of people used to call the restaurants to order. As the market was evolving the second generation had offered us more. And because of this, the calling percentage of customers dropped. 

2nd Generation – Mobile Marketplaces

And then comes the internet era. The growth in the usage of the internet among all the people was increasing day by day. Thus, the rapid increase of internet-enabled devices made every industry have an online presence. The second generation was not a full-fledged delivery platform but was working only as an aggregator. 

In simple terms, the restaurants were listed on the app but the delivery service was from the restaurant side. The customers were able to see the restaurant menu but order it through the restaurant. Apart from this, due to various offers and discounts, many people were also turning towards online ordering. 

The most important factor behind that was the convenience for customers that leads to customer satisfaction. The top apps in the food delivery market at that time were Zomato, GrubHub, etc. Global food delivery platforms were making a huge trend of online ordering and that will continue year by year. 

3rd Generation – Full-service platform

As per the second generation, the aggregators started logistics also, which is a delivery service to customers. Some of the apps that started this trend were UberEats, Swiggy, Rappido, etc.  

The restaurant has a major change. Now the restaurant doesn’t have to build its own website or app. Simply list their restaurant on the app and start getting orders. The app is responsible for assigning an order to the restaurant till the time it reaches the customers including delivery service.

And this is also the time of expanding the presence on social media. Social media is key for restaurants to connect with the target audience and engage directly with them. Several restaurants are on social media platforms to expand their customer base. This trend is expected to positively influence the growth of the globalon-demand food delivery services market in the near future.

4th Generation – Ghost restaurants 

While there is a change in every industry, the same can be seen in the online food ordering business. The ghost restaurants, also known as cloud kitchens. These kitchens don’t have any physical presence. This model will have a high capability of earning profits for restaurants.

Because of cloud kitchens, restaurants will be able to save the real estate costs, staff, insurance and a lot more which is required to build a restaurant. It can also help in maintaining the quality and will also get time to think of new strategies. 

The food delivery apps are quite popular within the millennials and the next generation. The largest customer segment to use Internet services falls in this generation. 

Popular on-demand food delivery services include a range of restaurants that allows customers to compare menus, prices, cuisines and also able to see reviews by previous customers. While analyzing, restaurant reviews are taken into consideration for the growth of the business.

Facts about online food delivery market:

  1. The market’s largest segment is Restaurant-to-Consumer Delivery with a market volume of US$4,934m in 2020.
  2. The online food delivery market will reach $23.5 billion by 2025.
  3. Currently, 26% of traditional food delivery orders are placed online, and this figure is expected to grow in the next few years.
  4. The US food delivery market alone is expected to grow by 79% in the next 5 years.
  5. Food ordering and delivery business is expected to grow by $30 billion (from $43 billion in 2017 to $76 billion in 2022) at an annual growth rate of 12% over the next five years
  6. Apart from the Millenials, online ordering and delivery is also becoming a favorite among the users in the age group of 35-44 
  7. The top five players in this sector have a combined valuation of $11.52 billion.
  8. In global comparison, most revenue is generated in China (US$45,909m in 2020)

Related Read: Online Food Ordering Statistics You Need to Know!

Why do some of the app startup fail?

A recent report states that one of the major factors hindering the growth of the food delivery market is because of the inefficient operational execution. Operations play a crucial role in any business. Efficient operational execution means providing on-time services as and when the demand arises.

However, many of the apps are still figuring out to overcome this challenge. Reaching customers on time and ensuring their trustworthiness can be problematic for on-demand service providers. This is because building and scaling a delivery app requires funding and also extremely complex processes. 

For example, if any customer orders a food item from the food delivery service, the food delivery service provider needs to ensure that the customer request is fulfilled within the requested time.

If the service provider fails to provide efficient operational execution, it can lead to the dissatisfaction of the customer. And this can result in loss of customers and eventually customer retention.

However, high operational costs for online on-demand food delivery service providers, strict regulations on the safety and hygiene of food delivered are also some of the main reasons behind their failure. 

What is the forecast for upcoming opportunities in online food delivery services?

The future of online food delivery services is all about customer satisfaction. Customer needs are going to be taken care of by the restaurants. Customers will have different needs and expectations from the food delivery services. Some of them are:

1. Delivery time:

The time factor is very critical. The speed of delivery is the biggest variable in customer satisfaction. With an average, 60 percent of customers switch apps because of delivery time issues. The wait time for customers should not be more than 60 minutes.

2. Quality meals:

Along with other factors, the quality of food will also matter. Because of the restaurants that will not serve good quality food, sometimes they will also switch to other apps. Around 82 percent of the orders were delivered at home, while only 16 percent were placed from the workplace. So it is necessary to deliver quality meals all the time.

The regions that have top opportunities in online food delivery business are:

  1. North America(the UnitedStates, Canada, and Mexico)
  2. Europe(Germany, UK, France, Italy, Russia, and Turkey, etc.)
  3. Asia-Pacific(China, Japan, Korea, India, Australia, and Southeast Asia) (Indonesia, Thailand, Philippines, Malaysia, and Vietnam)
  4. South America(Brazil etc.)
  5. The MiddleEast and Africa(North Africa and GCC Countries)

Thus, the market for on-demand food delivery services will keep on growing. The innovations in the industry won’t stop the business. The restaurants will have to adapt to the recent trends and must have to follow them to run a profitable business.