Secondary Research on Food Delivery Industry in India
Abstract
The food delivery sector has experienced significant growth and has become highly competitive globally over the past decade. Key drivers include the fast and busy lifestyle of consumers worldwide and the impact of the COVID-19 pandemic, which has accelerated reliance on online meal ordering. Numerous food delivery companies such as UberEats, Zomato, and Swiggy are shaping the industry with innovative trends. This research highlights key trends to watch in 2023 and their implications for the market.
Introduction
Online food ordering allows customers to order meals from local restaurants via websites or mobile applications. This ordering process resembles many online shopping experiences wherein users select cuisine types, restaurants, delivery or pickup options, and payment methods including cash or cards. The rapid service delivery, often within minutes, is a significant advantage of these platforms. Additionally, online platforms foster impulsive food purchasing and provide customers with access to diverse competitors and peer reviews via social media, influencing their buying decisions.
Research Methodology
This research is based entirely on secondary data collected from internet sources, including portals, journals, and blogs.
Food Delivery Trends to Watch in 2023
1. Tech Giants Entering the Market
The trend began in 2017 with Amazon's acquisition of Whole Foods and Uber launching UberEats. Since then, tech giants like Google, Amazon, and Uber have expanded aggressively in the food delivery domain, integrating food ordering into services like Google Search, Assistant, and Maps. This increased competition has simultaneously helped smaller vendors gain more options to deliver food online.
Examples and Proofs:
- Amazon's acquisition of Whole Foods
- Google's integration of food delivery services across major platforms
- Uber's UberEats growth as a live demonstration
Opportunities:
- Continued industry growth prospects.
- Increased competition with expanded delivery options benefiting vendors.
2. Delivery Directly from Restaurants
While third-party food delivery platforms grow, many large restaurant chains (e.g., McDonald's, KFC, Domino's) are setting up their own in-house delivery operations. This reduces dependency on external service providers.
Examples and Proofs:
- McDonald's, KFC, and Domino's own delivery systems
Opportunities:
- Restaurants launching direct delivery fleets increase revenue.
- Reduced competition for third-party platforms leads to potentially higher earnings.
3. Delivery by Drone
Drone deliveries have been tested worldwide since 2012. Domino's delivered pizzas via drones in New Zealand, while Zomato demonstrated successful meal deliveries using drones capable of carrying 5kg payloads at speeds of 80 km/h over 5 km ranges.
Examples and Proofs:
- Domino's pizza drone delivery
- Zomato's acquisition of TechEagle for drone delivery
Opportunities:
- Drones reduce delivery time and avoid traffic delays.
- Governments have allowed drone test flights under regulated conditions.
4. Food Delivery Subscriptions
Meal subscription plans—weekly or monthly scheduled deliveries—are gaining traction. Subscriptions cover all meals or specific daily meals, making the ordering process convenient and less taxing for consumers.
Examples and Proofs:
- Subscription models across various delivery services including Uber Eats and recipe box services.
Opportunities:
- Rapid growth of food delivery subscriptions globally with a CAGR of over 17% expected up to 2030.
- Consistent consumer satisfaction and profitability for food businesses.
5. Rise of Delivery-Only Restaurants
With dine-in restrictions during the pandemic, many restaurants have shifted toward delivery-only or cloud kitchen operations. This trend is driven by consumer preferences to avoid crowded spaces and opt for home-delivered meals.
Examples and Proofs:
- Faasos by Rebel Foods, Hoi Foods, and Biryani By Kilo as notable cloud kitchen examples in India.
Opportunities:
- Cloud kitchens offer lower upfront costs and scalability.
- The delivery-only model is expected to keep growing rapidly.
Factors Affecting the Food Delivery Industry
1. Shifting Customer Preferences
Players compete by offering the best value to win market share, but this has also led to increased customer churn due to abundant choices and aggressive marketing.
2. Adherence to Food Quality Standards
Maintaining food quality during transport is challenging, especially when meals are prepared far from the delivery location. Ensuring parity between dine-in and delivery quality remains critical.
3. Conscious Eating Trends
Consumers increasingly demand transparency about ingredients, food origins, and preparation practices, emphasizing farm-to-fork accountability.
4. Logistics Dilemma
Optimizing delivery radius, vehicle allocation, and food quality while ensuring timely deliveries are ongoing logistic challenges for startups and established players.
5. Threat from Bigger Players
Dominant brands with large market shares limit opportunities for smaller entrants to acquire high-value customers.
Summary
The Indian Food and Beverage (F&B) industry is vibrant, experiencing an unprecedented growth phase. This expansion is driven by demographic shifts, rising disposable income, urbanization, and advancements in organized retail. With the online food delivery segment rapidly evolving, the industry faces both challenges and opportunities across technology integration, customer experience, and operational efficiency.