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Foodtech in KSA - Searching for the Recipe for Success

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  • November 2020
  • Region: Global
  • Redseer
  • ID: 5319464
Latest perspective of the foodtech segment in KSA - the market size, growth, challenges, customer expectations and more

The growth of the food services industry in KSA is backed by the rising purchasing power among the workforce, lifestyle and cultural changes evident among the younger population, accompanied by an increasing preference for consuming fast foods. The estimated $25Bn food services market is largely concentrated in the three cities - Riyadh, Jeddah, and Damman. The market was growing at roughly 5.5% year on year pre-COVID and was expected to touch $30Bn by 2023. Consumers in Saudia Arabia still valued the dine-in experience as it is one of their primary sources of entertainment in the region. The adoption of online food delivery has been limited, with a penetration of ~4% in 2019 and a large number of restaurants are still to develop an online presence.

Post the pandemic, the overall food services sector suffered considerably and is expected to register a loss in earnings of almost 40% by year-end compared to the previous year. Restaurants continue to struggle in the new normal and have yet to completely recover from the disruption caused by the pandemic. The regulatory environment is challenging, leading to eroded confidence in restaurant owners with ~40% expecting the business environment to never recover to the pre-COVID levels and survival will continue to depend on their adoption in terms of regulatory norms, altered menu, operating infrastructure, staff size and supply, and geography.

Within the food services, the online food delivery market is also struggling to combat the fall in demand. Although COVID pushed everyone to remain indoors, pushing the use case of online food delivery by making dine-ins less accessible, the changing regulatory environment coupled with an increase in VAT and restrictions on cash payments is putting a strain on a complete recovery.

COVID played a catalyst in the relationship between the aggregators and the restaurants with the latter realizing the need of the former as the initial lockdowns posed restrictions on dine-ins. Although the dine-ins are witnessing a recovery in footfalls, it may still not be sufficient for the sector to completely recover to pre-COVID levels before H1 2021. Whereas, for the online food aggregators, COVID necessitated streamlining of operations and partnerships with restaurants and delivery executives.

The new normal brought forth by COVID will lead to lasting changes in the supply side partnerships as well as business operations. The changing consumer sentiments reflect a heightened need for hygiene and quality of packaging, however, sentiments like delivery speed and variety of food are expected to gain prominence in the long run.

The landscape for food services continues to remain bleak in the short run for KSA. However, the structural shifts in the supply chain post-COVID have solidified the use case of online food delivery for the existing restaurants and the increasing adoption by consumers will lead to lasting changes for the overall sector.

We have formed the report basis our existing IP on the food-tech sector in the MEA region, consumer research conducted at key intervals to observe the changing sentiments, expert inputs, and the study of leading dark kitchen players in the market including - Hungerstation, Jahez, ToYou, Deliveroo, Careem, Carriage, etc.

This report includes the Pre-COVID context on the food services market in KSA and the effects of COVID on the channels - offline and online. Long term implications for the sector along with the use case for dark kitchens.

This report will help the reader answer the following questions:
  • What was the market landscape for the food services industry before COVID and its key growth drivers?
  • How has COVID disrupted the food services industry and what it means for online food delivery in the long run?
  • How is the consumer sentiment changing towards food consumption post-COVID and its implications for online food delivery?
  • How will the food services market recover post-COVID and its impact on the online food delivery market?
  • What are the new opportunities and challenges for various stakeholders of the food services industry?

Table of Contents

1. The Market Scenario of Food Services in KSA.
1.1. KSA’s digital economy and online food delivery userbase
1.2. KSA Food Market Spend Funnel (Pre-COVID)
1.3. Food Services Market Size, Penetration and Key Growth Drivers (Pre-COVID)
1.4. Online Food Delivery Market Size, Penetration and Key Growth Drivers (Pre-COVID)
1.5. Dark Kitchens Market Size, Penetration and Key Growth Drivers (Pre-COVID)
1.6. Online food delivery business models in KSA
2. Developments post COVID and rise of online.
2.1. Overall Food Services Consumption - 2019 vs Pre-COVID 2020E vs Post-COVID 2020F
2.2. Strategies adopted by brick-and-mortar restaurants to overcome COVID-related challenges
2.3. COVID impact on various internet business - KSA
2.4. Consumer Preference for Ordering Food Online
2.5. Food Services and Online Food Delivery Market Size, Penetration and Recovery (Post-COVID)
2.6. Dark Kitchens Market Size, Penetration, Key Growth Drivers and Recovery (Post-COVID)
2.7. Strategies adopted by online food delivery and dark kitchen players to overcome COVID-related challenges
2.8. YoY forecast for online food delivery market size and penetration in overall food services
3. The way forward for online food delivery in KSA.
3.1. Long term developments in the food services market post-COVID
3.2. Change in parameters of restaurant selection for consumers and expected shift in the number of orders and average order value
3.3. Takeaways for restaurants engaging in online food orders
3.4. Forecast till 2023 - Food and Beverages market, Food services market, Online food delivery, and dark kitchens market
4. Sustainability of food aggregators and new entrants
4.1. Winning parameters and challenges of various business models in the online food delivery
4.2. Expert inputs and Takeaways for restaurants engaging in online food orders
4.3. Future potential for online food delivery aggregators and ancillary opportunities
5. Food-tech players in KSA
5.1. Hungerstation, Jahez, ToYou, Deliveroo, Careem, Carriage, etc.


1. Primary Research Consumers, stakeholders and industry experts are interviewed to help us validate key trends and market estimations.

While the exact figures may vary for different reports, on average, the publisher conducts:

  • ~1,000+ consumer surveys
  • ~30+ IDIs (in-depth interviews) with stakeholders (consumers, suppliers, distributors and delivery executives, among others)
  • ~25+ detailed discussions with industry experts Depending on the report in question, consumers and stakeholders are distributed across:
    • City tiers (Metros, Tier 1, Tier 2, Tier 3 & Tier 4 cities)
    • Income levels
    • Genders
    • Age groups
    • Professions
    • Internet usage pattern
    • Geographies


2. Secondary Research Secondary includes analysis of databases available in public domain. Information sought is cross-referenced and aligned for soundness.

Note: In order to maintain confidentiality, results and analysis of the surveys and expert interviews are presented at level of overall scenario analysis and representation only.