Online Food Delivery Market - Growth, Trends, and Forecasts (2023-2028)

Key Highlights

• The online food delivery market is projected to register a CAGR of 16.24% over the forecast period.
• Customers are rapidly heading online, which has fueled drastic growth in the e-commerce industry over the last decade. This shift in consumer shopping habits has been driven by various causes, some of which are industry or country-specific, while others are the product of global shifts.
• Most of it can be attributed to the availability of an increased number of online food delivery businesses, a better understanding by consumers of the developments of online e-commerce, a better easy and secure option for online payments of services, disposable income on the rise, and work from home decreasing time for people to invest in making the food themselves.
• Increased internet penetration rate, quick access to smartphones, simplified e-banking systems, improved food-service logistics, and changing lifestyles are some prime factors driving the growth of online food delivery. As per the report published by Zomato, the Indian food delivery platforms will have 80 million monthly active users in 2021 and have set targets of reaching 200 million over the next few years. Hence, an increase in smartphone users and internet penetration is driving growth in online food delivery services.
• `Some of the recent trends in the market studied include real-time order tracking and customized food delivery. Thus, companies are increasing their investments in research and development (R&D) and marketing and expanding their geographical reach to maintain their position in the market. Most leading players follow logistics-focused food delivery systems due to the model's ability to help gain scale with limited costs and increased speed.

Online Food Delivery Market Trends

Rising Popularity of Cloud Kitchens

The food delivery market is witnessing a rise in the popularity of cloud kitchens due to many consumers purchasing their food through online platforms. Thus, the increasing number of food orders through cloud kitchens is due to convenience, the hectic lifestyles of consumers, and intense internet penetration. Cloud kitchens have become the popular investment choice for established and new restaurateurs to open a food business. Faasos by Rebel Foods, Biryani By Kilo, and Freshmenu are some of the popular cloud kitchen chains operating in this segment.

Established restaurant chains are now also opening cloud kitchen outlets instead of opening dine-in outlets to cater to high food delivery orders. The ease of getting food delivered at a reasonable price and in record time has increased the number of orders placed online. Instead of dining out, people prefer to order in. Online food delivery is not only eating into the market share of traditional dine-in restaurants but is also replacing home cooking. Because of the shift in customer preference and an increased sense of hassle in dining out, the home delivery option has gained momentum and, along with that, has brought a change in the restaurant industry as now food overpowers the dining experience. For instance, in January 2022, Arabic REEF Technologies, a United States-based operator of delivery kitchens, logistics, and proximity hubs, announced plans to launch cloud kitchens for its network of restaurants and brands in the Middle East and North Africa. In November 2021, REEF acquired UAE-based cloud kitchen company iKcon, marking its first venture in the region.

North America Dominates the Market

• The North American market has a high market share in the global market, mainly due to strong user penetration rates in the United States. It is one of the largest markets for global online food delivery. It currently represents the world's biggest online food delivery market. Several factors drive north America's online food delivery market. The significant urban population, busy lifestyles, and increasing penetration of the internet and smartphones are some of the key drivers that have driven the growth of online food delivery in the region.
• Moreover, the United States' large young population, which constitutes most of the consumer base, has further facilitated this growth. In October 2021, Delivery Hero acquired Hugo's food and grocery delivery verticals and expanded its footprint in Central America and the Caribbean. Various online food delivery service providers are experimenting with innovative food delivery methods via self-driving cars, drones, and robots, positively influencing market growth.
• Moreover, individuals' high living standards continue to spur the region's demand for online food delivery packaging services. Some of the major players in North America, including Doordash, Uber Eats, Postmates, GrubHub -Seamless, and Caviar, are adopting strategies for developing the online food delivery market like new product development, global expansion, acquisitions, and investments.

Online Food Delivery Market Competitor Analysis

The Online Food Delivery Market is highly competitive. Some leading players offering online food delivery services include Delivery Hero SE, Grab Holdings Inc., Eat Holding Limited, Roofoods Ltd (Deliveroo), and Uber Technologies Inc. The key strategies preferred by companies to strengthen their market dominance include expansion, mergers and acquisitions, and partnerships to achieve consolidation and optimize their offerings. For instance, in May 2022, Swiggy entered into a partnership with Garuda Aerospace to deliver groceries with the help of drones in the city of Bengaluru in the Indian state of Karnataka and the Delhi-NCR region. Apart from expanding the business size and reach, companies emphasize R&D to develop technologically advanced and differentiated products to gain a competitive edge.

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