The restaurant meal home delivering business has undergone a drastic change since the time it was first initiated. Due to the emergence of new and better platforms of ordering food, there are more and more companies stepping in this business for capturing the markets. The new form of internet platforms, mobile applications are all attracting huge investment and also good valuations.
Across the globe, the food delivery market stands at more than $80 billion. In most of the countries this business is already at its maturity stage whereas in certain developing countries, this business is gradually emerging. The annual growth-rate of the food delivery service is estimated at around 3 to 3.5% for the coming 5 years. The most common form of delivering food to a home is still the traditional method wherein the customer would need to place his or her order with the restaurant or local fast food joint. The traditional form of delivering food is said to have a stake of 80%. Though for a long time people were making use of their phone for placing the order. But this trend is slowly seeing a change.
With the emergence of digital technology, it has reshaped a lot of various business including the food delivery business. Customers are now hooked on their phone wherein they can order any food online through the app or by visiting the website. This leads to maximum amount of convenience and at the same time provides transparency. There is also zero room for error due to minimal human interference. Online food ordering facility has led to an increase in the customer satisfaction.
There is a tough competition in the market of third players creating their platform for taking orders on behalf of the restaurant and then delivering the food to the customers. More and more service providers are carving up a niche in the market hoping to claim certain segments for themselves. Also in addition there are news of mergers and acquisitions in this segment that is leading to a bigger partnership.
Alibaba bundled up Ele.me in a hope for capturing the food delivery segment. Postmates and DoorDash are also in talks for a possible merger just as to survive some of the bigger players in this industry such as Amazon, Uber Eats and Grubhub. The factors that would set each of the players apart would be dependent on their consumer service.
There are two main types of online food delivery services in this sector. The first one being called as “Aggregators” which came around some 15 to 20 years back and the second one are termed as “New Delivery”. Both of these food delivery service, provide facility to the consumer for comparing the food menus and posting reviews. With just a single click of the button, the consumer can place the order for their favourite food and also check the estimated delivery time.
Aggregators are basically part of the traditional food delivery model wherein they just take in the orders placed by the consumer and route them to the specific restaurants which further handles the delivery of the food. On the other hand, the New-delivery have built up their own logistics networks wherein they not only take the orders and route it to the specific restaurant. But these new age players also make arrangements for delivering the food from that specific restaurant to the consumer.
There are four main players in the aggregators category, Grubhub, Delivery Hero, Just Eat and Food Panda. These players have their own global scale and most importantly all of these players focus on various regions.
In the New-Delivery category, there are two players Foodora and Deliveroo who are continuously looking out for capturing newer markets. By the year 2025, the market of this new-delivery category can reach up to more than $20 billion.
Both these category of players have said to attract huge investment which allows them to advertise about their service widely across the globe. Advertisements also helps in building brand leading to global recognition. The reported marketing budgets of two major giants Just Eat and GrubHub is said to be around $70 to $80 million. Once the player enters the market, there is no limit on the number of restaurants that can sign up on these platforms.
Consumers are also very happy with the new age food delivery service which allows for convenience, saving time and energy and most importantly placing orders at the click of a button. In the coming years, this business is said to grow much bigger with newer technologies.