The rise of digital technology, with greater penetration of internet and smartphone use are driving major changes in the online delivery market in India, allowing online food delivery platforms to capture market by offering a wide range of food products, according to the report.
The overall food delivery market in India is expected to measure a CAGR of 12.2% to reach $18.1 billion by FY25 from $10. On the same subject : The Dolly Llama To Open in Florida, Marking the Third State in the Concept’s National Expansion.2 billion in FY20, a Sharekhan report said. Increase in disposable income and busy lifestyle will add to growth of online food ordering and delivery platforms.
According to the report, the rise of digital technology, with greater internet penetration and smartphone usage is driving major changes in the online delivery market in India, allowing online food delivery platforms to capture the market by offering a wide range of food.
The online food delivery market is segmented into two business models with different delivery methods – meals ordered online through a restaurant website and delivered directly by the restaurant and online food ordering and delivery both carried by a platform such as Zomato or Swiggy.
“A restaurant, unless it is a large organized chain, can never customize their delivery and be profitable. The hassle is too huge and even if they establish it, the number of orders will not be as much as they get from the aggregators,” said Sriram Nair, founder of Terra Foods-backed Agility Ventures. “Zomato and Swiggy have built the entire delivery infrastructure. and consciousness, so it is not possible to reproduce the same itself.”
The platform-to-consumer delivery segment has shown the strongest growth among both delivery business models, posting a CAGR of 100% between FY2016 and FY2020, a trend that is expected to continue at a CAGR of 15.1% to reach $9.7 billion by FY25. $4.8 billion in FY2020.
“The customer behavior has been constantly changed, which established the need for the services. However, to survive in the long term they must be very reasonable with the price and the surcharge that the consumer must pay for the convenience of ordering through these programs,” said Dhianu Das, co-founder of Agility Ventures. “So mainly, it’s the balance between prices and convenience. The riders have to be taken care of by these service providers because if they don’t make money then, this business model won’t be successful in the long term.”
QSR is the fastest growing industry in India compared to other segments in the food service industry. The QSR channel leads the industry in terms of the number of outlets in 2020, at an outlet count of 1,995,104. The total number of outlets in the channel grew at a CAGR of 2% between 2015 and 2020, the highest among all foodservice channels, the Sharekhan report added.
“While there is tremendous enthusiasm for the massive opportunity ahead, QSR business owners face a variety of challenges ranging from low awareness of new food concepts, to technology adoption, brand visibility and access to capital,” said Bhavik Vasa, co-founder and CEO at GetVantage. “We work closely with many QSR founders to accelerate access to growth capital and other tools so they can invest in areas such as upgrading technology and equipment, increasing inventory and marketing. This helps optimize business operations, streamline cash flow and expand their achievement. to delight more customers with innovative culinary experiences.”
After two years of underperformance caused by COVID-led uncertainties, QSR companies are poised to post solid recovery-based performance in FY23 and FY24. Most of the companies witnessed a strong recovery in Q1FY2023 with average daily sales (ADS) of all companies under coverage improving on pre-COVID sales. This was on the back of a strong recovery in the food business with a recovery in footfalls, continued frequency of ordering through digital platforms and a large shift to branded products. Industry expects strong momentum to continue in the coming quarters with strong improvement in same store sales for most.
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